The Nation Newspaper

Category: Industry

  • ‘Slowdown may affect UK-Africa trade’

    Experts have cautioned that an economic slowdown in the United Kingdom( UK) could  reduce the volume of imports from African countries as consumer demand decreases.

    Some have also warned that, given the UK’s role as an entry point for African products into the EU single market, various businesses might need to adjust their export strategy should different rules, standards and relevant regulations emerge as a result of the exit model eventually selected by London.

    However, the UK is not Africa’s biggest trade partner considering that it only represents about five percent of total African exports, according to Harvard University postdoctoral fellow Grieve Chelwa. Some countries and sectors might nonetheless be more impacted than others. Some analysts have said that African economies which could be the most affected are those who depend heavily on the export of some specific commodities.

    The global instability stemming from the referendum vote is another factor that experts fear could negatively impact UK-Africa trade relations.

    “Periods of instability are usually periods that are not conducive to expansion in trade,” Homi Kharas, Deputy Director for global economy and development at The Brookings Institution told media sources.

    Others note that the same uncertainty might also negatively impact investment flows from the UK to the continent.

    “From an African point of view, the immediate aftermath of Brexit has exacerbated problematic trends in international markets which have already hit the continent’s growth prospects,” writes Were.

    However, some commentators tending towards seeing the glass as half-full suggesting that many African economies have already demonstrated the ability to adapt to global economic fluctuations, such as recent downturns in emerging economy trade partners.

  • Nigeria spends $11b on food imports, says Bol boss

    Nigeria spends $11b on food imports, says Bol boss

    Africa imports over $35.4 billion worth of food items yearly, with Nigeria accounting for $11 billion of the bill, the Acting Managing Director, Bank of Industry (BoI), Mr. Waheed Olagunju, has said.

    He said Bol was working to make farmers see farming as a business and not a subsistence activity. To this end, BoI has come out to teach farmers good agronomical practices and best practices in soil preparation, among other things.

    Olagunju, who spoke at a media parley in Lagos titled: “Sustaining Nigeria’s industrial sector growth through impactful partnership,’’said as a country with a huge population, Nigeria needs to feed her citizens and also export to other countries to grow her Gross Domestic Product (GDP).

    He said: “Huge population can be advantageous if it is productive, otherwise it becomes a liability. As a country with 774 Local Government Areas (LGAs), with each LGA blessed with at least a natural resource, we have no reason not to feed our population or create employment”.

    While encouraging investments in farming and food processing, the BoI chief said investors can never go wrong. According to him, Nigeria ranked fourth with 35 per cent on Return on Investment (RoI) globally.

    He noted that while a lot of countries are in competition for investment resources, Nigeria has all the resources in abundance.

    He said RoI should not be taken for granted, adding “We should try and de-risk our environment, improve on climate and continue to take measures by increasing our ranking in doing business.’’

    While calling for collaborative efforts from multi-lateral agencies, Olagunju stated that industrialisation is a multi-faceted process and no single agency can drive the industrialisation of any country. He said it is the only way the nation’s economy can be transformed in the shortest possible time.

    Olagunju added that Nigeria’s population was growing, hence there was the need to take a quick decision to remedy the challenges that come with population growth. “All hands must be on deck to achieve our desired economic and developmental goals,” he said.

    On the areas of support to agriculture, he said the bank has supported cassava growers and those who have gone further to add value to cassava to produce ethanol, starch, glucose, syrup and starch.

    “We are partnering the Federal Government on the disbursement of N220 billion to Small and Medium Enterprises (SMEs) and State Governments to draw up to N2 billion to support farmers in their state at two per cent,” he said.

    In addition, the bank, Olagunju said, made available N140 billion intervention fund as micro-credit programme to over 1.6 million Micro, Small and Medium Enterprises (MSMEs). He said the nation is at a point that it should begin to add value to products from the rudimentary level for local consumption and for exports to generate foreign exchange for the country.

    “If we start adding value to our primary products, we will not have enough people to work. We will stimulate primary products, sell for the local market and export as each of the 774 local governments has at least one local product to process.

    “Unfortunately we are the only oil producing country that is exporting crude oil while others add value before exporting thus earning more. Our advocacy is for a paradigm shift,” Olagunju stated.

  • SABMiller sales hurt by economic volatility in Africa

    Brewer SABMiller, to be bought by Anheuser-Busch InBev, has reported lower quarterly revenue, hurt by tough conditions in some African markets.

    The maker of beers, such as Castle Lager, Peroni and Grolsch, said the group net revenue fell four percent in its first quarter, ended June 30, with volume flat.

    Excluding the impact of acquisitions, disposals and currency fluctuations, revenue rose two percent as gains in Europe, South Africa and Latin America offset more challenging conditions in other African markets, where volume was hurt by economic volatility and tough conditions.

    In its trading statement on Thursday, which comes ahead of its annual general meeting, (AGM) SABMiller did not mention its pending $107 billion takeover by Anheuser-Busch InBev, which received approval by the United States.

    The takeover of the London-listed brewer has come under scrutiny in recent weeks as a drop in the British currency has reduced the relative attractiveness of the all-cash offer aimed at most SAB shareholders.

    Two activist hedge funds, TCI and Elliott Advisors, have taken small stakes in the brewer, raising the possibility that shareholders may push to try to get improved terms.

  • Manufacturing in a depressed economy

    Manufacturing in a depressed economy

    A robust manufacturing sector is fundamental to the diversification of the economy. But the sector, which is credited with the greatest capacity to create jobs, generate wealth and engender sustainable growth and revenue expansion, is at the crossroads. The fiscal and monetary policies and lack of infrastructure are taking a huge toll on manufacturing, with the fear that more companies may close shop, if steps are not taken to stem the tide. Assistant Editor CHIKODI OKEREOCHA reports.

    Despite their resolve and will to survive, manufacturers face bleak prospects. The challenging fiscal and monetary policy environment and lack of supportive infrastructure have continued to put tremendous pressure on businesses, resulting in declining productivity and competitiveness.

    For instance, because of lack of infrastructure, particularly power, manufacturers spend an estimated N500 billion yearly to run and maintain their power plants, according to the Chairman, Economic Policy Committee (EPC) of the Manufacturers Association of Nigeria (MAN), Reginald Ike Odiah, an engineer.

    Odiah, who is Managing Director/Chief Executive Officer, Bennett Industries Limited, said the huge cost of providing alternative electricity is responsible for high production cost. He said it is also responsible for the low contribution by the real sector, especially manufacturing to the Gross Domestic Product (GDP).

    For instance, while Nigeria’s real sector contribution to GDP stands at 9.5 per cent, those of the United States of America (US) and China stand at 35.6 per cent and 49.5 per cent. “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 industrialist said.

    Odiah, who spoke at a forum organised by MAN in Lagos, also said the high cost of production is  the reason local and foreign investors lost interest in investing in the country, closure of factories and migration of the few surviving ones to greener pastures. He said this has resulted in job losses, with attendant insecurity and rising crimes.

    Also, because of rising energy cost, most manufacturing firms in Nigeria are contending with falling profit margin, which remains a major threat to business sustainability and global competitiveness.

    The President of MAN, Dr. Frank Jacobs, lamented that manufacturers are paying for electricity not consumed.

    “In spite of the poor energy situation in the country, NERC has maintained increased electricity charges not considering its implication on the economy, especially the productive sector,” Jacobs said, adding that in spite of the high tariff from the Nigeria Electricity Regulatory Commission (NERC), manufacturers spend much on alternative energy sources for production.

    The implication of this development, he said, was increase in the average cost of production in the sector, which lowers the competitiveness of locally produced goods against imported close substitutes. He urged the new government to streamline electricity tariff to reflect the actual consumption by the industries instead of the current use of estimated bills.

    While the nation’s infrastructure deficiency, particularly electricity supply, continues to hurt manufacturers, sometimes forcing some of them to close shop, the prevailing macro-economic indicators also point to a sector irretrievably headed for collapse if nothing is done to stem the tide.

    For instance, inflation rate is hovering around 20 per cent. Cost of funds is high, as much as 20 per cent, while the exchange rate remains unstable.Unemployment is worsening and economic growth rate is declining. And the crippling effects of these negative indicators have pushed not a few manufacturers into panic mode.

    “Cost of funding is a big issue. For most of them or generally in the economy, cost of funding is well over 20 per cent. And for the real sector operators, it is difficult to sustain a business at that level with that kind of corporate funding, especially when you realise again that you are facing competition from products that are coming from Asia that are very cheap,” says Director-General of Lagos Chambers of Commerce and Industry (LCCI), Mr. Muda Yusuf.

    He blamed this for the high mortality rate of manufacturing firms especially at the medium and the small scale level. According to him, it is also responsible for why return on manufacturers’ investment is slow, while the turn-around is fewer.

    An economist and industrialist Mr. Henry Boyo painted a disturbing picture of the manufacturing sector caused by the crippling effects of the nation’s fiscal and monetary policy framework. He warned: “Manufacturers are at the crossroads, where we may lose some of our members. We may lose 50 per cent of our members, if nothing is done fast to address the current monetary policy framework.”

    While pointing out, for instance, that low rate of inflation, low cost of funds, reasonable exchange rate, and adequate power supply are four critical variables necessary for manufacturers’ survival, Boyo was emphasised that “inflation, which is  hovering around 20 per cent, high cost of power and an exchange rate that is unreasonably unstable is hurting manufacturers”.

    He was guest speaker at the “Business Luncheon for Managing Directors/CEOs” organised by the Ikeja branch of MAN in Lagos, last week. This year’s edition theme: “Manufacturing in a depressed economy. The way forward,” x-rayed the challenges facing manufacturers, particularly under the Foreign Exchange (forex) crisis and proffer solutions.

    At the event, Boyo predicted that without a robust monetary policy to address the challenge of excess liquidity in the system, which is the main driver of the afore-mentioned four critical variables, the naira may fall to N500 to a dollar before the end of the year.

    He explained that the unstable exchange rate, hike in interest rates, and inflationary pressure are a direct outcome of excess liquidity in the system and that the best way to address the problem is to liberalise the dollar.

    Boyo said companies and government agencies whose earnings are in dollar should be issued with dollar certificates with which to approach banks.

    He also wants their dollar earnings exchanged by banks at prevailing rate or at market determined rate, instead of the CBN hijacking the dollar earnings and printing naira equivalent, an approach he said constantly results in liquidity buildup.

  • UN group: green industrialisation vital for Africa’s growth

    The United Nations Economic Commission for Africa (UNECA) says green industrialisation is imperative for Africa’s economic development.

    UNECA Director for the Southern Africa sub-region, Said Adejumobi, stated this in Lusaka, following the release of the organisation’s 2016 Economic Report on Africa titled: “Greening Africa’s industrialisation.

    According to him, Africa needs to embrace green industrialisation if it is to experience sustained economic development.

    “Although we are the least contributor to global carbon emission, we have been one of the worst, if not the worst hit, in terms of its consequences.

    “The El-nino phenomenon which has caused drought and virtual food shortages in southern Africa compels us to think and act smartly,’’ he said.

    Adejumobi said this has challenged the continent to think proactively or being ahead of the game in addressing the challenges, the problem of global warming, climate and environmental degradation.

    He said green industrialisation would become good economics in the long-run because it would enhance efficiency and cheaper productivity.

    The director challenged Africa to embrace green industrialisation because it would position the continent on the cutting edge of science and technological innovation that may change the fortune and position of the continent in the global economy.

    “If Africa seizes the initiative and invest early in green technology and education and provide good incentives for private firms to adopt green technology, then Africa could have succeeded in promoting economic transformation and leap-flogging its development.

    He said the report has highlighted that Africa was poised for growth through green industrialisation, with case studies of projects in several countries.

    The countries include Kenya and Malawi, showing how countries could develop through green industrialisation.

    Adejumobi, however, identified lack of infrastructure conducive for greening Africa’s industrialisation process.

    He said it also acknowledges the willingness of African governments to transition from coal to greener pathways of development.

  • ‘Insurance sector’s under-performance slowing GDP’

    The under-performance of the insurance sector is denying the country a yearly 1.5 per cent increment in Gross Domestic Product (GDP), the Minister of Finance, Mrs. Kemi Adeosun, has said.

    At this year’s National Insurance Conference (NIC) in Abuja, the minister said the persistent under-performance of the sector was revealed at the 2014 Insurance Summit.

    The conference theme was “Expanding National Resources and Infrastructure in Challenging Times”.

    Arguing that the industry was under-performing, compared to its pension and banking counterparts, Adeosun identified low awareness as one of the factors responsible for the sector’s under-performance, pointing out that of the 57 insurance companies in the country, less than 23 advertised their products.

    “The companies put in less than 20 adverts on television, less than 10 adverts on radio and less than 10 adverts on social media. Other factors include poor distribution channels and unethical practices among operators, she said.

    The Minister added that her ministry was working vigorously with the National Insurance Commission (NAICOM) to ensure that premium discounting is eliminated among practitioners. She also said there was need for recapitalisation of most insurance companies.

    “The first top three banks have over N3 billion capital base each, while the top three insurance companies’ capital base is between N20 and 25 million each,” she said.

    Adeosun said there was the need to immediately address the issues responsible for the under-performance of the insurance sector “because a 0. 33 per cent increase in insurance penetration can result to a growth of 0.5 per cent in GDP.” She pointed out that the increment was capable of creating over 70, 000 jobs yearly.

    The Commissioner for Insurance, Alhaji Mohammed Kari, praised the Insurance Industry Consultative Council for organising the conference to reposition the industry.

    Kari pledged NAICOM’s commitment to making the industry the next growth area for economic development.

  • Dangote jobs to stimulate Ghana’s economy

    Dangote jobs to stimulate Ghana’s economy

    Dangote Cement Ghana said it has procured 1, 000 brand-new-trucks to facilitate the distribution of cement products to all parts of Ghana. The trucks, which came in three different vessels, arrived at the shores of Tema Port, last week.

    The company’s Media Relations Manager, Mr. Etornam Komla, who made this known to Reuters, said the company has commenced the process of recruitment of drivers, truck driver assistants and loaders, adding that by the end of July, all the drivers will be on board.

    He said the recruitment was part of the company’s objective of contributing to Ghana’s economic growth through job creation and honoring tax obligations.

    “These are components of the company’s mission in Ghana, which is to stimulate its economy,” Komla said.

    He said the company has also invested over $100 million in the construction of a new plant in Takoradi in the Western region. The plant, which will be a state of the art modern cement grinding plant, will have the capacity to produce about 1.5 million tonnes of cement per annum.

    “This project when completed will further cement the presence of Dangote Cement business in Ghana and is a further proof of our commitment to the infrastructural development of the country and will also enable us to meet the growing demands across other countries in West Africa” he explained.

    Although cement manufacturing remains the flagship of Dangote group’s businesses, the President of the group Alhaji Aliko Dangote has also made foray into oil and gas, investing in a petrochemical, refinery and fertiliser plant in Nigeria.  The petrochemical complex where these plants are being built occupies a land mass in excess of 2,100 hectares. The projects will cost in excess of $12 billion. The oil refinery has a capacity of 650, 000 barrels per day and over 3,000,000 ammonia and urea plants.

    Dangote told Reuters that these businesses will be ready between 2018 and 2019.

    The company also plans to build a 550 Kilometre Gas Pipeline across Nigeria and into West Africa.

  • Nigeria, South Africa to sign pact on post bank, agric

    Nigeria‘s Consul-General in South Africa Ambassador Uche Ajulu-Okeke has said Nigeria and South Africa are planning to sign an agreement on a post bank and agriculture.

    She said the Federal Government was exploring an opportunities through a private consortium to link Post Bank of South Africa with NIPOST.

    “The Federal Government is exploring the opportunity through a private consortium to see how we can join Post Bank of South Africa and NIPOST of Nigeria. If the platform works, Nigerians in South Africa can go to post bank and pay money while their relations will get it in form of Western Union from the post office,” she said.

    Ajulu-Okeke also said an agreement being planned would enable the country to harness the potentials inherent in its good arable land to boost agricultural production.

    On the prospects for Nigerian companies, she said a South African firm is already interested in the huge rubber plantations in Imo, Abia and Edo states. She promised to harness every opportunity for the good of the country.

    “Abia, Imo and Edo states have huge rubber plantations and Plastic SA is going to Malaysia to import raw rubber. I made contact with them and they have gone to Imo and are preparing to visit Abia and Edo states with the possibility of importing rubber from Nigeria,” she added.

    Ajulu-Okeke further said the agreement would also open more opportunities for Nigeria to leverage on opportunities in South Africa.

    She urged Nigerians to explore the opportunities in South Africa by venturing into export business as some firms needed raw materials.

  • 35,000 Kano farmers to benefit from CBN’s borrower scheme

    35,000 Kano farmers to benefit from CBN’s borrower scheme

    The Kano State Chairman of Rice Farmers Association of Nigeria (RIFAN), Alhaji Abubakar Aliyu, said about 35,000 registered rice farmers would benefit from the Central Bank of Nigeria (CBN) anchor borrower programme.

    The Federal Government introduced the programme to boost rice and wheat production.

    The CBN has earmarked N40 billion from the N220 billion Micro, Small and Medium Enterprises Development Fund for farmers in 12 states participating in the programme at a single-digit interest rate of nine per cent.

    Aliyu said 35,000 fell short of the100,000 farmers initially targeted for the programme.

    “One of the prerequisites for obtaining the loan is that one must register with the association. Secondly, one must open an account with one of the commercial banks,” he explained.

    He said most of the farmers, especially local ones, have no account with any bank, and that this was one of the challenges preventing many farmers from  registering.

    Aliyu said of the 35,000 farmers that had scaled the CBN’s hurdles, 30 per cent are women, 40 per cent youths, while the remaining 30 per cent are elderly persons.

    He said under the programme, each farmer is expected to receive seeds, fertiliser, chemicals and water pump, which represent a total package of N220, 855.

    He explained that after paying for the inputs, the balance of the money would be given to each farmer to enable him or her pay for the labour.

    Aliyu added that each farmer was expected to cultivate one hectare and repay the loan after harvesting the commodity.

    The chairman also said farmers were expected to receive training from extension workers on modern techniques of rice production.

    He said a technical committee on the programme had been constituted with a view to ensuring effective implementation of the programme in the state.

    The committee, which comprised farmers, agro-chemical dealers, state government and CBN officials, had already swung into action to ensure the success of the programme.

    Aliyu said the association had purchased six computer sets and scanners to speed up the registration process.

  • Foreign investors partner Agric College on cassava production

    The Provost, Federal College of Agriculture, Akure, Dr Adeola Odedina, has said the college is partnering with foreign investors to create millions of value chain jobs in cassava production.

    Odedina spoke in Akure on Wednesday during the Cassava Adding Value for Africa Phase ll (CAVA ll) Project’s International Farmers’ Field Day.

    He said the college would support the Federal Government‘s investment in agriculture, aimed at employment generation, food security, poverty alleviation and provision of raw materials for industries.

    “We have four African countries with an investor partnering with us on Cassava Adding Value Chain for Africa phase ll (CAVA). These are Malawi, Ghana, Uganda and Tanzania and Bill Melinda Gates Foundation.

    The programme is to showcase the positive effect of best and recommended practice in cassava production enterprise”.

    Odedina said cassava national average yield is about eight to 10 tonnes per hectare with the possibility of farmers obtaining between 20 to 25 tonnes per hectare if trained. He however, said it is far below the potential of the crop if well managed.

    He projected that farmers and investors would witness unprecedented yield in cassava to as much as  60 tonnes per hectare. On how this will be achieved he said the strategy would be achieved through crop management options that are within the reach of the farmers.

    He expressed the hope that the steps being taken would lead to increase in production at low cost as well as encourage youths to embrace agriculture.

    According to him, the college is grateful to cassava Adding Value for Africa phase ll (CAVA) Project and its donors, Bill & Melinda Gates Foundation, for tapping into college experience in cassava sector in uplifting its project.

    He noted that the college had joined a high yielding and disease-resistant varieties with modern technology of cassava processing, which are meant for farmers and processor in Ondo State and surrounding states.

    “Over 40 per cent of 8,500 vocational training graduates in recent years have benefited from the college experience in cassava value chain opportunities, “ he noted.

    A team of delegates from Uganda led by Mr Tony Ijala, said  the new technology idea gathered in Nigeria would be fully implemented in his country.

    Noting  that the technology would improve cassava production in the east African nation.

    Ijala, who stated that Uganda has a lot of challenges which include tackling cassava diseases, added that Nigeria has always been of assistance to Uganda.

    Also, Mrs Chikumbeni Grace, who led the team from Malawi, lauded the programme and promised to take the new idea to her country.

    She expressed the hope that the new idea would assist Malawian farmers to increase their output in cassava production.