The Nation Newspaper

Category: Industry

  • Clue vitamin beverage hits Nigerian market

    Denna Rossi Limited, a Fast Moving Consumer Goods (FMCG) company in Nigeria, has introduced Clue Vitamin Beverage to the Nigeria market.

    In a statement signed by its Head, Marketing/Corporate Services, Mr. Ifeanyi Nihe, the company said Clue Vitamin Beverage provides a healthy, hydrating, and rejuvenating miracle elixir that reduces the risk of chronic disease like diabetes, gives more energy and provides a healthier immune system.

    He said the product is an alternative to soft drink and other fruit juices. “It’s refreshing and healthy for an active lifestyle,” Nihe pointed out.

    According to him, the product has been designed to be sipped neat, mixed or in cocktails and offers innovative and unique gourmet and luxury experiences with extensive nutrient enrichment.

    Some of its nutritional attributes include immune support and antioxidant properties. In addition, nutrients were often juxtaposed with messages related to performance and emotional well-being, benefits that go beyond conventional nutritional science.

    It also has extensive micronutrient additions at levels often well in excess of nutrient requirements and very good for daily vitamin needs. Clue Vitamin Beverage, Nihe said, is made from highly purified water, natural flavor, citric acid, ascorbic acid, and vitamins A, C, E, B6 and B12.

    The company’s Chief Executive/Managing Director, Dr. Ifeanyi Nwafor, also revealed that Clue Vitamin Beverage provides the benefits of water along with enjoyable flavors and added nutrients, which can replenish the body.

  • Fitch affirms BoI’s sovereign rating

    Fitch Ratings has affirmed the national rating of the Bank of Industry (BoI) as well as seven other banks.

    According to Fitch, the rating actions followed its downgrade of Nigeria’s Long-Term Local Currency Issuer Default Rating (IDR) to ‘B+’ from ‘BB-’, as a result of which it is now equalised with the Long-Term Foreign Currency IDR.

    A statement from Fitch explained that the new rating was driven by change in Fitch’s sovereign rating criteria. “Following the sovereign criteria change and rating action, Fitch has recalibrated the national rating scale for Nigeria. As a result the national ratings for these banks are affirmed as there is no change in their relative creditworthiness.

    “The national ratings of BOI are driven by potential sovereign support reflecting its 99.9 per cent state ownership, its policy role and the bank’s strategic importance to Nigeria’s economic and industrial development”, the statement read.

    BoI however, maintained that it remains very virile and better repositioned to push the frontier of the nation’s industrial sector through aggressive business financing.

  • NACCIMA decries epileptic power supply

    NACCIMA decries epileptic power supply

    The Association of Chamber of Commerce Industry, Mines and Agriculture (NACCIMA) has decried poor electricity supply in the country, especially to the manufacturing sector.

    NACCIMA President Mr. Bassey Edem said the positive outlook of the energy sector early in the year could not be sustained, as power generation has continued to drop in the last three months.

    He spoke to The Nation in Lagos on challenges facing the Organised Private Sector (OPS), which has resulted in lack of capacity utilisation. He condemned the vandalisation of pipelines, which has hampered the supply of gas to the power plants.

    Edem advised the government to improve alternative and renewable energy sources for power generation to overcome the challenges. He said: “It is about time the government considered decentralising power transmission.

    “It is also important for investors in the power sector to ensure that consumers get value for money, while efforts are intensified on the distribution of pre-paid meters. The recent signing of power purchase agreement by the Federal Government and 14 solar energy firms is a welcome development.”

    The NACCIMA president urged the government to ensure strict adherence to the timeline in the agreement, so that within the shortest possible period there would be an improvement in power supply in the country, while they continue to work towards achieving the 30, 000 Megawatt (MW) target to meet the needs of every sector of the conomy.

    Bassey also called on the government to put in place measures that will address the immediate negative impacts of the new Foreign Exchange policy. He also asked that commitments and outstanding Letters of Credit (LCs) by importers with naira cash backings, that were billed at the new exchange rate to the importer, be retained at the rate with which the form ‘Ms’ were issued.

    He said in the alternative, the Central Bank of Nigeria (CBN) should introduce a form of palliative measure to reduce the resultant loss incurred by importers.

    According to him, the quest to attract Foreign Direct Investment (FDI) can only materialise  when foreigners see the prosperity of indigenous companies. He said the unhealthy business environment has led to the relocation of many companies, especially the multinationals, who have gone to other African countries to set up their businesses.

    Bassey criticised some of the economic policies of the government, especially with Diaspora remittances, which he said may be difficult to recover by those who sent them as a result of the not so clear and inconsistent Forex policy.

    On Economic Partnership Agreement (EPA), the NACCIMA boss argued that although it is a good concept, local manufacturers have not developed to a level that can accommodate the agreememnt. He said: “Overseas countries are not aware of the challenges of power and the crisis of poor infrastructure provision in all its ramifications. Putting all that into consideration, we cannot support EPA now as the ratification will make us uncompetitive”.

    The NACCIMA boss also berated the Federal Government over the non inclusion of members of the private sector in the economic team. He wondered how the peculiar challenges facing the private sector can be adequately addressed when they are neglected in such an important group.

  • How real sector’s woes hurt diversification

    How real sector’s woes hurt diversification

    Things are not looking up for the real sector. The challenges in the business environment has continued to hold the sector down, pushing its contribution to the Gross Domestic Product (GDP) down to 9.5 per cent. This has raised fears that Nigeria’s hope of riding on the sector’s back to diversify the economy may not be realised, if the challenges are not addressed. Assistant Editor CHIKODI OKEREOCHA reports.

    Nigeria’s transition to a non-oil economy is under threat. The real sector, particularly manufacturing, upon which Africa’s largest economy anchored its hope of diversifying the economy from  over-dependence on oil proceeds, is gasping for breath. For most operators in the sector, the deteriorating operational environment caused by lack of supportive infrastructure and macro-economic uncertainty has become too heavy to bear.

    Apart from the huge costs imposed on them by the lack of critical infrastructure, particularly electricity supply, the prevailing macro-economic indicators such as high interest rate, rising inflation, depreciation of the naira against other major currencies, especially the dollar, and scarcity of Foreign Exchange (Forex), among others, have continued to plague the sector acknowledged as the economy’s growth engine.

    The economic downturn manifested by these negative indicators, The Nation learnt, has since forced not a few operators to take drastic measures including scaling down their operations and sacking their workers in a bid to stay afloat. Others that could not cope closed shop or relocated to neighbouring West African countries where the operating environment is friendly.

    Expectedly, one of the unsavoury consequences of the high mortality rate and or relocation of companies in the sector is job losses. Apart from compounding the nation’s already high unemployment rate, the spate of job losses in the sector clearly defeats one of the government’s objectives of pursuing diversification, which is job creation.

    According to experts at PriceWaterhouseCoopers (PwC Nigeria), oil & gas jobs account for less than one per cent of total employment and the young population can no longer be absorbed by the sector. The experts said apart from the need to insulate the economy from the risk of being vulnerable to a single commodity, job creation was another core reason why Nigeria needed to genuinely pursue diversification.

    The consulting firm identified the real sector as one of the priority sectors that Nigeria should target for diversification, apparently because of its job creation potential and dominant transmission link to the overall economy. However, the challenging fiscal and monetary policy environment has weakened the real sector’s capacity to stimulate economic diversification and create jobs.

    For instance, since manufacturers came under the challenge of lack of forex, workers in the food, beverage and tobacco sector have not slept with both eyes closed. Recently, the National President of Food, Beverages and Tobacco Senior Staff Association (FOBTOB), Comrade Quadri Olaleye,  said between December 2015 and March 2016, a period of four months, about 405 workers in the sector lost their jobs.

    The labour unionist raised the alarm that under the guise of lack of forex, virtually every company in the sector is now calling for downsizing of the workforce. “Even companies, which seemed immune to the gale of redundancies are now being put under pressure by the action of others to shed weight and retrench some of their workforce,” he alleged.

    Although, the employers are said to have cited the challenging operating environment as reason for sacking the workers, Olaleye would have none of that. He argued that the economic downturn presented an opportunity for innovation and creativity.

    According to him, instead of carrying out “incessant and deceitful redundancy exercises as bailout”, companies in the sector can reduce the pressure created by the demand for forex if they stopped being intellectually lazy and engage in Research and Development (R&D) to discover alternative sources of raw materials for production.

    FOBTOB president, noted that the union was not unaware of the fact that not all the raw materials used in the food industry can be sourced locally, and that where they are found, they are not in commercial quantity.

    He, therefore, called on the Federal Government to review the forex policy with a view to placing the companies in the food industry on the priority list of those deserving of forex.

    But Olaleye’s call appears to be a tall order, as the Federal Government through the Central Bank of Nigeria (CBN) may have foreclosed a review of the import prohibition list. The Nation learnt from reliable sources close to the apex bank that the creation of a special forex window for operators in any segment of the manufacturing sector is not on the card.

    Besides, it wasn’t the first time such call came from real sector operators. Early this year, Manufacturers Association of Nigeria (MAN) President, Dr. Frank Udemba Jacobs, led a delegation of its members on a courtesy visit to Vice President Yemi Osinbajo in Abuja where, among other issues, he urged the Federal Government to avert imminent shut down of factories by creating a special forex allocation window for manufacturers.

    The MAN boss said the special forex window was necessary to facilitate easy access to forex required to fund importation of industrial inputs that are not readily available in the country. Although, the vice president assured the Association that the issue as well as others presented will be treated with dispatch, succour is yet to come the way of manufacturers, especially with regards to the request for a special forex window.

    But forex challenge is an addition to the long list of woes plaguing the real sector and limiting its capacity to drive economic diversification. Others that have continued to leave sour taste in the mouth of operators include lack of supportive infrastructure especially electricity, faulty monetary framework that has continued to push up cost of production and policy inconsistency.

    For instance, manufacturers require about 3,000 Megawatts (MW) of electricity for optimal performance, but less than 1,000 MW get to them. This is why over 75 per cent of the electricity needs of manufacturers are said to be generated in-house, leaving only about 25 per cent coming from the power utility firms. Electricity supply alone takes between 35 per cent and 40 per cent of manufacturers’ cost.

    The huge cost came about because most manufacturing firms run full time in-house power plants for production for fear of unannounced power outages and surges from the utility companies, which often result into damages to machines, tools, raw materials, man-hour loses, and disruption to production processes.

    Although, small-scale operators are worst affected by the erratic electricity supply, as they are unable to finance the cost of backup power, large scale manufacturers are also seriously constrained.

    Some of them spend more than 40 per cent of their production cost on diesel. Such outrageous cost is proof that the inefficiency of the energy sector, despite the power sector privatisation about three years ago, is a major setback to private investment, and by extension, a hindrance to the on-going economic diversification.

    Dr. Jacobs did not mince words when he lamented recently  that the emergence of the new core investors in the electricity market, the Electricity Distribution Companies (DisCos) nationwide did not seem to provide the anticipated reprieve to manufacturers.

    “We are still contending with inadequate and poor supply; high tariff, including fixed charges; arbitrary and startling increase in tariff; unwarranted disconnections, among others,” he lamented at a recent forum organised by MAN in Lagos.

    Jacobs said in spite of the poor energy situation in the country, the Nigeria Electricity Regulatory Commission (NERC) has maintained increased electricity charges not considering its implication on the economy, especially the productive sector, which spends so much on alternative energy sources for production.

    The increase in the average cost of production caused by lack of electricity lowers the competitiveness of locally produced goods against imported close substitutes. It has also forced a decline in operators’ productivity.

    The Chairman, Economic Policy Committee (EPC) of MAN,  Reginald Ike Odiah, an engineer, put it in perspective when he said because of the rising cost of production, Nigeria’s real sector contribution to Gross Domestic Product (GDP) currently stands at a paltry 9.5 per cent.

    He said in contrast, those of United States  (US) and China stand at 35.6 per cent and 49.5 per cent, respectively. According to the industrialist, manufacturing cost in Nigeria is twice that of Ghana, four times that of South Africa and Europe, and nine times that of China and Malaysia.

    The nation’s faulty monetary framework is also frustrating the hope of levering a vibrant real sector to drive economic diversi-fication.

    The belief, for instance, is that with inflation rate hovering around 20 per cent, currently, and cost of funds as high as 20 per cent, while the exchange rate remains unstable, real sector operators may not gather enough steam to drive diversification.

  • ‘We’re redefining hospitality business’

    ‘We’re redefining hospitality business’

    The tourism/hospitality sector is a potential goldmine and can contribute immensely to the present administration’s on-going economic diversification programme. But the Federal Government will have to tap into it and build first class hospitality businesses close to tourist sites and also address the challenges facing operators, the Managing Director/Chief Executive Officer of i-MAX Guest House & Suits, Prince Madugba Raphael Chiadikobi, has said.

    He spoke to reporters in Lagos during the week at the opening of i-MAX Guest House & Suits, a 33-room five star hotel located in the serene, highbrow Apapa GRA area of Lagos.

    Chiadikobi, who is an industrialist and ex-banker, said the result of a feasibility study by a firm commissioned by his company showed that tourism/hospitality business in Lagos alone can rake in over $3 billion annually, if government can fix the energy sector and address the security challenge in the country.

    He said, for instance, that unlike other sectors, the hospitality industry is the most adversely affected by the crisis in the energy sector. “It (energy crisis) affects us more than any other sector. In the banking sector, their generators will be on from probably 7 o’clock till 10 o’clock and they power down.

    “The Automated Teller Machines (ATMs) operate with solar. But the hospitality business is 24/7. You don’t power down. Even if it is one guest you have, he expects you to put on the light for him and he is right, because you have already told him that you have 24-hour electricity supply,” he stated.

    Chiadikobi also pointed out that insecurity posed a major challenge for operators. While noting that President Muhammadu Buhari’s administration is making progress in the area of security. He said: “There is no business that can thrive when there is crisis. The moment you are able to completely sort out the issue of security, more people will have the confidence to invest.”

    He said despite the challenges, the new hotel, which is a division of International Maximum Resources & Chemical Industries Limited, has come to redefine hospitality business through quality, cost-effective service delivery.

    Conducting newsmen round the expansive facility, he said the hotel is categorised into Royal Apartments, Executive Rooms, Standard Rooms and Presidential Suites, all tastefully furnished and tailored the meet the needs of different categories of clients.

    “Our rooms are very fantastic, expansive and affordable; we did not economise space. Our neighbours here our standard room is their big room; they charge N15, 000 per night while we charge an introductory price of N7, 000 for the same room size. The one they take between N15, 000 and N20, 000 we take N10, 000,” he said.

    The hotelier added that apart from nine metres-deep swimming pool to add to customers’ comfort, the hotel also offers special local delicacies on weekends. He said these have ensured a steady stream of customers since February 14 this year when the hotel started a test run of its facilities.

    He said the hotel, with its unique propositions, is poised to drive hospitality busniess especially in Lagos where the opportunities are huge.

    The hotelier said, for instance, that as big as Apapa is, the only five star hotel there is Rockview. “As I talk with you, after Rockview we are next to them. This is not our own assessment, but of people who who have been dealing with them that came here within two months of our test run,” he said.

    Chiadikobi added that because of the positive response the hotel has been getting, it plans to build an additional hotel in Lagos in the next five years. “The business is here,” he declared.

  • UK, PwC to boost trade with Nigeria post-Brexit

    To boost trade between the United Kingdom (UK) and Nigeria, the UK Foreign and Commonwealth Office and Pricewaterhouse Coopers (PwC) have launched a report titled: “Seizing the Opportunity: An Economic Assessment of Key Sectors of Opportunity for UK Business in Nigeria”.

    The launch, which was held along with a roundtable discussion at the PwC Nigeria’s office in Lagos, recently, provided opportunity for UK and Nigerian business leaders and the UK Trade and Investment team to interact.

    The report, produced by PwC on the request of the Foreign and Commonwealth Office, highlighted the opportunities that exist in Nigeria for UK businesses and provided guidance for trade and investment in Nigeria.

    In the context of BREXIT – the UK’s recent vote to leave European Union (EU) – the UK Trade Envoy to Nigeria, John Howell, described the report as useful in the UK’s bid to strengthen trade relations with Nigeria and other countries.

    While speaking with journalists at the event, Howell said BREXIT will not reduce the UK’s trade relations with Nigeria, but would rather increase its importance.

    He said: “I don’t think BREXIT will change the trade relationship with Nigeria. I think you’ve got to remember that my appointment as the Prime Minister’s trade envoy pre-dates BREXIT and it shows how important the relation between Nigeria and Britain was even then. So, all BREXIT has done is that it has increased the importance of that relationship. Britain is open for business. It may have left the EU, but it hasn’t left Europe.”

    Howell also said the report was very useful in that it highlighted so much about how trade is done between Nigeria and Britain and it also highlighted the opportunities that are there for the future. “I shall certainly be using it when I get back home to encourage companies to come out and-take advantage of the opportunities,” Howell said.

    The UK Trade Envoy added that he was determined to ensure that the UK becomes Nigeria’s number one trade partner by talking to both British companies and companies in Nigeria about how they can do more business together and making them aware of the opportunities highlighted in the report.

    He also noted that the floating of the naira has made it a lot easier to do business with Nigeria.

    The PwC’s Country Senior Partner, Uyi Akpata, who presented the report, said despite the current state of Nigeria’s economy, its scale, the country’s resource wealth and its strategic geographical location make it favourable for UK exporters and investors.

    Akpata said: “UK businesses are well placed to succeed in Nigeria because of its familiar legal system, strong ties through the Diaspora community, same lingua franca and the perception that UK brands offer high quality.

    “Unfortunately, the UK’s importance in Nigeria has been sliding. Since 2000, the UK has fallen from first to become only the fifth largest non-oil goods exporter to Nigeria behind China, US, India and Germany in 2014. Similarly, the UK’s share of the Foreign Direct Investment (FDI) stock in Nigeria has decreased from close to seven per cent to less than two per cent between 2005 and 2014.”

    He added that the UK’s non-oil export and FDI in Nigeria could increase significantly depending on if the Nigerian Government will progress on reforms and enactment of policies on trade openness and also if the UK government will facilitate better cooperation between the two countries.

    The report identified six goods and services exports that will offer UK businesses the greatest potential for growth. These include, machinery and transport equipment; manufactured goods; chemical and related products; telecommunication and information services; transportation and travel; and intellectual property.

    It also identified three sectors that will provide the most promising FDI opportunities for UK businesses. They are technology, media and telecommunication; retail and consumer products; and business and financial services.

  • Global labour union seeks special recognition for Dangote

    Global labour union seeks special recognition for Dangote

    For his investments, which have created thousands of jobs across Africa, the African Industrial Global Union has hailed the President of Dangote Group, Alhaji Aliko Dangote.

    The body, at a meeting in Lagos, called for a special recognition for the African entrepreneur, describing him as a success story from Africa who African countries must be proud of.

    At a network meeting on unionisation in Dangote Group, organised by the Industrial Global Union, Africa Region, in Lagos, the union leaders said Dangote has offered a relief to Africa from the negative narratives the western countries latched on to discredit the continent and her people.

    They stated that as Dangote is so patriotic as to dot African soil with billions of dollars investments, creating jobs and reducing poverty, he needs to be given special recognition to motivate others to toe similar line.

    Relishing the prospect of an African country hosting the largest refinery and petrochemicals project, the union leaders said they planned to bring the business mogul to address them at their next African meeting.

    The Regional Secretary, sub-Sahara Africa, Fabian Nkomo, said the body cherished Dangote’s business acumen and would like to work closely with him to ensure that job quality is maintained.

    He said no African has invested so much in Africa, so Dangote should be encouraged. “He has helped governments across African states to create vital jobs and reduce poverty among our people. The union is proud of him,” Nkomo stated.

    The Africa Regional Chairman of Industrial Global Union, Issa Aremu, who is also the General Secretary of Textile Workers Union, praised Dangote for leading industrialisation in the continent.

    Aremu acknowledged Dangote’s efforts at re-industrialisation of the continent, stimulating its growth and creating jobs for its huge population.

    The labour leader lauded Dangote’s commitment to sustainable industrial development, urging governments to provide favourable environment for investments and improve infrastructural development.

    He added that it was time Dangote Group entered into mutually-rewarding engagement with relevant unions even as he called on trade unions to support businesses through improved productivity.

    Aremu alluded to the $12b refinery, petrochemicals and fertilizer projects, which, he said, will be a revolution in the Nigerian industrial space when completed.

    As partners in progress, Aremu pledged  to ensure business-friendly unionisation of Dangote workers.

    He also cautioned the unions involved to be proactive and strategic in handling the exercise, saying, “We need to show that we are partners to improve on the businesses of Dangote. We are talking of unionization because there is an investment in which workers are engaged. If there are no businesses, we can’t be talking of unionism.”

    The Industrial Global Union, with headquarters in Geneva, Switzerland, represents 50 million workers in 140 countries in the cement, mining, energy and manufacturing sectors.

  • Manufacturing: Lafarge, Access Bank partner to bridge gender gap

    Access Bank’s ‘W Initiative’, in collaboration with Lafarge Africa Plc, during the week organised a workshop with some of Nigeria’s leading women professionals in manufacturing to discuss gender disparity in the manufacturing sector.

    The workshop, which was attended by a large number of women executives and senior managers in the manufacturing sector, according to its organisers, demonstrated the conviction that women in manufacturing is good for business.

    Among others, the workshop examined the reasons for the unattractiveness of the sector to women, creating innovative solutions specifically targeted at professional women in manufacturing, and increasing the number of women who work in the manufacturing industry.

    Setting the tone for discussions, Access Bank’s Executive Director Elias Igbin-Akenzua said “approximately 600,000 manufacturing jobs are unfilled because companies can’t find qualified workers to fill them.

    “Women are critical to filling this gap and we must empower them to do so. We must also reduce the barriers for women in manufacturing in accessing funds from financial institutions for those who may want to transit from employees to manufacturing business owners”

    In her address to the gathering, Managing Director, Geocycle, Lafarge Africa Plc, Mrs. Adepeju Adebajo, remarked that women represent manufacturing’s largest pool of untapped talent and the dearth of women in manufacturing has been made more prominent recently, due to the potential skills shortage facing the industry.

    Mrs. Adebajo identified Nigeria’s formal education system as the most powerful agency of change from which several intelligent and confident women who now challenge many aspects of patriarchy in all leading occupations have emerged.

    While urging for support, coaching and encouragement for more women to be successfully recruited and retained in manufacturing, she stated that “women have become leading industry players in different sectors, which were for long the preserve of men – including manufacturing.

    “The industry needs to send out the right message that women can, and do succeed in manufacturing careers,” Adebajo said.

    Victoria Ibhawa of Deloitte provided valuable research and data, while other notable speakers at the workshop touched on the existing dearth of women professionals in the sector, the challenges they face and propositions on the way forward.

    This workshop is expected to culminate in the launching of a ‘think tank’ group providing advice and ideas on attracting, retaining and advancing women in the manufacturing workforce.

  • ‘How firms can take advantage of economic downturn’

    Price Waterhouse Coopers (pwC) Nigeria has listed steps businesses can take to minimise the effects of economic downturn and position their organisations to emerge stronger.

    The professional services firm enumerated these at a breakfast meeting held in Lagos for business leaders and executives. Its theme was “Preserving Value in Challenging Times.”

    According to PwC, the Nigerian economy is facing several challenges largely due to declining global oil prices, which resulted in a scaling back of public spending, uncertainties around the exchange rate, double digit inflation and a reduction in Gross Domestic Product (GDP) growth.

    The International Monetary Fund (IMF) has also slashed its growth forecast for Nigeria, stressing that a combination of plunging oil revenues and weakened investor confidence will push the economy into recession. According to the IMF, Africa’s largest economy is expected to contract by 1.8 per cent this year. This situation has negatively impacted the financial performance of most businesses as many struggle to remain afloat.

    However, PwC believes that there is an opportunity for companies to turn their challenges into opportunities. They noted that the most successful businesses during challenging times are those that react the quickest, take tough decisions early and lead rather than follow.

    Kwabena Asante-Poku, a partner in PwC Nigeria’s Advisory Deals practice, said: “Effective managers must consider the effects of the downturn and what it means for their business and its survival. Then, they should address the key questions – what do we need to do differently, what do we need to do better? Often the secret of survival will be getting the simple things right rather than embarking on wholesale radical change in every aspect of their operation.”

    The firm advised that businesses must first understand the true impact of the downturn on their operations and subject their assessment to stress testing and scenario planning. This knowledge is critical to coming up with a new strategy.

    Asante-Poku further said they should identify unprofitable products and customers and determine effective future working capital for the business. Also, businesses, he said, need to implement cost reduction strategies especially by targeting discretionary expenditure, separating the essential from the desirable while limiting outgoings.

    Seyi Akinwale, an Associate Director in PwC Nigeria’s Advisory Deals practice, said: “Strategic interventions that can help companies preserve value include Strategic Alternatives and Business Planning, Operational Improvements, Review of Contractual Obligations, Liquidity and Cash Management, Refinancing and Recapitalisation, Turnaround Management, Carve-Outs and Exit Management.”

    In addition, PwC advocates that corporates and their bankers explore the use of informal restructuring workouts to preserve shareholder value and reduce the required specific provisions for non-performing loans. These informal restructuring arrangements between creditors and debtors will prevent greater loss and through this, the banks can work with the distressed debtors to resolve financial difficulties that would otherwise likely lead to liquidation.

    Akinwale also said: “Informal arrangements include any out of court restructuring arrangements and these are critical given the absence of adequate insolvency laws with provisions to govern business restructuring in Nigeria. These informal workouts serve as a timely alternative to recovering funds loaned to borrowers and ensuring the survival of businesses.”

    He also stated that avoiding bankruptcy of potentially viable businesses helps to prevent job losses and can be a driver of economic recovery.  “Formal insolvency proceedings in court often delay the turnaround process, can be expensive or can end up being more complex due to the adversarial nature of the judicial process. It is therefore, in the interest of both the borrower and its bankers to utilise and adopt informal out-of-court restructuring solutions,” he said.

    Other strategies, which the firm outlined, include maintaining an experienced and well-resourced finance team, proper and careful tax planning and ensuring effective performance management and forecasting. It also said companies should ensure appropriate and sustainable financing arrangements and communicate constantly with stakeholders.

    Asante-Poku concluded saying that “in a downturn, numerous difficulties present themselves, all important and urgent. A natural response may be to batten down the hatches and focus solely on the immediate problems of the day.

    “Prudent management is of course necessary but it is also important to recognize the opportunities presented, to challenge old ways of doing things, to take advantage of weaker competitors and plan for the changed market place that will emerge. Effective management and taking the right decisions will help business emerge through the bad times re-energised and fit for the future.”

  • USAID moves to strengthen agric sector

    USAID moves to strengthen agric sector

    The United States (U.S) Agency for International Development (USAID) has launched two new partnerships with Babban Gona and Hello Tractor, highlighting the U.S. government’s agricultural and private sector strategy and promoting the development of agriculture.

    Under this $2 million two-year partnership, it is anticipated that access to smart tractors will increase. There will also be improved seeds and and profitable markets for over 45,000 smallholder farmers across seven states and the Federal Capital Territory (FCT).

    During a ceremony at the U.S. Embassy, Deputy Chief of Mission Maria E. Brewer described the partnership as a co-investment in public goods.  “Innovation and entrepreneurship hold the key to unlocking Nigeria’s agriculture potential, and the U.S. government will continue to provide support in this direction,” said Mrs. Brewer.

    Under the Feed the Future initiative, USAID partners with the private sector to support smallholder farmers in Nigeria. Through these partnerships, USAID addresses development and business challenges by increasing access to improved agricultural inputs and mechanisation, better quality technical advisory services, and expanding market opportunities for smallholder farmers.

    These partnerships capitalise on the untapped potential of youth in agriculture and help build the capacity of young entrepreneurs to help grow their businesses, create secure jobs, and boost economic growth in Nigeria.

    Babban Gona is a company that addresses the challenge of smallholder farmers by forming strong cooperatives called Trust Groups, which enable maize, rice, and soybean farmers to gain access to new markets and sell at premium prices.

    The company provides member-farmers with services designed to optimise crop yields, production costs, and prices of agricultural outputs.

    This business model helps to increase profitability of smallholder farmers and contributes to household food security and improved livelihoods.

    Through the deal with USAID, Babban Gona will create positive impact for 20,000 smallholder farmers. On the other hand, Hello Tractor, which recognises the need among smallholder farmers for consistent and sustainable mechanisation services, designed a versatile Smart Tractor with eight attachments to serve their needs throughout the farm production cycle.

    Each tractor is fitted with technologies, which enable Hello Tractor to pair farmers in need of services with a Smart Tractor owner nearby via text messaging. The technology allows small landowners access to affordable tractor services to increase their productivity, while Smart Tractor owners are given the opportunity to earn additional income with their machine.

    Through the partnership with USAID, 24,500 smallholder farmers will gain access to tractor services. The partnership expects to train 100 youth entrepreneurs on the business of owning and maintaining a fleet of Smart Tractors.  In addition, some 15 young technicians will benefit from trade skills to repair Smart Tractors.