Category: Issues

Transforming the nation’s food system to make it more sustainable, resilient and productive has never been this compelling. With Nigeria’s rapidly growing population, experts say that enhancing agricultural productivity by leveraging innovation and partnership is the way to go to achieve food security, create more jobs and guarantee higher income for various operators across the food value chain. DANIEL ESSIET reports.

 

It’s a clear danger. A severe food crisis stares Nigeria in the face, requiring urgent policy responses by the authorities, including various players across the nation’s agriculture sector, to avert the looming danger.

With Nigeria’s rapidly growing population, amid rising cases of herders/farmers clashes that have disrupted food production across the country, as well as climate change, the on-going campaign for a more resilient ecosystem to securitise food supply has never been this compelling.

For those pushing the campaign, the model of agriculture, which largely centres on labour-intensive, primary production and consumption, must urgently give way to full scale mechanisation in order to achieve food security.

To them, the time has come for small-scale agriculture, which accounts for 70 per cent of agricultural production, to give way to large-scale, commercial agriculture that will not only guarantee increased revenue to farmers, but also create jobs and ultimately, achieve food security.

Incidentally, Nigeria enjoys a wealth of different climates and soils, which is reflected in the diversity of its agricultural production. And admittedly, the agriculture sector has continued to play a major role in the economy, generating income, employment and foreign exchange, for instance. However, the sector represents only three per cent of the country’s Gross Domestic Product (GDP), with experts noting that mechanisation a sure way to go to enhance its productivity.

Interestingly, the authorities in the agriculture sector seem to be aware of this thinking and appear to have, accordingly, risen to the challenge. The Federal Government’s decision to extend the National Programme on Food Security (NPFS) for another five years after it elapsed last year, for instance, attests to its realisation of the need to boost food production and halt the impending food crisis.

The NPFS, The Nation learnt, runs at the national level, by the Federal Ministry of Agriculture and Rural Development, and at state level, by the state Ministry of Agriculture.  It is an expanded phase of the erstwhile Special Programme for Food Security (SPFS) implemented from 2002 to 2006 in the states.

The NPFS was selected as a priority project as a result of the preparation of the National Medium-Term Investment Programme (NMTIP) in support of the New Partnership for Africa Development’s (NEPAD’s) Comprehensive Africa Agriculture Development Programme (CAADP) designed to improve rural infrastructure and accessibility to market, improve household income and food security among others.

NPFS began with the Federal Ministry of Agriculture and Rural Development at the apex management committee, with Agricultural Development Programme (ADP) authorities acting as the supervisory body at the state level and implementation agencies for the programmes. The programme was to run for five years (2008 to 2013). Another phase ended in 2020, but it has now been extended by another five years.

NPFS’s Head of Agric Processing and Enhancement Mr. Hassan Bawa explained that the government’s decision to further expand the NPFS was in recognition of the role of agriculture in the national economy, as well as the need to improve smallholder productivity. He also said it was in recognition of the importance of sustainable agriculture for food security.

According to him, NPFS comprised a broad variety of interventions that focus on areas most relevant for improving food security at both national and household levels. These include improving farmers’ access to input such as fertiliser and seeds for rain-fed and irrigated agriculture; making it possible for farmers to have more than one cropping cycle, with the attendant doubling of net returns.

Bawa added that there had been instruments in facilitating groups of farmers to recognise and take up opportunities for improving their farming systems and livelihoods.

According to him, Lagos State Programme for Food Security (LPFS) is the state branch of NPFS to improve national and household food security, reduce rural poverty sustainably and increase agricultural output and the income of rural households and beneficiary communities.

The NPFS Head acknowledged the commitment of the Lagos State Government towards the sustenance of the initiative, attributing it to purposeful leadership on the part of successive administrations in the state.

He said Lagos State, being one of the selected states for the pilot phase, recorded an impressive performance which qualified it for the expanded phase and later on the third phase.

Bawa noted that the state had qualified for another five years with support from the national headquarters. According to him, NPFS was being repacked to respond to the aspirations of the government to place agriculture as the engine of social and economic growth, adding that it was building consensus among partners on solutions to meet the challenges within the sector.

He reiterated that the NPFS agenda was an integral part of national efforts to promote the agriculture sector’s growth and economic transformation. He emphasised that considering the challenges faced by the agricultural sector, it was high time stakeholders re-engineered the sector by fully tapping the potential of agribusiness.

Agribusiness, Bawa said, could pave the way for a modern and resilient agriculture by fostering competition, innovation, research and development.  He pointed out that agribusiness would provide opportunities for inclusive economic growth and sustainable livelihoods as well as ensure food security.

According to him, rural development projects financed by NPFS have contributed to increase productivity, income and food security, adding that the programme has been innovative in bringing solutions around agro-processing. Such interventions, while boosting agricultural productivity, have also led to higher incomes and improved food security for beneficiaries of all projects.

For the Lagos State Commissioner for Agriculture, Ms. Bisola Olusanya, ensuring the supply of quality and safe food at affordable prices requires a mix of food policy, smart technology and entrepreneurship.

According to her, the government has been supporting the agriculture business with a variety of policies in an attempt to stabilise the output, and also seeking ways to make sure that the agribusiness is growing healthily and sustainably. She noted that because of helpful policies, the agriculture sector’s performance has been raising steady in recent years.

Olusanya further stated that Lagos State has risen to the challenge of ensuring food security by increasing farming output, ensuring the provision of key farm product, promoting the supply-side structural reforms and accelerating the utilisation of machinery and advanced technologies within the agriculture sector.

In addition, she added that there were a network of public institutions and various programmes and schemes to safeguard agricultural producers and boost production. For instance, the State Programme for Food Security (SPFS) has been supporting projects aimed at raising incomes and improving livelihoods, food security and living conditions of the people.

The Commissioner, who said capacity development and training for farmers have helped them set up and develop their own businesses, also reiterated that Lagos State was determined to promote mechanisation to achieve a modern, competitive, comprehensive and sustainable agriculture.

To address the lack of agricultural system technology application in farm practices, Olusanya said the Lagos State Government was promoting incentives for investment, research and adoption in agricultural system technology.

She reiterated that the government was working to address various aspects of the food supply chain, including manpower, technological applications, financial resources, investment and infrastructure.

According to Olusanya, the goal was to grow the agric sector to a greater level to strengthen food supply and self-sufficiency through increased domestic production, modern technology expansion, and reduce dependence on food imports.

She added that the SPFS has also provided support services such as extension, credit, nutrition education to farmers and consumers in the state, thereby improving their standards of living and livelihood.

She noted that innovations were needed all the way from the farm to fork.

So far, she said, farmers across all the three senatorial districts in Lagos had benefited from the state government’s initiative under SPFS with the donation of millions of naira to support farmers, as well as distribution of various farming implements to the beneficiaries.

The commissioner maintained: “We must always bear in mind that farming at any scale is a business and businesses need clear linkages along the value chain from production to processing, to marketing and ultimately to consumption.”

According to Olusanya, “Investing in these farmers, many of whom are women and in the markets around them is more important than ever. In order to feed a population expected to grow globally to nine billion people by 2050, the world will needs to be more efficient in how it meets this demand.”

The General Manager, Lagos State Agricultural Development Authority, Dr. Pereira-Sheteolu Olalekan, noted that it was important to ensure that food security became one of the cornerstones of the State’s response, adding that there was the need to continue to leverage innovation.

He said, for instance, that Lagos has been driving aquaculture training and empowering rice/fish, poultry on project sites, in addition to spreading the use of improved farm storage facilities to all interested farmers.  This, according to him, was to increase the availability of domestically produced fish through increased aquaculture output.

Olalekan informed that the Authority was saddled with generating and distributing improved farming technology, new innovations and practices to farmers in the State.

According to him, the idea of procuring and distributing various farm inputs such as knapsack sprayers, organic manure, cutlasses, hoes, safety gadgets, digital movable scales, compost plus and water pumps, among others, to farmer groups, would assist them in expanding their farms and food production in the State.

He said a total of 6,650 farmers had benefited from the programme, adding that the 2021 edition would impact 2,310 farmers.

 

The Central Bank of Nigeria’s recent ban on cryptocurrency trading and its directive to Deposit Money Banks and Other Financial Institutions to forbid access to dealers of their platforms and channels for payments and transactions was done to protect the nation’s economy, writes, Group Business Editor, SIMEON EBULU

Save for the COVID-19 pandemic, there’s hardly an issue in recent times that has generated so much interest and such instant and diverse reaction as the ban placed on cryptocurrencies transaction by the Central Bank of Nigeria (CBN).

It was four years ago in 2017 that the CBN foresaw the danger that cryptocurrency transactions portend for the nation’s economy and promptly slammed a ban on it, warning Money Deposit Banks (DMBs) and Other Financial Institutions to steer clear of opening their platforms and channels to traders and others dealing in cryptocurrencies. The CBN, then in 2017, on January 12 to be precise, sent a circular to banks and other financial institutions on virtual currency operations in Nigeria, saying the emergence of virtual currencies has attracted investments in payments infrastructure that provide new methods of transmitting value over the internet.

The circular, signed by Director, Financial Policy and Regulation Department, Kevin N. Amugo, described these virtual currency (VC) transactions as largely untraceable and anonymous, making them in his words, “susceptible to abuse by criminals, especially in money laundering and financing of terrorism.”

The circular indicated that virtual currencies are traded in exchange platforms that are unregulated all over the world. Consequent upon this loophole, Amugo warned that “consumers may lose their money without any legal redress in the event these exchanges collapse or lose business”.

Foreseeing a potential danger in the developing virtual currency payment products and services and their interactions with other new and existing payment products and services, he said there was an urgent  need for guidance, as he put it, “to protect the integrity of the Nigerian financial system”.

Specifically, Amugo warned that “there is need to address the money laundering/terrorism financing risks associated with VC exchanges and any other institutions that act as nodes where convertible virtual currency activities intersect with the regulated fiat currency financial system”.

Having laid the groundwork underlying its concern and the associated and potential risks with the emerging trend, the CBN urged banks and other financial institutions to adopt the underlying measures until it reaches a final decision on the matter. As it clearly stated in its narrative in the originating circular four years ago, the CBN advised the DMBs and other financial institutions to ensure that they “do not use, hold, trade and/or transact in anyway in virtual currencies, and as well ensure that existing customers that are virtual currency exchangers, have effective Anti- Money Laundering/Counter Financing Terrorism controls that enable them to comply with customer identification, verification and transaction monitoring requirements.

The CBN said where banks or other financial institutions are not satisfied with the controls put in place by the virtual currency exchangers/customers, the relationship should be discontinued immediately and that any suspicious transactions by these customers should immediately be reported to the Nigerian Financial Intelligence Unit.”

The apex bank explained that because virtual currencies are issued by unregulated and unlicensed entities, cryptocurrencies’ use in Nigeria goes against the key mandates of the CBN, as enshrined in the CBN Act, as the issuer of legal tender in Nigeria. It added: Virtual Currency Transactions, such as bitcoin, ripples, monero, Litecoin, dogecoin, onecoin and similar products are not legal tenders in Nigeria, thus any bank or institutions that transact in such business does so at its own risk.”

Thus the latest action of the CBN to slam a ban on cryptocurrency transactions should not come as a surprise to anyone, crypto dealers inclusive. They are in the purview of the regulator, entities with no legal backing.

The follow-up letter of February 5, 2021 to DMBs, Non-Bank Financial Institutions and OFIs initialled by the Directors of Banking Supervision and Payments Systems Management Department, Bello Hassan and Musa I. Jimoh, came as an enforcement of an otherwise subsisting directive to arrest an illegal enterprise. Which is why the CBN’s letter was more pointed.

It said: “The bank hereby wishes to remind regulated institutions that dealing in crypto currencies or facilitating payments for cryptocurrency exchanges is prohibited. Accordingly, all DMBs, NBFls and OFls are directed to identify persons and/or entities transacting in or operating cryptocurrency exchanges within their systems and ensure that such accounts are closed immediately,” adding that “breaches of this directive will attract severe regulatory sanctions.”

 

SEC aligns with CBN

With the CBN window on crypto transactions closed, some other affected dealers came with the argument that the CBN had overreached itself, pointing out that the regulation and administration of cryptos lie with the Security and Exchange Commission (SEC). How wrong. SEC was to issue a statement in no time, aligning with  CBN’s declared vision, saying it has joined CBN to ban crypto trading. SEC said it received inquiries on a perceived policy conflict between its September 11, 2020 statement on Digital Assets, Classification and Treatment and the February 5 CBN circular.

The Commission said there were no contradictions or inconsistencies, but that last year’s statement was to provide regulatory certainty within the digital asset space, due to the growing volume of reported flows, pointing out that as the regulator of the banking system, the CBN identified certain risks that threatened investors’ protection.

“For the purpose of admittance into the SEC Regulatory Incubation Framework, the assessment of all persons (and products) affected by the CBN Circular of February 5, 2021, is hereby put on hold until such persons are able to operate bank accounts within the Nigerian banking system,” SEC said.

 

Crypto trading ban list

Nigeria is not alone on Crypto currency trading ban. Several countries have been on that turf for long before the CBN joined the league, as it were.   Some other African countries like Algeria, Morocco and Libya have laws prohibiting cryptocurrency trading outrightly. South Africa, on the other hand, is proposing new regulations that protect its citizens from frauds using the platforms.

The list includes Asian countries, among them China, Bangladesh and Nepal. Others are Iran, Ecuador, and Bolivia, to mention but a few.

 

CBN’s timely intervention

The CBN’s deft move to prohibit transactions in bitcoins trading, or VCs, was not haphazard, it was calculated and timeously executed. It was becoming obvious that beyond the criminality associated with virtual currency transactions, trading and payments, the medium was already and substantially deflecting a major source of the country’s source of foreign exchange earnings – diaspora remittances.

Resources, or rather foreign currencies that are usually rooted through the CBN, were now being accessed and warehoused in other channels and entities outside the reach of the apex bank.

Besides the loss of revenue to the Federal Government, the CBN was no longer in a position to track and monitor how these forex earnings were being applied, nor able to ascertain the identities of those involved in the transactions.

In addition, a significant contributory portion to the stock of the nation’s foreign reserves was gradually being threatened.

 

For and against crypto ban

The CBN’s ban against banks and other financial institutions from engaging in cryptocurrency transactions has sent shockwaves across the country. The reason for the huge debate is evident. Available data from Paxful—a cryptocurrency trading platform – showed Nigeria was second only to the US in volume terms as among the highest downloaders of crypto wallets.The total value of all cryptocurrencies globally grossed the $1 trillion mark in January 2021.

According to reports, “the decision of the apex bank to ban cryptocurrency transactions was aimed at safeguarding the economy from the adverse effects of unregulated cryptocurrency trading’’. Some analysts have said dollar inflows meant for the  foreign exchange market and foreign reserves were being channelled into the cryptocurrency market.

Research & Consulting firm, Afrinvest West Africa’s Managing Director, Abiodun Keripe said the apex bank had observed a dangerous trend, where foreign capital inflows into Nigeria were being diverted to cryptocurrency markets with zero regulation. Keripe said the nation’s cryptocurrency market recorded over N2.2 billion daily turnover. The market, he added, remained vibrant where upwardly mobile and youths earned income but was unregulated.

Alluding to CBN’s concern on its ability, or inability to regulate this crypto market, Keripe said Nigeria lacks digital assets needed for effective monitoring and regulation that would enable Nigerian regulators to track crypto exchanges across the world. He underlined the sheer volume of transactions involved in cryptocurrency deals as revealed in the stock exchange, saying the Nigeria Stock Exchange records an average of N2 billion daily transactions, and that the cryptocurrency market is in excess of that, and Nigeria is the biggest crypto market in Africa.

Keripe agreed that funds, which previously entered the country as diaspora remittances are now flowing into the cryptocurrency market after CBN tightened policy mandating International Money Transfer Operators (IMTOs) to pay diaspora remittances beneficiaries in dollars.”

The CBN, like many other major central banks around the globe, is cautious about the use of bitcoins because of the threats its usage posed to the financial system. While noting that no central bank in the world would sit back and not address threats to the financial system it regulates, the CBN has observed that cryptocurrencies had been used for laundering illicit funds, defrauding unsuspecting investors, scams and monetising ransomware as was the case with the unnamed commercial bank in Nigeria.

Keripe has equally stressed the need for Nigerians to be cautious in transacting in cryptocurrencies since they were highly volatile and not regulated by any central bank in the world, nor insured by the government of any major economy.

He said the apex bank had watched as diaspora remittances inflow to the country dropped by over $2 billion in the third quarter of 2020. “Diaspora remittances dropped from about $5 billion quarterly inflows to $3 billion in the third quarter of 2020. The statistics could even be worse,” he explained when the fourth-quarter data is released. And these reduced inflows are having a negative impact on the foreign reserves and naira stability,” he said, adding that the CBN cannot regulate and track assets within the crypto market, because of the cumbersome nature of its operations.

“Due to the downturn in the economy, Nigerians in the diaspora now use crypto to move funds home, which means forex market will continue to dry up fueling high premium between official and parallel market rates and making it difficult for the reserves to provide a buffer for the local currency,” he stated.

He said although genuine dealers are available, their operations, regrettably are now used to pay for kidnapping ransom. He therefore urged the apex bank to develop technology that connects to the crypto exchanges, track funds flow for effective regulation.

“The CBN holds the responsibility of protecting the nation from financial risks hence the need to ensure that financial dealings within the country follow set rules and regulations. Cryptocurrency, he said is not the currency of any nation, and there is no law yet.

 

Advocates of cryptocurrencies

Among critics of the CBN’s ban of cryptocurrency is the former Deputy Governor, Financial Systems Stability at the CBN, Prof.  Kingsley Moghalu, who faulted the blanket ban on trading on cryptocurrency.

According to him, instead of what he termed, the “knee-jerk reactionary step’’ of the apex bank, it ought to have engaged in deep thinking and be more innovative to be at the front of the curve. Moghalu told ARISE TV that during his time at the apex bank, there were a lot of innovations about how to ensure the stability of the financial system.

The CBN should come up with regulations on this area of financial dealings, demand Know Your Customer (KYC) for the crypto exchanges and corporate entities trading on such assets. This will help in identifying who is trading and validating their identity, and fish out fraudsters,” he advised.

He said: “Cryptocurrencies are one more facet of a process that continues throughout history which is innovation. Let me remind you that paper money or what we call fiat money which is legal tender as ordered by governments, has not always been in existence through creation,” saying paper money has had its ups and downs, but still remains the currency in the world today.’’

He explained that cryptocurrencies are virtual currencies that people use online to purchase goods and services, adding that one could not obtain a cryptocurrency without a legal tender, but that cryptocurrency value is not aligned to the normal legal tender.

“It has a value on its own and some people will say it is not backed by any fundamental legislation, but there are many reasons,” he said.

“One of them is that many people just want the freedom to exchange value without having to go through the restrictions of fiat money that is issued by the central banks. “Also, there’s a political dimension, that is why it is called freedom money, saying many people around the world who are protesting for human rights or when regimes, try to restrict their rights because cryptocurrencies do not go through the central bank.

“They find that they are able to still communicate with themselves and do transactions that bypass sovereign authorities,” he said, adding that central banks have never been comfortable with cryptocurrency.

On the ban, Moghalu said: “I would have preferred some deep thinking about how to come up with a regulatory framework that restricts the use of cryptocurrency or subject it to some sort of surveillance that alerts the CBN if there are serious abuses that can affect financial system stability.

“The CBN has to be concerned about the financial system stability and that is what it should be concerned about. So you have to be able to monitor and see if these signs are coming, but to ban a financial institution from having an account associated with cryptocurrency exchange or cryptocurrency trading seems to me a bit odd, it was not necessarily the best approach to the problem, that is what I think even though I understand why they did what they did, Moghalu added.

Budget performance and impact have been major issues in Nigeria’s budget implementation. Amid growing budget deficit and weak revenue profile, experts say government needs to focus on optimisation and efficiency of budgetary incomes and spending to make budget more meaningful. Deputy Group Business Editor, Taofik Salako, reports

 

The Federal Government aptly titled  the 2021 budget, “Budget of Economic Recovery and Resilience” , underlining the thematic economic direction after the relapse into recession last year.

With the most optimistic projection for growth at three per cent thIs year, Nigeria needs to accelerate growth to significantly reduce the adverse effect of the COVID-19 pandemic on national economic performance and reignite economic levers to meet national aspirations of infrastructure, jobs and improved standards of living.

 

Budget highlights

The 2021 budget, signed into law by President Muhammadu Buhari on December 31, 2020, stands at N13.59 trillion, 25.7 per cent increase on the 2020 revised budget of N10.81 trillion. The 2021 budget comprised capital expenditure of N4.13 trillion, recurrent expenditure of N5.65 trillion, debt service of N3.12 trillion, sinking funds for maturing bonds at N200 billion and statutory transfers of N497 billion. Non-debt recurrent expenditure thus represents 41.5 per cent of the total budget size, the largest by broad segment. Capital expenditure represents 30.4 per cent of the total budget while debt servicing will take more than one-fifth of the total budget for the year.

Total revenue is projected at N7.99 trillion in 2021, implying a deficit of N5.6 trillion or 3.93 per cent of the Gross Domestic Product (GDP). Fiscal deficit printed at 3.57 per cent of GDP in 2020. Revenue breakdown indicated that the government expects oil revenue of N2.01 trillion with benchmark oil price of $40p/b and oil production at 1.86 mbpd. Revenue from other sources, including independent revenue, signature bonuses, stamp duty and domestic asset sales and recoveries, are estimated at N4.49 trillion while non-oil revenue is projected at N1.49 trillion. The government plans to finance the deficit with new domestic borrowings of N2.34 trillion, foreign borrowings of N2.34 trillion, drawdowns of N709.69 billion from multi-lateral and bi-lateral project-tied loans and privatisation proceeds estimated at N20515 billion.

 

2020 budget review

A year-end review showed that the government slightly overshot its budget by 1.1 per cent in 2020 with total actual expenditure at N10.08 trillion, as against the revised budgeted amount of N9.97 trillion. The increase was driven mainly by increase debt service, which rose to N3.27 trillion as against budgeted estimate of N2.95 trillion. With the COVID-19 pandemic creating severe disruptions in global economy, with attendant negative impact on national incomes, Nigeria underperformed its budgeted revenue for 2020, even after revising the estimates downward to adjust for the adverse impact of the  pandemic.

Against the revised budgeted revenue of N5.365 trillion for 2020, actual revenue stood at N3.937 trillion, a shortfall of 26.6 per cent. The decline was basically due to shortfalls in non-oil revenue and other revenues. Oil revenue had risen to N1.67 trillion, an improvement on N1.1 trillion in the revised budget. However, non-oil revenue closed lower at N1.296 trillion as against budgeted provision of N1.625 trillion while other revenue also closed significantly lower at N994 billion, 62.4 per cent below N2.64 trillion estimated in the  2020 revised budget. With the revenue shortfalls, the government ended up with its highest fiscal deficit, at N6.2 trillion, 33.4 per cent above the budget estimate of N4.61 trillion. The 2020 fiscal deficit was financed primarily through domestic debt issuances of N2.06 trillion, external loans of N1.22 trillion and ways of the Central Bank of Nigeria (CBN).

Data provided by the Budget Office of the Federation showed that  budget deficit had risen in five out of the six past budgets. Projected revenue, also provided by the Budget Office of the Federation, showed possible increases in budget deficit over the next two years with total revenue expected to remain below N8.5 trillion by 2023.

Experts and analysts said the headway for Nigeria is to optimise its revenue and expenditure to ensure better budget implementation and impact on the economy. With huge infrastructural deficit, unemployment, security challenges and continuing dependence on the volatile crude oil, experts said the yearly budget has major roles to play in achieving national economic growth, employment generation, reduction of economic disparity and inequality, national security and human capital developments, among others.

Making the budget work

A seasoned economist and statistician, Dr Tajudeen Adebayo, said the 2021 budget reflects twin objectives of repositioning the economy on the path of recovery, growth and resilience, following the pandemic and its negative economic consequences as well as enhancing the competitiveness of the economy through diversification and social inclusion in the polity.

He however noted that the four evident incongruities of galloping spending, weakening revenue, growing debt service and infrastructural deficit required government to be more painstaking in its budget implementation.

At a review session organised by Abeokuta Business School (ABS), Crescent University, Abeokuta, Ogun State, Adebayo, a senior faculty member at ABS, noted that revenue generation remains a challenge in the face of falling oil prices and economic contraction resulting mainly from the pandemic-induced global uncertainties.

According to him, the key concerns on the 2021 budget include the growing debt profile of Nigeria, diversifying the economy from its over-dependence on crude oil export and its price volatility, increasing revenue generation from all government ministries, departments and agencies (MDA), addressing revenue leakages in government finances, steady oil production and controlling the growing recurrent spending on payment of salaries and overheads among others.

He pointed out that there was genuine fear that the deficit financing in 2021 may further exacerbate Nigeria’s already poor debt profile, force governments into adapting policies aimed at austerity, widen inflationary gap in the economy that may adversely increase money supply as well as lead to a fall in aggregate demand, lower growth, trigger recession and unemployment.

He however noted that the government could turn its deficit into a growth lever through careful and efficient implementation. According to him, budget deficit is not always harmful, it can be beneficial to Nigeria, depending on quite a few factors. Theoretically, the Keynesian analysis holds that a budget deficit can be good for an economy in recession because private sector spending will be low, while savings will rise on the aggregate.

Empirically, financing the budget deficit can be cheaper for the government because the private sector will prefer buying government securities or bonds, which is safer than investing in the private sector with uncertainties. Invariably, this will make the cost of borrowing lower for the government to finance the deficit, as the increased patronage of government bonds by private investors ultimately, brings down the bonds’ yields. With this, the government can borrow safely from the private sector to finance the 2021 budget deficit.

“The prospect can thus be bright for Nigeria with approved spending of N4.370 trillion by the Federal Government in the current fiscal year, as that will inject more funds into the economy, and through the multiplier effect, rejuvenate the level and quality of infrastructure to improved productive capacity through increase investments and job creation, increased aggregate demand, higher economic growth, higher tax revenue to the government and consequently, dowse the deficit and market failure over time,” Adebayo said.

He identified the key factors necessary to optimise the budget potential to include accountability, corruption-free and strong commitment in revenue generation, blocking leakages of resources and eradicating waste in public expenditure.

ABS outlined a 10-point recommendation to making the budget work for optimal national growth and development.These include strengthening of the frameworks for greater transparency and accountability at all revenue collection and expenditure management points and in all processes, publishing the rules for the various licence award processes in Nigeria, intensifying efforts to make significant gains in 2021 fiscal year from those sources including its special accounts, special levies account, domestic fines, asset recoveries, stamp duty, signature bonus, and receipt from the auction of oil licenses and block all known avenues for revenue leakages in the 60 GOEs and MDAs.

Other ways to improve budget performance include increasing public private partnerships through well prepared projects involving MDAs, the Infrastructure Concession Regulatory Commission and the private sector, reduce borrowing and establishing special purpose vehicles that gather and aggregate resources from a plethora of sources including institutional and retail investors to fund priority capital projects, stoppage of subsidy payment to fully deregulate the downstream sector and drive investment to the sector and implementing service reflective electricity tariffs to help resolve liquidity crisis in the power sector while simultaneously finding solution to estimated billing and other corruption-prone practices in the sector.

The ABS also advised the government to shun the decadence of project abandonment by maintaining the culture of keeping proper stock of the national wealth by focusing more on the completion of as many ongoing projects as possible in the 2021 fiscal year, rather than the commencement of new projects without well-established necessities.

ABS also urged the government to implement the lofty objectives stated in tax policies: pushing for amendment of key tax legislations, financial reporting and other fiscal rules for companies operating in the Free Trade Zones, tax exemptions, incentives and rebates to businesses to achieve socio-economic development.

Director, Monitoring and Evaluation, Ministry of Budget and Planning, Ogun State, Mr. David Onigbinde underscored the need to institutionalise measurement and evaluation (M&E) as a primary component of budget framework and implementation.

According to him, integrating appropriate measurement and evaluation tools into the budget will enable the government to not only to improve implementation but also to improve quality and to forestall and reduce abuses.

Director, ABS, Dr Jubril Salaudeen, said the use of project-tied issuances could foster the culture of monitoring and citizen participation as non-government stakeholders could easily assess budget implementation.

According to him, a seeming “third eye” on revenue allocations and capital raising in relation to specific projects would enhance budget performance  and development of the country.

The finance expert called for efforts by stakeholders in the formulation, implementation, monitoring and supervision of the national budget, noting that the yearly budget remains a major fulcrum for growth and development.

President, Abeokuta Chamber of Commerce, Industry, Mines and Agriculture (ABEOCCIMA), Sir Olujare Oyesola, decried undue politicisation of budget implementation, noting that while stated budget intentions and objectives are usually laudable, the major drawback in implementation over the years has been undue politicking that misplaces allocations and implementations at the expense of value and efficiency.

While acknowledging the constitutional responsibility of the government in the development of the entire country, Oyesola said adequate consideration must be given to value, sustainability, efficiency and viability of projects in various segments of the country. He assured that the organised private sector is willing to partner the government in the realisation of its objectives.

Coordinator, Abeokuta Business School (ABS), Dr. Muideen Isiaka, added that the government needs to accelerate implementation of key reforms to improve on revenue collection and control mismanagement in public financingS to keep apace with the developmental needs of the country.

According to him, while government deserves commendation for the apparent readiness to confront the challenges of post-COVID-19 pandemic economic recovery, there must be renewed commitment to increased revenue generation and efficient management to make more meaningful impact.

Analysts at SCM Capital said the 2021 budget projections are largely realistic, leaving the onus on the efficiency of implementation. Expected recovery in global economic activities in 2021 supports government optimism on oil receipts while government could achieve as high as 96 per cent of its non-oil revenue based on domestic economic growth. SCM Capital however noted that 2021 fiscal deficit could be as high as N6.05 trillion, 8.07 per cent higher than the budgeted N5.60 trillion. This brings home the importance of budget efficiency, monitoring, measurement and evaluation to ensure that Nigerians derive optimal value, even as the debts grow.

 

After many months of agitation, the Federal Government made good its promise by releasing bail out funds to airlines. Among the beneficiaries are ground handling firms, travel agencies and other players in the sector. But, it was not without acrimony as the development has triggered allegations of skewed sharing formula, writes KELVIN OSA- OKUNBOR.

AStorm is gathering in the aviation sector following the release of bail out funds to operators and players in the industry. The funds – N4 billion – was released by the Federal Government as palliatives expected to cushion losses incurred since the outbreak of coronavirus pandemic.

Though experts had criticised the package as a paltry given the huge losses incurred by airlines ground handling firms, aviation fuel suppliers and others, the decision by the government to make good its promise has, however, received commendation from watchers of the sector.

Prior to the release of the huge cash, the Federal Government had set up a committee consisting head of aviation agencies, officials of the Ministry of Aviation, the Central Bank of Nigeria (CBN) and representatives of the umbrella body of indigenous carriers – Airline Operators of Nigeria (AON) – to work out the template for disbursement.

But, things fell apart two weeks ago when operators lashed at one another when facts emerged on the breakdown of figures allocated to operators. According to regulatory sources, out of the N4 billion released by the government, scheduled operators got a lion’s share  compared to their non-scheduled counterparts.

According to a document obtained by our correspondent, ground handling firms, scheduled and non-scheduled airline operators; the National Association of Travel Agencies, aviation fuel marketers as well as airport car hire services partook in the sharing of the fund. Scheduled operators received N3 billion with five per cent deduction for the Federal Airports Authority of Nigeria (FAAN), the Nigeria Airspace Management Agency (NAMA) and Nigeria Civil Aviation Authority (NCAA).

The deductions stand at 50 per cent for FAAN at N75million; NAMA 25 per cent at N37.5million and the NCAA also at 25 per cent for N37.5million. The total deduction from the share of scheduled operators stood at N150million, thereby leaving the scheduled operators with N2.85billion.

Non-scheduled operators received a total amount of N1billion with deductions amounting to N950million to aviation agencies, including FAAN, NAMA and NCAA.

Ground handling firms, aviation fuel marketers and catering services got N233.33million each.

The National Association of Travel Agencies received N196million with  N4million deduction.

Airport Car Hire Association of Nigeria received N100million. Some airlines with valid Air operators Certificate (AOC) alleged that they were sidestepped in the disbursement of the funds. Their grouse is hinged on the fact that they meticulously followed the process and submitted their request for the funds only to discover that a controversial 70-30 sharing formula was allegedly adopted.

An operator told The Nation that the AON Board of Trustees (BoT) and the executive members disagreed over the sharing of N3 billion to some scheduled operators out of the N4 billion released.

Investigations have shown that some charter operators, including those who have valid AOC, were yet to get anything from the funds and seem to be amiss as to what is actually happening.

Director of Press, Ministry of Aviation, James Odaudu  confirmed that the bailout had been disbursed and that it would go to airlines with functional AOCs but that he was not aware of the other details.

He said: ”What I can confirm at this time is that it was released to individual airlines.The consideration is for individual airlines and airlines that have AOC.”

On whether charters were included, he said: ”I can’t confirm that but charter operators are also airlines. Let me confirm.”

Speaking on the development, a source said the process could have been handled more professionally to avoid the controversies it is generating among airlines as a list of qualified candidates should have been put out by the ministry.

The source said such a list should include persons who were in charge rather than shrouding the process in secrecy.

Some airline operators have expressed displeasure over the sharing formula adopted for the distribution of bailout funds, saying it  skewed the cash in favour of few airlines.

The complainants, who operate smaller capacity, were displeased with the ratio 70:30 adopted between the schedule and non-scheduled carriers.

Air Peace, Azman, Arik, Aero Contractors, Overland, and Dana Air were listed as the biggest beneficiaries. The Federal Government had, last week, shared N4 billion bailout funds among 18 scheduled and non-scheduled carriers.

The special intervention was thrown open to all airlines with a valid AOC and distributed according to the size of the carrier. The parameters, however, made some ‘dead’ airlines beneficiaries of the COVID-19 stimulus package.

An operator accused the executives of the AON of “making themselves” the biggest beneficiaries through the choice of parameters.

“I think we are all in these harsh realities together. It didn’t make any sense to some of us that we cannot get an equitable share of the palliative,” he said.

It was gathered that the AON BoT and the executive earlier had a heated argument over their share among six scheduled operators, out of the amount released to the carriers, while the balance went to over 10 charter operators.

The Chief Executive Officer of Skypower Express Airways, a charter operator, Capt. Mohammed Joji, however, expressed gratitude to the Federal Government, especially the minister of aviation and Director-General of the Nigerian Civil Aviation Authority (NCAA), for “bringing relief to the industry”.

Joji said the distributed sum was instrumental in offsetting salary backlog and pending insurance premiums.

“We are very grateful for the intervention. The minister and DG NCAA tried for us,” he said. Another of the beneficiaries said the intervention was a drop in the ocean of devastating effects of the pandemic on the air travel business.

Though there is no consensus on how much was lost, estimates ranged from N360billion to N500billion. In three months of lockdown, no fewer than 120 airplanes were parked, not yielding revenue, yet incurring maintenance costs.

The Chief Operating Officer of one of the airlines, who refused to be named, said without the heavy costs of maintenance, the airlines could have ignored the Federal Government’s bailout plan.

“The pandemic lockdown was an unusual development that modern aviation did not foresee. That the whole world would be on lockdown for months was unthinkable. Yet, it came. Airplanes that were programmed to be in the air 20 out of 24 hours a day started sitting on the apron. That was devastating and huge losses to say the least. Someone has to bear the brunt, which no operator can afford. That is the rationale behind global requests for governments’ support so that aviation will not die.

“In our case, C-check maintenance costs as much as $2 million per airplane because we have to fly them overseas. Most of the planes grounded during the lockdown are already due for C-checks. Think about it, the so-called N4 billion bailout can only repair four airplanes at the cost $2 million each. Isn’t that a drop in the ocean?

“We now see airlines closing routes all over the place, while some carriers have not even come back since local flight services resumed. Is that normal? I think the government needs to get serious with the plan to save the sector from imminent collapse. We are not asking for free money but a good loan deal that will support airlines through a mandatory maintenance schedule, restart and recovery process,” he said.

In an interview, Group Managing Director, Nigerian Aviation Handling Company (NAHCO) Plc , Mrs Olatokunbo Fagbemi , who commended the government for the bailout said ground handling firms looked forward to more. She said: “ Yes, we were given about N70 million but if you look at how much we lost, it is not much but anything that is given is something that we are grateful for because it is better to have something than you have nothing.

“But like Oliver Twist, as we are thanking the ministry and the Federal Government, Central Bank of Nigeria (CBN) and the Minister of Finance, we are also hopeful that some more as we have been told will be given to the ground handling companies,”

On his part, Chairman of Air Peace, Mr Allen Onyema Mr Allen Onyema said palliatives offered by the government would not solve the problems local carriers were grappling with as it only a temporary relief.

Onyema, who is AON Vice Chairman, said even if the government had given N10billion each airline, it would only amount to a tip of the iceberg because the funds would be depleted within a short while.

In a telephone interview, he told The Nation that the major clamour by indigenous carriers was for the government to remove import duty on aircraft and spare parts as well as the abolition of Value Added Tax (VAT) on domestic tickets to reduce the huge cost and charges  operators were subjected to.

He said as much as the AON had engaged the Federal Government and the Ministry of Aviation on ways of assisting indigenous carriers, it is imperative for operators to devise an appropriate strategy to get the sector out of the woods.

Onyema said the AON leadership had reached an agreement with aviation agencies on how to recover the huge debts owed by local carriers, even as a repayment plan had been worked out to stop closure of airlines’ counters and other punitive measures.

He said rather than thinking of ways to reach out to the government, previous executives of the umbrella body of local carriers had engaged in scathing criticism of the government to cover up their indebtedness.

Onyema said the AON executive would not be dragged into controversies on how the bail out was disbursed because there is a template designed by the Minister for doing so.

He claimed that no carrier was sidetracked in the disbursement of the funds, saying some operators were raising false alarm. He said: “I do not want to be dragged into the politics of how bail out funds were decided. The government had criteria that it used. It was not the job of Airline Operators of Nigeria. Anybody alleging that some airlines did not get whatever amount should feel free to ask such airlines.

“The new leadership of AON has been engaging the government constructively on how to fix problems of the industry to create a more enabling environment for airlines to do their business. The era of AON engaging in blind fight with the government is over. If airlines owe aviation agencies, they should approach such agencies on a repayment plan.That should be the new thinking.”

The move by former Vice President Atiku Abubakar to exit Intels is seen as the final phase of a truce brokered between the Nigerian Ports Authority and the company to operate as a going concern in Nigeria, writes, MUYIWA LUCAS.

It was a protracted saga between the two parties. The Nigerian Ports Authority (NPA) and the Integrated Logistics Limited (Intels). Both parties co-joined in a going business partnership which eventually turned sour.

Under the partnership, which was consummated in 2006, Intels emerged as an agent of the NPA and concessionaire to the Onne Ports, Rivers State. As concessionaire, Intels was required to provide pilotage services to guide ships into and out of the ports. Payment of pilotage fees, collected by Intels, is mandatory for vessel owners on ships of 35 metres overall length. This amount is subsequently shared between two stakeholders – the concessionaire, Intels; the port landlord, that is the NPA acting on behalf of the Federal Government. This transaction preceded the time Atiku Abubakar, a core investor in Intels, was Vice President.

By virtue of the incentives, opportunities and special privileges in the concession, the lobbying, horse trading and shenanigans in participating in the scheme were high wired. However, with over three decades of operating in the country, Intels was no stranger to the business and political terrain of the land. Therefore, when the controversy that befell the deal came to the fore in 2016 and thereon to 2017, especially on the compliance, or non-compliance of Intels with the Treasury Single Account (TSA) policy of government, a business decision had to be taken to mitigate the unfolding development.

Olive branch

As the disagreement became more intense in October 2017, Intels major shareholder and co-founder, Gabriele Volpi, tendered an apology on behalf of the company over its disagreement with the NPA. It was a wise move considering that the NPA had made clear its intention to terminate the pilotage agreement it had with the company.

Volpi, a naturalised Nigerian but of Italian decent, apologised to the Federal Government and NPA over the disagreement with Intels. “I was not personally involved in the negotiations with NPA, but we apologise for what has happened. We intend to comply with the directive of government and transfer all the revenue to the TSA because we are a law-abiding company,” Volpi said.

Stakeholders in the industry and those knowledgeable with the ensuing politico-economic power play, rationalised that Volpi may have made the move to douse the tension the disagreement had created, and leave the door open for future engagement with the government on other projects.

Divestment

Atiku, whose stake in Intels is estimated to be about $100 million, sources say, may have commenced his divestment option probably since 2018 before its eventual completion last month. The move is rumoured to be the outcome of an unwritten agreement designed for peace to reign. The said equity was sold in three tranches of $60million, $29million and $24.1million to Orleal Investment Group, the parent company of Intels.

Atiku, in a statement by his spokesman, Paul Ibe, said his decision to sell off his shares in Intels is a culmination of years of long-drawn battle between officials of the President Buhari Muhammadu administration. Ibe said his principal’s persecution by the government was threatening Intels’ multi-million dollar business.

Not so, Intels retorted. The company in a swift reaction, alongside its parent company, Orlean Invest Holding, denied insinuations that its business had at any time been hindered by political influences from the current government.

“The company has always operated according to market logic, thanks to its history and commitment to the development of the Nigerian economy in the oil and gas logistics sector. The ongoing contradictions are part of a natural commercial divergence, which will hopefully be resolved, as in the past, by a new approach, in the interest of all the parties, also according to the social role that Intels plays in the country.

“The severance from the world of Atiku Abubakar was an economic decision, in the exclusive interest of the company, and to irreconcilable strategic differences with the new governance structure of the Intels – Orlean Invest Group,” a statement signed by Tommaso Ruffinoni, Intels’spokesman said.

Battles

In 2008, there was a move to grant Intels the management of the Lagos Pilotage District with exclusive right to handle oil and gas cargoes. This was, however, refused by the late President Umaru Yar’Adua, on the basis that such would erode competition in the sector.

But Yar’Adua’s successor, President Goodluck Jonathan, was later to concede to Intels exclusive control over all oil and gas cargoes at terminals in Onne, Warri and Calabar. This angered other stakeholders in the oil and gas sector like Ladol, which immediately instituted legal action. For the stakeholders, such was an aberration to the concession agreement it entered with the government.

By 2016, one year into this administration, the government mooted the idea of reforming the ports. The Minister of Transportation, Rotimi Amaechi, was said to have highlighted the need to take a look at the monopoly of the oil and gas pilotage enjoyed by Intels.

According to sources, the Attorney-General of the Federation, Abubakar Malami, was said to have advised and described the exclusivity granted to Intels as “not only unknown to the shipping industry, but that it encourages monopoly and, therefore, inimical to the investment climate in the country.”

Besides, the AGF, in a letter addressed to the NPA had argued that the agreement which had allowed Intels to receive revenue on behalf of NPA for 17 years was in contravention of the Nigerian Constitution, especially because of the implementation of the Treasury Single Account (TSA) policy of the government.

Consequently, in April 2017, the President approved the recommendations of the AGF for reversal of the exclusive handling of oil and gas cargoes at Intels controlled ports. This decision obviously placated Ladol, which immediately withdrew its subsisting suit against the Federal Government from the Federal High Court, Lagos.

On October 10, 2017, the NPA terminated its contract with Intels based on the advisory from AGF, who described the arrangement as misconceived and unconstitutional. Intels, however, went to court challenging the decision of the NPA. Last August, a Federal High Court in Lagos granted an interim injunction stopping the NPA from terminating the role of Intels as manning agent in the Pilotage Districts of Lagos, Warri, Bonny/Port Harcourt and Calabar. The judge, Rilwan Aikawa, granted the interim injunction in the suit number FHC/L/CS/1058/2020 based on an application filed by Intels and Deep Offshore Service Nigeria Limited against NPA.

The NPA, however, issued a Marine Notice to the Lagos Pilotage District (LPD) on September 1, instructing ports users not to deal with Intels, saying services hitherto handled by Intels, have been terminated.

A furious Intels, in a rebuttal, said: “NPA’s publication is highly selective, inaccurate and should be disregarded, as it seeks to circumvent legal due process. Indeed, a dispute has arisen over NPA’s right to terminate our role as managing agent in the Pilotage Districts of Lagos, Warri, Bonny/Port Harcourt and Calabar. This dispute has been submitted to arbitration, and the arbitral proceedings have already commenced.”

OGFTZ

Along the country’s coastline, are four established Oil & Gas Free Zone Areas (OGFTZA). These are Onne Oil and Gas, Rivers state; Warri Oil & Gas Free Zone, Delta State; Eko Support Free Zone, Lagos State and Ikot Abasi Oil and Gas Free Zone, Akwa Ibom State. The first oil and gas export free zone to be established in the country was the Onne Oil and Gas Free Zone in Rivers State. These projects were expected to facilitate the development of a world class export-oriented oil and gas processing city in the country. The OGFTZ, with an estimated $20 billion as value of investment in the early years, was targeted to favour foreign investment in the country and aimed at creating employment, welfare, transfer of technology and a generic economic development. It also aims at maximising the country’s natural resources. Hence, the seemingly overwhelming and attractive incentive offered.

Business incentives

To achieve this, incentives were put in place to serve as a catalyst for investors. These include but not limited to allowance of a 100 percent repatriation of capital investment, remittance of profits and dividends allowed, no import or export licenses required; 100 percent of Free Zone (FZ) goods can be sold in Nigeria; 100 percent foreign ownership of business allowed, duty-free stock, equipment, spare parts, pipes, no double-handling in and out of Nigeria. Furthermore, enterprises in the Free Zones are allowed to export into the Nigerian territory up to 100 per cent of their products.

Tax incentives

Enterprises operating in the FZ are also exempted from payment of value added tax, withholding tax, corporate tax and/or capital gains tax. Still, a 75 percent import duty rebate on items associated or related to the business concern, investment or partnership, under any guise, remains a juicy attraction for any discerning investor.

Customs Duty Exempt

Under the special economic incentives encapsulated in the free trade zone arrangement, businesses under the initiative do not pay customs duty payable for goods stored within the Free Zone or goods consumed within the Free Zone (including equipment and machinery); no customs duty payable for export of Free Zone goods to other countries; Free Zone goods may be transferred under customs’escort from any port or airport of entry in Nigeria to Oil and Gas Free Zones.

Immigration incentives

This is targeted at foreign firms operating in the FTZs. Expatriates working in the zones are allowed some form of immigration immunity, hence they are granted free movement in and out of the zones, including immigration fast-track procedure, when required.

Despite the double shock of the Covid-19 pandemic and the crash in oil prices, the push by the Ministry of Mines and Steel Development to build a globally-competitive minerals and mining ecosystem and related processing industries capable of contributing to wealth and job creation has not lost steam. Some of the proactive initiatives and reforms put in place by the ministry to transform the sector before the crisis set in are said to have given the ministry the leverage to weather the COVID-19 storm. Assistant Editor CHIKODI OKEREOCHA reports.

The Minister of Mines and Steel Development,  Olamilekan Adegbite, does not have the power of clairvoyance. Like any other Nigerian, he never saw the COVID-19 pandemic and the slump in oil prices coming; neither did he or anybody else envisage the extent of their devastation.

However, while other heads of ministries and agencies in the public sector, including operators in the private sector, are still ruing the dislocation the global crisis foisted on them, Adegbite and the mining sector, which he oversees, appear unscathed, drawing sufficient strength from some of the initiatives and reforms put in place before the advent of the crisis to ride the storm and transform the sector.

Some of the proactive measures and reforms said to have positioned the sector to navigate the challenging times include strengthening the geosciences base to drive investment into exploration and mining industries; strengthening critical sector institutions and governance to build organisational and functional capabilities of the ministry and agencies under it.

Others are improvement of regulatory management and enforcement to enhance overall mining sector management across the country, particularly the control and management of informal miners; and building capacity to manage environmental and social impacts from mining, among others.

Incidentally, the implementation of most of the initiatives and reforms, The Nation learnt, had reached advanced stage before the COVID-19 pandemic and the plunge in oil prices started taking heavy tolls on the economy and finances of operators in all the sectors.

For instance, the ministry and its agencies migrated most of their programmes to online systems and platforms; e-recording and archiving had also been perfected. With these in place, the Director-General, Nigerian Mining Cadastre Office (MCO), Obadiah Nkom, an engineer, said the agency was able to generate about N2.6 billion last year.

He added that despite the pandemic, which affected mining operations a lot, the agency generated about N1.8 billion this year. While expressing optimism that before the year ends, “We would have generated more,” Nkom confirmed to The Nation that the Minister had been working hard despite the pandemic.

According to him, Adegbite has been holding several zoom meetings with foreign investors and compelling them to come into the mining sector. “Perhaps, this is why despite the pandemic, expressions of interest from foreign investors was up this year by about 100 per cent, which can be attributed to all the hard work of the minister,” he said.

The outbreak of COVID-19 in China and its subsequent spread across the world, including Nigeria, caused significant disruption of business and financial activities. From late February this year, when the deadly virus found its way into Nigeria, it’s been a tale of woes for government agencies and operators in the private sector.

Despite the COVID-19 onslaught, Adegbite has continued to move on with the sector’s transformation, having managed to build a high level of resilience by riding on the back of reform initiatives aimed at growing and developing the mining industry in line with the Federal Government’s campaign to diversify the economy through mining.

Delivering a keynote address at a recent webinar on the “New Normal – Opportunities for the Nigerian mining industry” hosted by the Nigerian Economic Summit Group (NESG), the minister said regardless of the pandemic and looming global and national economic crisis, Nigeria could not afford to overlook the opportunities in the global and domestic mining industry.

He said this was why there is a strong political will by the government to diversify the economy through mining so that Nigeria is adequately prepared to harness the opportunities therein. He stated that ongoing reforms underpinned by the roadmap for the growth and development of the mining industry approved in 2017 are geared towards rebuilding the sector and unlocking its full potentials.

At the webinar, which was attended by The Nation, Adegbite explained that the vision is to build a globally competitive minerals and mining ecosystem and related processing industries capable of contributing to wealth creation, providing jobs, and advancing social and human security. He added that in line with the sector’s roadmap, the ministry is assiduously implementing several reform initiatives to force its inevitable turnaround.

For instance, under the current effort to strengthen the geosciences base, Adegbite said the objective was to drive investment into exploration and mining industries through improvements in the quality and breadth of geo-scientific data, as well as improvements in data accessibility for investors and other interested parties.

To make this happen, he said the ministry was undertaking data gathering and analysis through the Nigeria Minerals Exploration Project (NIMEP), which is the Federal Government’s rapid response to the dearth of investible geoscience data. “We are currently implementing NIMEP to generate credible geoscience data capable of giving confidence to investors and prospective investors in the Nigeria minerals sector,” he declared.

According to him, the project has engaged high calibre local and international professionals to conduct exploration in brown and green fields for gold, lead, zinc, tantalite, lithium, and iron ore. And encouraged by positive reaction received by the investment public at different global mining conferences, Adegbite government intends to extend this programme to other mineral commodities.

Apart from NIMEP, the fallout of the pandemic and the plunge in oil prices have not stopped the Nigeria Geological Survey Agency (NGSA) and the National Steel Raw Materials Exploration Agency (NSRMEA) from carrying out exploration campaigns for other minerals.

Improvement of regulatory management and enforcement has also helped push back the impact of the current crisis on the sector. Through its on-going establishment of a remote sensing centre at the Ministry headquarters to identify and monitor artisanal, small, and large-scale mining activities, overall mining sector management across the country has significantly improved.

Also, the upgrading and automation of the MCO for full online operations is on the verge of being completed. According to the minister, significant investments have gone into Information Technology (IT) to drive MCO’s mineral title administration and processes and also create six regional offices with centralised processing of applications.  

“MCO’s automation will facilitate the online application, processing, and management of mineral titles in Nigeria. We expect to inaugurate the new MCO shortly,” Adegbite gleefully announced to participants and prospective investors at the webinar, pointing out that online application will significantly cut down the time for processing licences.

He also said the ministry was building its capacity to manage environmental and social impacts from mining, and also investing in improving environmental surveillance and green mining practices to ensure minimum damage to the environment, while also optimising the mineral value chain.

“We’re optimising our mineral value chain to minimise the export of raw materials, create value along several mineral value chains that would increase industrial and manufacturing activities, and also create employment and foster skills development,” he stated, adding that at present, the priority is in the gold sector.

“We are creating a gold ecosystem to minimise the high rate of illegal gold mining and smuggling, increase government’s revenue from the resource, create jobs, and improve environmental and social stewardship,” Adegbite said, adding that through the on-going Presidential Artisanal Gold Mining Initiative (PAGMI), the ministry is organising, formalising, and equipping Artisanal and Small-Scale Gold Miners (ASGMs).

The Nation learnt that PAGMI’s formalisation and equipment of artisanal gold miners has been going on in Kaduna, Kebbi, Osun, Niger and Zamfara. Under the arrangement, miners of precious, metallic, and industrial minerals would be linked to formal markets through licensed private mineral buying centres.

One of such initiatives, it was gathered, is the recently launched Dukia-Heritage Bank Buying Centre. Two companies (Kian Smith and Dukia Gold Limited), in Ogun State and the Federal Capital Territory (FCT), have been granted licences to refine gold; and are in the process of building their refineries.

Giving more insight into this strategic approach, Adegbite said: “We are trying to stimulate mineral processing across the country using a cluster or hub approach. Each cluster will be provided with road and power infrastructure to encourage investors in processing and refining and to support a network of miners and processors.”

The challenges

Heart-warming as the sustained momentum to transform the mining sector is, despite the COVID-19 pandemic and now, economic recession, there are still hurdles to cross.

For instance, decrepit infrastructure, particularly electricity supply, is yet to be addressed. Besides, the pervasive insecurity across the country that has been a bone in the neck of various operators especially miners has to be tackled.

More specifically, under the Nigerian Minerals and Mining Act, 2007, mining remains the exclusive right, and under the control of, the Federal Government. The snag with this arrangement is that with states currently under pressure to boost their internally generated revenue, many of them are looking to mining as a source of additional income.

“This (states’ interest in mining) is understandable,” Adegbite admitted. He, however, warned: “We must be mindful about the exclusivity of the Federal Government under our constitution in order not to erode investor confidence in Nigeria, as the mining industry prizes policy consistency and predictability. Except the constitution is changed, we must abide by this provision.”

However, in what will, no doubt, gladden the hearts of state governments, the minister announced at the webinar that together with state governments: “We have come up with several initiatives to incentivise states to become key influencers (if not a direct economic participants) in how the mining value chain develops within their jurisdictions.”

 

 

Nigeria, as predicted, slipped into another economic recession. It was the second in five years. But, before the recession begins to take its toll on operators and businesses, airlines, ground handling companies, and other players in the aviation and allied sectors seem to know how to weather the storm. Many of them say that the recession offers an alternative window for operators to diversify their operations by deepening participation in the agro-allied/logistic value chain, Aviation Correspondent KELVIN OSA OKUNBOR reports.

There is palpable fear in the economy.This is because of Nigeria’s slide into recession, the second in five years. Coming at a time the scars of the 2016 recession are still visible, requiring more time to completely heal, operators and businesses in virtually all sectors are jittery that the latest recession may be more devastating.

This apprehension is more pronounced in the struggling aviation and allied sectors. And this is understandable in view of the fact that the sector was worse hit by the COVID-19 pandemic, apparently because of movement restriction, globally, to contain the spread of the virus.

Nigeria entered into a recession, last week, according to the National Bureau of Statistics (NBS) which shows that the Gross Domestic Product (GDP) contracted for the second consecutive quarter, sliding further with negative growth of 3.62 per cent in the third quarter of 2020. The country had earlier recorded a 6.10 per cent contraction in the second quarter.

However, the interesting thing is that even before the harsh effects of the current recession begins to manifest and add to the sector’s woes, operators appear to be battle ready; they seem to have figured out what option(s) to take to weather the coming storm.

For instance, in anticipation of the reduction in passenger traffic, which will affect their finances in the coming months, one of the viable survival strategies is for airlines to diversify their operations to stay afloat. This, according to them, will allow indigenous carriers and other players to explore revenue opportunities in the cargo and logistics value chain.

The Group Managing Director, Nigerian Aviation Handling Company (NAHCO), Mrs. Tokunbo Fagbemi, put the situation in perspective. “In times like these, operators must explore opportunities to earn more revenue in the agro-allied cargo and logistics value chain.

“Nigerian carriers are yet to see the abundance of opportunities in these areas (agro-allied cargo and logistics) to enhance revenue. Operators need to think innovatively, get more creative and flexible with the aircraft in their fleet to accommodate more space for freight.

“Domestic carriers need to get more creative by ensuring that as they acquire newer aircraft, they do not need to discard older aircraft which could be converted to cargo planes. Airlines need to extract more value from this line of business to make money.”

Fagbemi was, however, quick to add that there was a need for restructuring of the regulatory regime to drive this potential revenue spinner for airlines.

Her words: “The business needs a lot of structuring and public awareness to drive growth. Most people do not know what to do. This is the reason airlines need a lot of structuring.”

The NAHCO boss, however, said conversations with airlines were ongoing to consider this line of business by fixing appropriate timing for people who need such services with good space to drive growth from that value chain.

While reiterating the need for structuring among airlines and people in need of local cargo freight to deepen participation into different airports, Fagbemi said to achieve this aim, there was a need for support from the Nigeria Civil Aviation Authority (NCAA) for people playing in that space.

The NCAA’s support, she said, would be in the areas of appropriate training, standards and regulation to drive growth for that area of aviation business. “This is key in ensuring standards, training and good practice in the handling of dangerous cargo and other products,” she stated.

According to Fagbemi, there has to be global standards that the regulator gives to everybody. “These are the areas that remain critical in packaging of goods that will be taken by the aircraft to different routes in terms of weight standards.

“These are areas we need help from government to drive growth for this arm of the business,” she said, adding that besides, regulation, there is need for customer enlightenment.

The President, Aircraft Owners and Pilots Association of Nigeria, Mr. Alex Nwuba, also said the sector could withstand the shocks of the current recession if airlines and others evolve explore revenue opportunities in the agro-allied/logistic value chain to make up for reduced revenues that will arise from dip in passenger traffic.

“We must not ignore new opportunities cargo inadvertently created by the challenges,” Nwuba, who is also the founder, Smile Airlines, charged his colleagues in the industry.

For Head, Strategy, Zenith Travels, Mr. Olumide Ohunayo, the expected dip in economic activity, following the slid into recession, should not be a death sentence, if airline operators could evolve survival measures by rejigging their aircraft fleet.

In fact, Ohunayo urged indigenous carriers to park large aircraft and return leased airplanes to their lessors as a way of cutting costs to ride through the times.

On her part, an NCAA-licensed Flight Dispatcher and Ground Instructor, Mrs. Victoria Jumoke Adegbe, said the economic recession provided a clear opportunity for airlines to convert some of their passenger aircraft for cargo operations.

Adegbe, who is also chief executive officer of Insel Networks Limited, said doing this could qualify as recovery for indigenous carriers which are currently struggling to keep their businesses afloat.

The Chairman, Domestic Airport Cargo Agents Association (DACAA), Mr. Monday Subair, said indigenous carriers were yet to fully exploit opportunities in the cargo and courier value chain with possibility of air lifting over 15 tonnes of cargo monthly.

He said this was an opportunity for airlines to earn huge revenues from such volumes of cargo if they deployed their aircraft for cargo haulage. He was emphatic that the economy’s slide into recession has thrown up opportunities for local carriers to tap into this revenue earning business by expanding their operations at a time passenger traffic is waning.

“Airlines should look beyond passenger operations and expand into cargo, which could be a huge revenue earner. Airlines which have large aircraft in their fleet could deploy some of it to service cargo,” Subair advised.

He said indigenous carriers with a good network of routes in the West African coast, such as Air Peace,  could break new grounds in cargo operations to boost their revenue in Monrovia, Freetown, Accra, Dakar, Banjul and other destinations.

Such operations, Subair said, could be extended to the Middle East and Sharjah in Dubai, the United Arab Emirates (UAE).

On his part, DACAA Board of Trustee Chairman Mr. Ikpe Ukana said indigenous carriers needed to partner cargo agents to drive the sustainability of their business during hard economic times.

He said: “Airlines do not depend on passenger operations alone. There is the need to develop cargo. Airlines should go into cargo. They need to partner domestic cargo agents to leverage opportunities in the cargo sub-sector to keep their business afloat.”