The Nation Newspaper

Category: Issues

  • How Nigeria can gain from global trade

    Nigeria may have become the toast of foreign investors and governments in search of bilateral trade and investment opportunities. But, what is in it for the country? Experts say the country must prioritise infrastructure development, address its poor non-oil export capacity and sustain the momentum in the implementation of the ease of doing business to benefit from such investments. Assistant Editor CHIKODI OKEREOCHA reports.

    Nigeria has become the beautiful bride for foreign investors and governments eyeing its huge market and population to claim a chunk of the West African market.

    Between June and last month, no fewer than 10 Heads of State and Government have visited Nigeria as part of their economic diplomacy to explore trade and investment opportunities.

    The prospective investors, who have stormed Africa’s largest economy and most populous nation ostensibly to expand their markets for goods and services, may have inadvertently heralded a season of bilateral trade partnerships and economic co-operation programmes between them and Nigeria.

    Some of them include French President Emmanuel Macron, July 3; German Chancellor Angela Merkel, August 13 and United Kingdom (UK) Prime Minister Theresa May, August 29.

    Even some less-endowed African countries and their investors have joined the race to woo Nigeria.

    For instance, South Africa’s Cyril Ramaphosa was in Nigeria on July 11.  Others include Togolese President Faure Ganssingbe, June 29; and Namibian President Hage Gottfried Geingob, July 4.

    Niger Republic and Benin Republic Presidents, Mahamadou Issoufu and Patrice Talon, were in Nigeria, July 23 and July 25. Gambia President Adama Barrow visited Nigeria on August 1.

    A common thread running through all the high- profile visits was the search for bilateral trade and investment opportunities in Nigeria. For them, the country’s bountiful, but largely untapped natural resources; large domestic market of over 180 million; a growing middle-class with spending power and an increasingly stable polity, among others, have become irresistible.

    However, the flurry of shuttle economic diplomacy by foreign investors and governments may have raised some posers. Will Nigeria take advantage of the increasing attention of global leaders to emerge competitive? Can she translate what may have emerged as a season of bilateral trade partnerships and economic co-operation programmes between her and members of the international business community into concrete benefits for the economy and Nigerians?

    Some experts and real sector operators fear that Nigeria may not benefit fully from the various bilateral trade partnerships and economic co-operation programmes being dangled before her, unless a number of issues such as dearth of infrastructure particularly electricity supply and the nation’s weak productive capacity are resolved.

    Other formidable forces identified can work against Nigeria’s push to ride the wave to the centre of global trade and business include faulty fiscal and monetary policies, lack of robust policies to boost non-oil export, especially the export potential of value added products in critical sectors.

    Weak manufacturing base justifies fears

    Members of the Organised Private Sector (OPS), particularly manufacturers, are still up in arms against Nigeria signing the controversial African Continental Free Trade Area (AfCFTA) agreement.

    The free trade deal seeks to create a continental trade bloc of 1.2 billion Africans, with a combined GDP of more than $3.4 trillion.

    It commits African countries to phasing out tariffs on 90 per cent of goods, with 10 per cent of “sensitive items” to be phased out incrementally. It will also liberalise trade in services, while also signaling a step towards building strong regional value chains.

    The agreement was seen by its proponents as an important milestone in promoting Africa’s regional integration and helping to increase intra-African trade, which stands at  about 17 per cent, by more than 52 per cent, worth about $35 billion yearly.

    But the deal has not gone down well with the OPS, which argued that the likely negative impacts of the agreement on private businesses and the economy far outweigh its supposed benefits. They insisted that the agreement will hurt the economy.

    The OPS noted, for instance, that by opening Nigeria’ borders, which is part of what the AfCFTA entails, it will expose local manufacturing industries currently struggling to survive to undue competition.

    They pointed out that at a time other countries are embracing the policy of protectionism for the growth and survival of their local industry, Nigeria cannot do otherwise by allowing a free trade policy.

    The President of Manufacturers Association of Nigeria (MAN), Dr. Frank Udemba Jacobs, has been quite vociferous in the OPS’s sustained opposition against the deal.

    Heexpressed worries that the agreement will open the floodgate for the influx of the European Union (EU) and other foreign goods into the local market and turn the country into a dumping ground.

    Jacobs said, for instance, that the Rules of Origin (ROO), which is used to determine the country of origin of a product for the purpose of international trade, in the AfCFTA cannot be adequately enforced to guard against the influx of goods into the Nigerian market.

    He expressed fears that the ROO cannot be adequately enforced because goods from the EU can find their way into one of the African countries that have bilateral agreement with the EU.

    The MAN president also said the agreement’s market access was a concern to manufacturers as it leaves low protection to locally produced goods.

    “The agreement says that 90 per cent of the tariff plan would be liberalised, leaving only 10 per cent to protect manufacturers. That 10 per cent is too low,” he kicked.

    Addressing members of MAN at the 51th Annual General Meeting (AGM) of the association’s Ikeja branch held in Lagos, Jacobs also argued that there was the need to undertake a wider stakeholders’consultation for a holistic analysis of the impacts of AfCFTA to the economy.

    Besides, he said there was the need to do a specific study to determine the possible impacts of the trade liberalisation deal to the economy and the manufacturing sector.

    Although the OPS’s opposition forced President Muhammadu Buhari, who declined to sign the proposed deal, investigations by The Nation, however, show that the nation’s weak manufacturing base and lack of critical infrastructure were at the core of the groundswell of opposition against the deal.

     

    Huge infrastructure gap also

    The dearth of supportive infrastructure is said to have put fears of competitive disadvantage in the minds of manufacturers against their counterparts from other African countries.

    There has been significant support for Nigeria to go ahead with the agreement initiated by the AfCFTA, including the avalanche of bilateral trade partnerships and economic co-operation programmes dangled before her by foreign investors and governments.

    However, the nation’s decrepit infrastructure has continued to stand in the way. The Financial Derivatives Company (FDC) brought this reality nearer home when it said Nigeria requires $15 billion (about N4.59 trillion) worth of investments yearly for 15 years to adequately develop her infrastructure nationwide.

    The economic and financial research firm, in its bi-monthly Economic and Business report for February 2018, said: “Nigeria’s under-investment in infrastructure has left it with a core stock of infrastructure of just 20 per cent to 25 per cent of GDP, compared to an average of 70 per cent of the GDP for more advanced middle-income countries of similar size.”

    While FDC said “Bridging this gap will require investing about $15 billion annually for the next 15 years,” it added, “Given the government’s limited access to international debt, revenue constraints and competing priorities, the major question is where will funding be sourced?”

    The research firm was emphatic that “One of the biggest constraints to Nigeria’s competitiveness, economic growth and diversification is the crippling infrastructure deficit, estimated at about $300 billion, about N30 trillion, by the African Development Bank (AfDB).”

    When considered that Nigeria spent N2.7 trillion on infrastructure in 2016 and 2017 fiscal years, the challenge infrastructure gap poses to Nigeria’s competitiveness in global trade comes into bold relief.

    However, hope of closing the gap brightened, following President Buhari’s visit to China where he participated in the seventh Summit of the Forum on China-Africa Cooperation (FOCAC). Buhari said Nigeria’s partnership with China through the Forum has yielded over $5 billion investments in the last three years.

     

    Low non-oil export capacity is sore point

    The economy, according to experts, is still going through a rough patch, despite exiting recession. Yet, efforts at leveraging a vibrant non-oil oil sector to reposition the economy sustainably have continued to be undermined by low non-oil export capacity.

    Lack of standardisation caused by government’s failure to put in place functional laboratories for testing and certifying products before export is said to be hurting non-oil export business as well as diversification.

    For instance, the Founder, Centre for Cocoa Development Initiative, a Non-governmental Organisation (NGO), Mr. Robo Adhuze, said lack of seriousness by the Federal Produce Inspection Service (FPIS), the agency responsible for checking and certifying agro-allied products leaving the country, was robbing Nigeria of the benefits of a vibrant non-oil export-based economy.

    “The government is not serious,” Adhuze charged, pointing out that “Quality standards have moved from physical standards to biological standards, but FPIS appears not be up to speed with this reality.”

    The expert also pointed out that Nigeria’s lack of seriousness was underscored by the fact that despite exporting cocoa for over 100 years, the country has no defined cocoa policy to identify the basic links in the cocoa value chain.

    According to him, there was need for a policy on cocoa farming with appropriate institutional framework to boost its production through proper identification of all the actors who have stake in the industry, from farmers to processors, marketers and exporters, among others.

    Adhuze further said lack of a clear cut policy direction was responsible for why the N100 billion Cocoa Sector Development Fund remained a proposal on paper years after the Federal Government announced the initiative aimed at supporting cocoa farmers and processors.

    He told The Nation that the government’s inability to walk the talk by translating the proposal into reality constituted a serious setback to Nigeria’s plan to reposition itself to extract immense value from the cocoa industry.

    Adhuze also said apart from staling Nigeria’s hope of reclaiming her position as a global powerhouse in cocoa production and export, the fund’s failure to get off the ground was frustrating efforts at riding on the crest of a vibrant cocoa industry to create jobs.

    Sadly, cocoa was one of the 11 strategic products with high financial value that has been identified by the Federal Government under its ‘Zero Oil Plan’ to replace oil. Others include palm oil, cashew, soya beans, rubber, rice, petrochemical, leather, ginger, cotton and shea butter.

    Under the Zero Oil Plan, which targets to replace oil as a major foreign exchange earner by growing non-oil export, the Federal Government targets annual non-oil export revenue of $100 billion (about N30.5trillion, at N305 per dollar exchange rate) through the implementation of the plan.

    According to the plan “Nigeria’s trade has been largely driven by exports of petroleum products, which contribute about 17 per cent to the nation’s GDP, signifying about 90 per cent of total merchandise exports and more than 65 per cent of the government’s income.

    “NEPC’s vision is to replace oil as a major national foreign exchange earner by growing non-oil export to $30billion in the next 10 years and eventually to $100billion yearly based on its Zero Oil Plan.”

    NEPC Executive Director/Chief Executive Officer Mr. Segun Awolowo said if the country could effectively key into the Commission’s plan in taking advantage of the opportunities in the agricultural sector, there would not be any need to depend on oil revenue for survival.

    He said the volatility in the oil market had made it imperative for the government to look inwards, adding that Nigeria could no longer depend solely on oil revenue for implementation of government’s programme.

    Sound and patriotic argument no doubt, experts say that Nigeria’s failure to work on her safety and other industrial standards and tackle constraints to meeting the US and other importing countries’ specifications remains clod in the wheel.

    The recent series of ban on the importation of agro products such as dry beans and cocoa from Nigeria by the US and the European Union (EU) underscored Nigeria’s lack of industrial standards.

    The situation was seen as an embarrassing setback to the nation’s push to stimulate non-oil export and facilitate economic diversification.

    Recall that the EU had in June 2015 banned the importation of Nigeria’s dried beans on grounds that it contained high level of pesticides considered dangerous to human health.

    While relevant government agencies said they were working to get the EU lift the ban, the European body extended the ban by another three years, citing the continued presence of dichlorvos (pesticide) in dried beans imported from Nigeria.

    This came after the Republic of Ireland rejected and returned five containers of beans exported from Nigeria to the country. The products were said to have been received with heaps of weevils.

    The US also added to Nigeria’s woes when it recently banned the importation of Nigeria’s cocoa into its market over issues of quality and standard.

    Lack of standards has also been cited as part of the reason Nigeria has yet to take full advantage of the 10-year extension of the African Growth and Opportunities Act (AGOA), for instance, to be competitive in the global market and also create jobs.

    AGOA is the cornerstone of US trade and investment policy in Africa. The programme, which was signed into law by the US Congress in 2000, is a preferential trade agreement between the US and some eligible sub-Saharan African countries that allows the exportation of certain products into the US market tariff and quota-free.

    The free-duty export programme essentially seeks to increase market access to Nigeria and 38 other eligible Sub-Saharan African countries to export about 7, 000 product lines to the US market.

    Its ultimate aim was to give Nigeria and other qualified African countries opportunity to build capacity in the global markets and also create jobs.

    Although, the Act initially covered eight years (October 2000 to September 2008), amendments signed by former US President George Bush in July 2004 extended it to September 30, 2015.

    Again, in a bid to ensure that target countries take advantage of the export window, the US Congress extended it for additional 10  years, which means that it now expires on September 30, 2025.

    However, an international trade expert, Dr. John Isemede, regretted that for 10 years, only very few Nigerian exporters have been able to export under the AGOA platform due to lack of information and proper documentation.

    “Most of the nation’s farm produce have been rejected in the EU countries due to the high amount of pesticides, and poor storage methods, yet we are the highest producer of most of those foods.

    “For instance, our yams, cassava, sesame seeds, Shea butter are being freely exported under documentation from countries like Ghana, Cote’d Voire,” Isemede said, in Lagos.

    According to him, these countries were beating Nigeria to AGOA because of poor marketing capacity. “Informal export and import trade have also taken over the country and smuggling accounts for up to 80 per cent,” he added.

    Also, the belief is that because of Nigeria’s over-dependence on the oil and gas sector, which provides the bulk of her revenue, it has been difficult for agric exports to play an important role in Nigeria-US trade under AGOA.

     

    Why value addition is imperative

    As Nigeria prepares to engage foreign governments and investors, experts argue that without adding value to natural and mineral resources, the envisaged benefits of such international trade/business deals may not come the way of Nigeria, let alone boost her competitiveness.

    The consensus is that for Nigeria to be competitive in global trade, the era of exporting natural and mineral resources in their raw state must give way for value addition; that Nigeria must produce, and most importantly, add value to mineral and natural resources for export, which can be achieved through the use of appropriate technology. Virtually, all the basic raw materials to feed the local industries are available locally. The snag, however, is that they are not available in sufficient quantity and quality. Most of the available local raw materials are said to be in unusable form, requiring value addition before they can be used by industries.

    The value addition, it was learnt, is done mostly by SMEs because they are the off-takers, taking the materials from the unusable form to the next intermediate stage. It is the intermediate raw material that industries require.

    However, because of the low capacity of the SMEs to add value to available local raw materials, coupled with lack of access to capital to set up processing facilities, process technology and techniques, and spare parts, among others, they have not been able to fill the gap.

    This explains why most of the local raw materials are exported for processing and later imported back into the country as finished products, with the addition of certain additives at great cost.

    For Nigeria to get round this challenge, experts said she must not ignore the role of Research and Development (R&D) in its drive for competitiveness.

    According to them, the majority of technologies required to reduce poverty, add value to natural resources, and upgrade the technological proficiency of local industry have already been invented.

    What the Federal Government needed to do was to develop capacity to use existing technologies, which requires developing engineering, technical and vocational skills rather than conducting frontier-level R&D.

    Renowned industrialist and Managing Consultant, Starteam Consult, Mazi Sam Ohuabunwa, did not mince words when he said one of the surest ways to Nigeria’s competitiveness at the global marketplace is through “a single-minded focus on manufacturing-production through value-addition.”

    Ohuabunwa is right. Nigeria boasts bountiful agricultural and mineral resources that could make other less-endowed countries green with envy. Sadly, however, most of these resources, if not all of them, are exported in their raw form, without any value addition.

    The implication is that Nigeria ends up losing money that could have been made from finished products produced locally. More importantly, Nigeria creates jobs for nationals in other parts of the world, while she continues to grapple with unsavoury socio-economic consequences of rising unemployment particularly, among graduates.

     

    Calls for sustained implementation of ease of doing business

    The Lagos Chamber of Commerce and Industry (LCCI) Director-General, Mr. Muda Yusuf, said for Nigeria to reverse the declining trend in Gross Domestic Product (GDP) and emerge competitive in global trade, she must sustain the momentum in the implementation of the ease of doing business.

    Nigeria’s recently rose by 24 places on the World Bank’s 2018 Ease of Doing Business Index. It was her highest jump in the history of the rankings, which provide a global snapshot of a country’s business environment in comparison to its peers.

    The country’s jump on the rankings, The Nation learnt, followed the signing of an Executive Order on Ease of Doing Business by Vice President Yemi Osinbajo last year. This was to specifically address some of the identified challenges to the ease of doing business in Nigeria.

    The aim was to create an enabling environment for business and entrench measures and strategies aimed at promoting transparency and efficiency. The executive order also sought to promote domestic and foreign investments, create employments and stimulate the economy.

    It was also expected to promote made in Nigeria products and services by supporting local contents in public procurement by the Federal Government, and also fast-track Nigeria’s transition to a non-oil economy.

    Before the order came into force, the Federal Government had inaugurated the Presidential Enabling Business Environment Council (PEBEC) in July 2016. The Council, which is being chaired by Osinbajo, was the administration’s flagship initiative to reform the business environment, attract investment and diversify the economy.

    The Council’s principal goal was to make it easier for Medium, Small and Micro Enterprises (MSMEs) to do business, grow and contribute to sustainable economic activity and create jobs.

    The Council’s reforms, as well as the signing of the executive order in 2017 paid off by forcing Nigeria’s rise by 24 places from 169 to 145 in the World Bank’s 2018 Ease of Doing Business Index.

    Now, Yusuf and indeed, other real sector operators are pushing for the government to sustain the tempo to force down the operational cost of investors.

    According to them, sustaining the implementation of the initiative was necessary in view of the fact that their operations are still hurting from multiple taxes and levies by government at all levels.

    Yusuf argued, for instance, that without doing so, while also leveraging areas where Nigeria has comparative advantage to boost her trade power, the country may end up holding the short end of the stick in what is supposed to be a mutually beneficial trade/business relationship.

    The LCCI chief, who cited latest report of the National Bureau of Statistics (NBS), which showed decline in the economy’s performance in the second quarter (Q2) of this year, said the economy was still in the doldrums.

    He specifically lamented the poor performance of the manufacturing and agric sectors, despite the attention given to them by both the monetary and fiscal authorities.

    Yusuf said the decline in the performance of the agric sector from three per cent in Q1 2018 to 1.19 per cent in Q2 was as a result of recent security challenges, which affected many farming communities across the country.

    With regards to manufacturing, the LCCI DG said the real sector was still grappling with serious productivity challenges caused by infrastructure constraint, particularly power and logistics.

    According to him, poor infrastructure has continued to take a toll on investment across all sectors, noting that the impact was more pronounced on manufacturing and the agric sector.

    Yusuf said, for instance, that the manufacturing sector slowed from 3.39 per cent in Q1 to 0.68 per cent in Q2 because of infrastructure deficit, logistic challenges, including the Apapa gridlock, access and cost of credit, weak purchasing power and multiple taxation.

    He, therefore, called on government at all levels to double their efforts to improve the state of infrastructure.

    Indeed, operators in various sectors have been screaming blue murder over the lack of supportive infrastructure particularly power supply, which, according to them, push up cost of production and also erode their competitiveness at the global market.

    Worst hit are operators in the Small and Medium Enterprise (SME) sector, where the export capacities of most Nigerian SMEs are said to have been seriously undermined by the high cost of production.

    Apart from infrastructure, the competitiveness of most SMEs has been affected by lack of adherence to contractual terms, ignorance of local and other countries’ customs regulations as well as poor packaging, labelling and insufficient information on nutritional content of export products.

    Some of these issues are believed to have combined to put the economy on a fragile state, despite exiting recession. They have also exacerbated fears that Nigeria may not be able to negotiate or go into any bilateral trade partnership from a position of strength.

     

     

     

     

     

     

     

  • ‘We need to inject capital into economy’

    There is need for financial market participants to work closely with the regulators and government institutions to create enabling environment that promotes capital inflow into the economy. President, Financial Market Dealers Association of Nigeria (FMDA) Samuel Ocheho, speaks with COLLINS NWEZE on the opportunities in the financial market, how technology can help in deepening the market and the group’s 2018 financial markets conference holding this week in Lagos.

    How would you assess the financial market in Nigeria and the impact it is having on the economy?

    There is room for Nigeria’s financial market to play a greater role in driving sustainable economic development through stronger financial intermediation and inclusion and the effective transfer of capital. This would require the financial market participants to work hand in hand with regulators and governmental institutions to create the enabling environment. Technology can also be a positive disruptor and accelerator for deepening the financial market in Nigeria.

    What role are the 2019 elections likely to play in the market?

    Elections, particularly in emerging markets, introduce a level of uncertainty into markets. Amid this uncertainty, investors would naturally take a cautious stance, choosing to sit on the side lines until the outcomes of the elections are known. In this instance, investors have downplayed any major risk coming out from the elections. Those who have been in Nigeria for long have seen opposition taking over from incumbent, a President dying in office and his Vice taking over and a host of others. There is not much anxiety from an election stand point.

    What reactions are we likely to expect from foreign portfolio investors as the elections approach?

    Nigeria’s democracy and elections have received a level of credibility from the international community particularly with the peaceful handover in 2015 after the incumbent lost the election. As such, while we would expect that investors may be cautious in a period of uncertainty, we do not anticipate significant sell-offs on the back of the elections.

    It is more likely though that money market and fixed income investments with maturities closer to the election will not be rolled over and subsequently outflowed. Additionally, surveys have shown that actions of Central Banks and other global issues such as trade wars and tightening in developed markets have a stronger influence from a foreign investor perspective.

    What opportunities do you see in the Mutual Funds market and are those opportunities being explored especially by grassroots investors?

    Largely reflective of the level of financial inclusion and literacy in the country, Nigeria’s mutual fund penetrations remain low at 0.3 per cent of Gross Domestic Product (GDP) compared to a global average of 15 per cent. The 10 per cent per annum growth in the value of mutual funds over the last five years nonetheless highlights the depth of opportunity for the industry.

    Growth in middle class, urbanisation and increasing use of technology should support higher penetration of mutual funds in Nigeria over time. Mutual funds clearly provide a platform for less savvy investors, especially people at the  grassroots, to invest in the capital market. The professionals that manage the funds have access to more real time information that may be out of reach for those at the grassroots. We do not have information for Mutual funds penetration to grassroots. However, a number of fund managers have reduced initial subscription values to as low as N5,000, which makes it possible for grassroots investors to participate.

    What advice do you have for local and foreign investors in the economy?

    The investment opportunities in Nigeria remain elevated. We are still a growing country with so much need for infrastructural development. The yields in the country are also high and forex rate has remained largely stable.

    My advice to investors is that there would always be one form of noise or the other as it is with African economies and emerging markets as a whole, but the opportunities and expected returns far outweigh the risk in the country in my view.

    What role does Financial Market Dealers Association (FMDA) play in the financial sector. Can you tell us about the group’s vision and what its priorities are?

    The Financial Markets Dealers Association of Nigeria is an association of licensed Deposit Money Banks (DMBs) operating within the Nigerian Financial Market. It emphasises on regulatory policy engagement/advocacy and professional ethics in the financial markets. The association builds capacity, identifies, supports and develops, where necessary possible financial market infrastructure, human capital and promotes professional and ethical standards in treasury activities in Nigeria.

    The FMDA has contributed to the development of the financial sector by collaborating with the government and financial markets regulatory bodies in formulating policies on monetary issues as well as creating awareness of financial markets products through education, technical advice and networking events.

    It has a vision of promoting efficient market practices by encouraging high standards of conduct and professionalism. The association’s priority among others is to contribute to the growth and development of our financial markets as well as the protection of the interest of its members in the exercise of their dealing/trading activities including its value chain.

    FMDA will be organising the 2018 Financial Markets Conference in Lagos on September 21.  Can you tell us about the objectives of the conference and what is it meant to achieve?

    The association is putting together a forum where players in the Nigerian financial market can share ideas and experiences to improve and stimulate economic growth. Consequently, we are bringing together investors in the manufacturing, agriculture, Fast Moving Consumer Goods (FMCG), areas that we typically refer to as the real sector, portfolio investors and policy makers to engage one another. We want a forum that will not be another talk shop, but an environment where practical ideas are shared that can influence our economy positively.

    Why did you chose the theme: “The Nigerian Financial Market – A Catalyst for Sustainable Economic Growth” for the conference?

    Nigeria’s wealth of potential remains largely unlocked amid a relatively dearth of financial capital. We needed to create the opportunity for knowledgeable minds in the industry to address the challenges and opportunities that exist in the Nigerian financial market and how that can be channeled towards sustainable economic growth. The real sector remains a veritable source of growth for the Nigerian economy, hence, the association’s drive to contribute its own quota to ensuring that capital is unlocked into the economy.

    Previously, we were seeing a lot of new listings in Nigeria. What is holding the companies back from listing?

    Investors are clearly looking for more quality names to invest in. When you talk to both domestic and foreign portfolio investors they are frustrated about the limited depth of the Nigerian equity market from a liquidity perspective and limited growth in market liquidity. The introduction of new listings addresses that concern. Nevertheless, issues such as compliance and information sharing, dilution of control, market depth, regulatory requirement, cost associated with interacting with investors might be challenges. However, there are a number of non-listed public companies that have shares trading on the NASD but at very limited volumes.

    Are there other measures that can boost listing in the market?

    I suppose the main reasons companies list is to improve access to equity capital. Hence a company with little need for that may not have a compelling reason to list. Additionally, there are a number of companies that have listed overtime, but have shown to be value-traps and have underperformed materially due to extremely weak performance and a poor competitive advantage. Hence what the market needs is more quality names with strong growth potential and that can deliver returns to shareholders. In terms of encouraging more listings, a simple approach could be to legislate listings as part of the reforms in sectors such as oil and gas and power. However, market regulators could allow some concessions for listed companies, thereby making it more attractive to be a listed company.

    Which segment of the market are investors likely to get the highest returns in the next six months?

    Six months is a very short horizon when you are talking about investments. Beyond buying treasury bills where duration risk is limited, six months sounds more like speculating which is not necessarily bad if one can spot/ interpret trends appropriately. Nevertheless, over the long-term, research has shown that equities offer better real (inflation adjusted) returns than fixed income.

    Finally, what are the measures you think operators and regulators should put in place to ensure that investors’ money is secured?

    Operators are enjoined to put in place sound and robust risk management policies and also abide by the policies put in place. It is one thing to have good policies in place and it is another thing to continue to condone breaches without proper remedial actions in place. Ultimately, regulators should continue to ensure that the financial system stability is achieved.

  • Food sufficiency: Why mechanised agric holds the ace

    Africa’s population is projected to hit 2.4 billion by 2050. More than half of this growth will occur in Nigeria where one-quarter of the population is said to be undernourished. This, according to the United Nations Department of Economic and Social Affairs, poses serious challenge to global efforts to reduce food shortage and end poverty. But, experts are optimistic that prioritising mechanised agric will help position Nigeria to contribute significantly to tackling global food crisis, writes DANIEL ESSIET.

    They are disturbing statistics that ought to challenge the ingenuity of the authorities in the agric sector as well as various actors in the agric value chain. With the United Nations (UN) Department of Economic and Social Affairs projecting that by 2050, Nigeria will be the world’s third most populous country, the implication of this  growth is certainly not lost on Nigeria, where one-quarter of the estimated 180 million population is said to be undernourished.

    Although the UN Department in its report, titled: ‘World Population Prospects: The 2017 Revision’, said with this development, Nigeria will overtake the United States in terms of population, just as the world population will reach 9.8 billion, it, however, added that Nigeria’s population growth presented a challenge as the international community seeks to implement the 2030 Sustainable Development Agenda (SDG) that hopes to end food shortage and poverty.

    The report brought the reality nearer home when it projected that Africa’s population will grow to 2.4 billion by 2050; that more than half of this growth will occur in Nigeria, where one-quarter of the population is already battling to wade off crushing poverty and undernourished.

    Disturbing, no doubt, experts, however, say that the report is a wake-up call to both the authorities and operators in Nigeria’s agric value chain. The thinking, and rightly so, is that Nigeria’s huge agricultural potential holds promises of meeting the continent’s nutrition needs, if the authorities get their acts right and operators embrace mechanisation to boost productivity.

    For instance, Nigeria’s large arable land, favourable climate conditions, and even population, which is made up of millions of high potential farmers, are some of the factors that justify optimism that the country could help drive food sufficiency, if she adopts mechanisation in her farming.

    At present, Nigeria has millions of high potential farmers, but their productivity has been declining, as many of them are said to rely on subsistent, traditional farming methods, which is largely unproductive.

    Apart from the limited adoption of new technologies, the declining production is also said to be as a result of other factors, such as poor irrigation, inadequate storage techniques, lack of access to credit for farmers, and lack of research.

    Other critical challenges that have continued to threaten food security include lack of supportive infrastructure (power and transport infrastructure), high post-harvest losses, and low export growth.

    The Managing Director, Agro Nigeria, Mr. Richard-Mark Mbaram, was emphasised that meeting the challenge of sustainably feeding 2.4 billion Africans by 2050 would require   transforming the sector.

    According to him, achieving the transformation would require new approaches and extensive coordination among all stakeholders in the agricultural system. He said more nutritious food would need to be produced using fewer resources that would bring greater benefits to farmers and rural communities.

    The agric expert, who noted the importance of political commitment and leadership in Nigeria to reduce hunger, said key areas for investment in food systems include rural infrastructure, access to markets, knowledge and technology, and improved storage and transport capacity to reduce post-harvest losses.

    Mbaram noted that any significant improvement in agricultural productivity levels will immediately improve millions of lives.

    He   said Nigeria   is a priority for investment, if Africa is to achieve food sufficiency, adding that any significant improvement in agricultural productivity levels will improve lives.

    According to him, the Federal Government should work with the private sector and international partners to make things work in areas, such as creating stronger platforms for agriculture policy formulation and encouraging private sector involvement in agric.

     

    Mechanisation, aggressive investments are key

    African Development Bank (AfDB) President, Dr. Akinwumi Adesina, has never hidden his revulsion over the fact that more than 500 million people in Africa are suffering from hunger and malnutrition.

    His dislike stemmed from the fact that Nigeria and other African countries have great potential to raise agriculture-generated incomes, increase productivity and become more resilient to climate change and improve the nutritional value of crops.

    Adesina said the time has come for increased investment in Africa to address global food insecurity, which, according to him and other experts, remains a real threat to global socio-economic development.

    Addressing a crowd of global agriculture experts at the Food and Agriculture Organisation (FAO) headquarters in Rome, recently, Adesina said:  “The future of food in the world will depend on what Africa does with agriculture.”

    He said while only a few countries in Africa have yet successfully achieved high-income status, he believes that the potential is there for all of them, and it starts with modernising agriculture.

    Also, in a keynote speech at this year’s Agricultural and Applied Economics Association (AAEA) Annual Meeting in Washington, D.C, United States, last month, Adesina lamented that Africa was spending $ 35 billion on food import yearly.

    Sadly, Nigeria, despite her rich agricultural endowment, spends N6.6 trillion ($23.3billion) on food import yearly. This is more than the N6.06 trillion ($21.4billion) total national budget for 2016 alone.

    But Adesina argued that this should not have been so, if farmers were able to harness the available technologies with the right policies. This, according to him, will rapidly raise agricultural productivity and incomes for farmers, and assure lower food prices for consumers.

    As Adesina observed: “Technologies to achieve Africa’s green revolution exist, but are mostly just sitting on the shelves. The challenge is lack of supportive policies to ensure that they are scaled up to reach millions of farmers.”

    He pushed for urgent collective action by state and non-state players to accelerate Africa’s agricultural growth and transformation. He said Africa and its partners must seize unprecedented opportunities for innovative partnerships.

    The AfDB boss said technology transfer was needed and that evidence from countries, such as Nigeria, demonstrated that technology plus strong government backing was already yielding positive results.

    Adesina cited Nigeria, where government’s policy during his tenure as Minister of Agriculture, resulted in a rice production revolution in three years.

    “All it took was sheer political will, supported by science, technology and pragmatic policies…Just like in the case of rice, the same can be said of a myriad of technologies, including high-yielding water efficient maize, high-yielding cassava varieties, animal and fisheries technologies,” Adesina said.

    The Nation learnt that AfDB was already pointing the way to how this could be done. It is working with the World Bank, the Alliance for Green Revolution in Africa (AGRA), and the Bill and Melinda Gates Foundation.

    The collaboration hopes to mobilise $1 billion to scale up agricultural technologies across Africa under a new initiative called Technologies for African Agricultural Transformation (TAAT).

    TAAT is taking bold steps to bring down some of the barriers preventing farmers from accessing latest seed varieties and technologies to improve their productivity.

    “With the rapid pace of growth of the use of drones, automated tractors, artificial intelligence, robotics and block chains, agriculture as we know it today will change,” Adesina said.

    As he projected, “It is more likely that the future farmers will be sitting in their homes with computer applications using drone to determine the size of their farms, monitor and guide the applications of farm input, and with driverless combine harvesters bringing in the harvest.”

    AFDB, which Adesina leads, envisions a food secure continent, which uses advanced technologies, creatively adapts to climate change, and develops a whole new generation of what he describes as ‘agri-preneurs’, empowered youth and women, who he expects to take agriculture to the next level.

     The AfDB president also recently took the case for expanded partnerships and investments in Nigeria and Africa’s agri-business sector to The Netherlands.

    That was when he paid a three-day visit to The Netherlands, where he intimated Dutch officials and industry captains on attractive investment opportunities in Nigeria and other African countries.

    In a statement obtained by The Nation, after the meeting, Adesina said the continent could feed itself in 10 years and the rest of humanity, if it gets the needed investment to unlock its agri-business potential.

    Reiterating that “What Africa does with agriculture will determine the future of food in the world”, he added that the greatest agenda the bank has is how to unlock Africa’s agricultural potential.

    Hear him: “If Africa can get the right technology to raise productivity, transform its savannahs, turn agriculture into a business and address the issue of nutrition, Africa can feed itself in 10 years and contribute to feeding the world in the years to come.”

    The AfDB boss, at a meeting with the Minister for Foreign Trade and Development Cooperation, in the Hague, Sigrid A.M. Kaag, commended The Netherlands for its support, which has extended to legal systems, water, food and nutrition, and gender.

    “Africa is growing economically. Foreign direct investment is on the increase. This is due to political stability and improved governance. Africa is open and ready to do business,” Adesina said.

     

    Infrastructure is critical

    Much as Nigeria and indeed Africa is open and ready to do business, according to Adesina, lack of supportive infrastructure remains a major hurdle to cross if efforts to achieve food self-sufficiency must succeed.

    For instance, noting that rapid population increase and high rates of urbanisation have exacerbated the need to increase local production through increased productivity, Mbaram said the costs of aggregating small quantities of production from widely dispersed farmers is a logistic challenge.

    The expert added that high cost of transport has made farming unprofitable for farmers. This was why the Managing Director of OCP (Office Cherifien des Phosphates), Mustapha El Ouafi, said investment was a necessary requirement to develop and organise the agricultural sector.

    According to him, feeding the rapidly growing continent’s population is a complex and challenging undertaking. He, therefore, stressed the need to speed up the deployment of modern agricultural production techniques.

    He said this will allow for reliable and affordable access to appropriate farming inputs and services, and ensuring that agricultural output find their way to markets.

    As one of Africa’s leading fertiliser companies, El Ouafi said OCP intends to actively participate in the continent’s effort to bolster agriculture. The centrepiece of its agriculture strategy, he said is to enable Nigeria and other governments to supply all their fertiliser needs.

    OCP has also created Agri-booster, a farmer-centred market funding model aimed at supporting small farmers. Agri-booster provides access to good quality inputs, financial services, and enhanced market linkages, as well as training and extension services centred on Good Agricultural Practices (GAP).

    The firm is training 10,000 small holder farmers across 12 local government areas in 72 communities within Kaduna State on soil analysis opportunities, and soil specific fertiliser recommendation for improved productivity.

    Even with such efforts, transportation hiccups remain, prompting experts to call for increased focus on the creation of local transportation and distribution corridors. This, according to them, should include attracting investments in areas such as roads and electricity.

    As El Ouafi   pointed out, transport and storage infrastructure were essential to allow access to markets and support any increased agricultural output, whether the destination is local, regional or international.

    He also said one of the best prospects for feeding Africa’s rapidly growing population is to increase the sustainable use of fertiliser, adding that there is the challenge of lack of a secure and affordable supply of fertiliser that meets the needs of local soils and crops.

    According to experts, Africa (Nigeria inclusive) currently has the lowest fertiliser consumption rate in the world — representing only two per cent of global consumption. This is despite holding 20 per cent of the world’s population.

    It is also said when Nigeria and other African farmers use fertiliser, they pay two to six times more than the average world price. Farmers, El Ouafi added, also need better education and training to boost soil fertility and access to financing.

     

    Renewable energy holds promises

    Global improvements in the development of renewable energy technology have brought down costs and made it easier to install renewable energy grids.

    The importance of renewable energy for Africa is reflected by the fact that the AU’s Agenda 2063 has also identified renewable energy as a priority area for the first 10 years.

    Already, the Federal College of Agriculture (FECA), Akure, Ondo State, has keyed into the agenda. Its Provost, Dr. Samson Odedina, said the institution was promoting a sustainable agriculture model using renewable energy.

    Subsequently, the institution has invested in a biogas recovery system, which transforms cow manure and other waste into enough electricity to power farm homes.

    Aware that the system requires a lot of maintenance, which many farms don’t have the manpower to manage, the college, according to Odedina, has been training manpower to handle the system.

    The increasing focus on agricultural development alongside renewable energy, The Nation learnt, stemmed from farmers’ realisation that renewable energy is now more reliable and cheaper than fossil fuel power.

    It also contributes to strengthening energy security and creating more jobs. Already, some experts point to Africa as having advantage in developing solar and wind power, which will improve the competitiveness of agriculture.

    The belief is that Africa is blessed with potential for solar, wind, hydropower and geothermal energy resources; it only needs to unlock its energy potential – both conventional and renewable-to push back food shortage and stem poverty.

    In leveraging renewable energy, experts say that Nigeria could borrow a leaf from Morocco, which, according to them, is an ideal partner for advancing Nigeria’s energy security goals, considering the significant strides the country has made in the energy sector.

    Morocco is said to be the leading renewable energy country in Africa. Morocco is implementing an ambitious strategy to develop the energy sector that will require investments of $40 billion by 2030, including $30 billion for renewable energies.

    For experts, Nigeria needs to explore long-term energy options, including focusing on “green” energy solutions that lie within its natural competitive advantage.

    Those pushing for investment in renewable energy argue that access to energy is essential for agricultural growth particularly in Africa where more than 640 million people are said to be without electricity.

    Interestingly, the AfDB’s new and ambitious Desert-to-Power initiative, which aims to generate 10,000MW of power across Africa’s Sahel region, will be critical to reducing migration and climate change impacts.

    “We will do this through a blended finance mechanism with guarantees,” Adesina said, adding that at less than 20 per cent the rural electrification rate in sub-Saharan Africa is the lowest in the world.

    Across Africa, electrification of rural areas faces challenges such as the high costs of capital, low revenue collection rates, and insufficient generation capacity (infrastructure), amongst others.

    This has affected continent-wide food production. And for analysts, access to electricity is important for improving agricultural productivity to employment. Even though Africa is endowed with inexhaustible raw energy potential, over 640 million people do not have access to electricity.

     

    Nigeria’s anchor borrower’s programme to the rescue

    Minister of Agriculture and Rural Development Audu Ogbeh said the government was determined to achieve a hunger-free society.

    Noting that for decades agric was the economy’s backbone, he regretted that its contribution to Gross Domestic Product (GDP) has dropped significantly.

    The Minister said the agric sector has been underperforming for years and has now faded to one of the lowest levels of productivity due to reasons typical of the underachievement felt in all sectors of the economy and not only in agriculture.

    Ogbeh, however, said one of the Federal Government’s interventions that has yielded positive results particularly in the areas of rice and wheat production was the Anchor Borrower’s Programme (ABP).

    Through the ABP, a scheme created by the Central Bank of Nigeria (CBN) aimed at improving the commercial sustainability of smallholder rice and wheat farmers, government has been trying to reduce its huge import bill on those food crops.

    Introduced as a pilot initiative in late 2015, the ABP encourages domestic production by facilitating access to financing and supplies such as tractors and fertiliser, while also improving links between smallholder producers and anchor companies involved in processing.

    Under the scheme, farmers with at least one hectare of land qualify for loans at nine per cent, well below the benchmark interest rate of 14 per cent. The CBN is funding the programme using N40 billion ($130m) allocated from its N220 billion ($720million) Micro, Small and Medium Enterprise Development Fund.

    The ABP has shown initial signs of success, with total unmilled rice output growing 17.4 per cent between 2014 and 2016 to 7.85m tonnes, according to the National Bureau of Statistics (NBS).

    Apart from the need to sustain the programme and perhaps, introduce new ones, experts said for Nigeria to raise agricultural output and achieve food self-sufficiency, she must bring potentially-cultivable land into cultivation, increase yields and shift to cultivation of high-value and high-yielding crops.

    Also, the Federal Government, they said, must pursue pragmatic partnerships and collaborations aimed at leveraging modern, innovative technologies to boost agric production.

  • Credit bureau chief seeks more loans for consumers, MSMEs

    Banks provide less than 10 per cent loans to consumers and Micro, Small and Medium Enterprises (MSMEs) in Nigeria compared to other emerging economies, Managing Director/CEO, CRC Credit Bureau Limited, Tunde Popoola, has said.

    Speaking during an industry forum organised by the firm in Lagos, he said following the enactment of the Credit Reporting Act, 2017, and the launch of a global scoring platform, it is expected that consumer loan value would grow exponentially.

    He added that the World Bank projected that by 2020, one billion adults currently excluded from traditional financial systems will gain access to some form of banking services.

    Popoola, who spoke on the theme: Growth & innovation in retail banking: building sustainable business models, said the future of retail lending is in embracing financial technology for financial inclusion, adding that today and tomorrow belong to those who are able to play in retail banking. “The drivers of any sustainable retail lending business model include digitilisation, data-driven decisions,” he said.

    He added that credit bureaux (in emerging markets) have the capacity of expanding credit financing by $1.2 trillion, touching 613 million more people and reducing transaction cost by between 30 and 40 per cent.

    According to him, there are untapped opportunities to grow asset size and profits. He added that there is need to grow bank assets and profitability in a healthy way.

    Popoola also said CRC Credit Bureau is positioned to help banks and other institutions successfully manage their retail lending business on a scale that enables exponential financial growth. The firm also provides opportunity for industry practitioners to discuss the trend in consumer/retail lending; discuss business models that work in retail lending in an economy with data/information challenge, appreciate and discuss the role of credit bureau in retail lending and International Financial Reporting Standards (IFRS) implementation.

    He said Africa’s banking markets are among the most exciting in the world, adding: “The continent’s overall banking is the second fastest-growing and second most-profitable of any global region, and a hotbed of innovation. Africa’s banking revenue pools to grow at 8.5 per cent a year between 2017 and 2022, bringing the continent’s total banking revenues to $129 billion. Africa’s retail banking markets are ripe with potential and present huge opportunities for innovation and growth.

    “Revenue from retail banking will grow to $53 billion, representing about 41 per cent of total banking revenues of $129 billion. The expected growth in revenues will come from South Africa, Egypt, Nigeria, Morocco, Ghana and Kenya.”

    Also, Dun & Bradstreet Credit Bureaux Managing Director/CEO, Miguel Llenas, said the future of banking is technology. He said financial technology (fintech) firms also play critical roles in deepening financial inclusion and are also giving the banks a good fight for the market space. According to him, banks and fintech firm needed to partner to deepen financial inclusion by taking financial services to the grassroots

     

  • Sterling Bank, African Ventures Programme partner

    Sterling Bank Plc has announced plans to partner with 500 indigenously promoted African enterprises in a bid to make 50 of them globally competitive in the next five years.

    Group Head, Strategy and Innovation, Sterling Bank, ShinaAtilola who disclosed this while addressing participants at the African Ventures Programme hosted by the bank in Lagos recently, explained that the Africa Venture Programme is an annual pan-African leadership event that brings together exceptional emerging leaders from government, businesses and non-profits across Africa.

    Atilola added that the programme enables the transfer of knowledge, know-how and inspiration across generations and attracts some of the most inspiring leaders in the world today as participants. “It creates a new generation of African leaders who have the cultural intelligence to work fluidly and flexibly across the continent, who have the analytical and creative skills to use diversity to spark innovation, and who have extraordinarily broad African networks,” he said.

    Atilola stressed that Africa needs leadership in every sector of the economy and not only in government, adding that, “We need leaders that can see wider and deeper than others can see. We need leaders that are willing to take the risk. We need leaders that are willing to leave their comfort zones. “Leadership is about service, not an entitlement. Leadership is about what you are willing to give and not what you are expecting to receive. Leadership is about denying yourself just because you want to achieve a greater purpose. It is not about solving your problems, but it is about solving other people’s problems.”

     

     

    The group head noted that a leader must combine his concern for the greater good with an excellent in-depth understanding of how to run a business or how to create and deploy new technology. He reiterated that Africa needs leaders who can think broadly and who excel in teamwork and communication. “It is not about you (leader) but about us,” he said

     

  • Stanbic IBTC cancels deposit slips for cheque, cash lodgments

    Stanbic IBTC Bank Plc has deployed some changes on its Cash Deposit Process and Cheque Truncation System (CTS) portal, which includes the elimination of cash and cheque deposit slips in branches.

    Among other key features of the new offering are proper customer data collection, reduction in the presentation of stale and post-dated cheques and activation of cheque deposit receipt functionality on the CTS portal. However, deposits for accounts such as electricity bills, Federal Inland Revenue Service, Customs, and Lagos Inland Revenue Service, among others, still maintain the use of customized deposit slips.

    The initiative, tagged “Speak Your Transactions,” became operational for cash deposits on August 13, 2018 and August 20, 2018 for cheque deposits. The purpose of the initiative is to further embed the Stanbic IBTC Group’s “Go-Green” culture as it continues on the paperless journey and empower its customers to speak their transactions.

    Chief Executive, Stanbic IBTC Bank Plc, DemolaSogunle, said the new initiative is in fulfillment of the bank’s commitment to improving customer experience, work efficiency, data quality and ensure all improvement opportunities are maximised to the customers’ benefit.

    “This is another initiative that speaks to our determination to consistently reinvigorate our systems and procedures in order to provide bespoke financial solutions to our clients. As a service business, we recognise that customer satisfaction is a cardinal operating principle and there is no better way of showcasing this than empowering our customers and enhancing their banking experience,” Sogunle said.

    He added that as a member of the Standard Bank Group, Africa’s largest bank by assets, Stanbic IBTC will continue to leverage on the 155-year experience, expertise and strong financial clout of the mother brand to deliver superior sustainable shareholder value by meeting the needs of its clientele. “Our ultimate goal is to continue to render best-in-class service to our customers and also play a leading role in driving their growth”.

    Regarding cash deposits, the process entails some simple steps in which the bank teller receives the customer’s account name and number, and subsequently validates the details provided by the customer and then receives cash to be lodged in. Thereafter, the teller processes the request and prints duplicate receipts that are handed over to the customer. After endorsement of both copies by the customer, the teller appends his or her signature and stamps the receipts; then hands over a copy to the customer while the duplicate is kept as evidence of processed transaction.

     

    For outward clearing cheques, only one receipt is printed, stamped and given to the customer. At the point of truncating the cheque on CTS, the teller is required to input the cheque issuance date and present the posted cheque on CTS to the authorizer and prints a copy for the customer.

     

  • Firm announces IT support for banks, SMEs

    Tranter IT, provider of IT infrastructure services, has launched a new service offering called 10+ IT Support for Small and Medium Enterprises (SMEs). The product is expected to help SMEs and commercial banks save cost and improve efficiency.

    According to the company, 10+ IT Support can help SMEs work better, save time, money and ensure optimum productivity. The firm is also helping commercial banks to achieve seamless services and IT support for the Automated Teller Machines (ATMs).

    10+ IT Support, a branded service powered by Tranter IT, is an integrated technology support service which provides premium IT support to small and medium scale enterprises. This level of support was previously only available to large organisations, but now Tranter IT has customised and tailored this service to the needs, size and dynamics of small and medium scale businesses.

    “Our clients include Union Bank, FCMB, Sterling Bank Plc, Lafarge Africa Plc, Leadway Assurance, Total E&P to mention a few.” – Executive Director, Ms. Melanie Ayoola on why 10+ IT Support was launched.

    “The support service we offer to the big enterprises is a dedicated service, what we are offering to the SME market is largely a shared service. Every organisation needs IT to survive. With 10+ IT Support service, your shas access to over 150 senior engineers in our network and not just the support staff attached to your organistion. Tranter IT has over 300 employees out of which over 250 of them are trained and highly skilled ICT engineers who are currently engaged with top organisations in Nigeria. We have a business continuity plan in place where for every 10 engineers on the field, there are two backup engineers to cater for resignations, annual leaves, maternity leaves and other unforeseen events. By this, downtime is eliminated from the businesses of our clients. With 10+ IT Support, an SME can concentrate on their core business areas while we manage and provide either a part or the whole of their IT requirements. Tranter IT has trained over 100 engineers this year for free to the trainees with about 60 per cent – 70 per cent of them currently engaged with us. This is also part of our CSR as an organisation.” – Chief Operating Officer, AdewaleSaka on Tranter IT’s experience in the IT service industry.

    10+ IT Support was developed to satisfy the needs of growing businesses that are trying to achieve growth.  The growth can happen in different areas of the business but almost all growth can be dramatically boosted by IT.

    “From our series of research on growing business owners’ pain points, we found out that IT is one of the key issues for growing businesses. As the business environment is becoming more complex, there needs to be smarter thinking by embracing IT for any business to remain competitive’’ – Product Manager, Mr. Onyinye Ibe.

    Partnering with Tranter IT by procuring our 10+ IT Support service immunizes our Clients against loss of data, downtime, the sudden resignation of staff, productivity lags, the high cost of quality IT staff thereby enabling and enhancing the speed and growth potential of the business.

    “10+ IT Support has ITIL framework and IT Service Management practices embedded in its delivery to our esteemed clients.  This new service will follow best practices to ensure that we deliver the best IT Support service to Small and Medium Enterprises. At Tranter IT, we pride ourselves on having top-notch HR management because our support staff’s welfare is a top priority.” – Support Manager, Mr. Olalekan Ahmed on ensuring best standards practice and the welfare policy for the support staff at Tranter IT.

    The Management of Tranter IT observed, through an extensive research conducted, that interest and demand for professional IT services, solutions and especially support were increasing from the SME sector and decided to package 10+ IT Support as a service suited to the demands of this sector of the Nigerian economy.

     

     

    So for the first time, the type of high quality, premium, reliable, comprehensive IT Support that keeps the large companies, enterprise clients operating smoothly and effectively is now available to any company that has 10 or more computers at a price that is less than the cost of hiring their own full time IT Engineer. Never again will our SME Clients suffer from the high cost of employing their own IT Support engineers and never again will they suffer from the problems of high staff turnover in their IT departments all over the country.

    “With 96% of Nigerian businesses are categorized as Small & Medium Enterprises (SMEs), Tranter IT is set to employ 10,000 support engineers within the next 5 years who will join our extensive network of IT professionals.” – Executive Director, Ms. Melanie Ayoola on the future plan for improving IT in West

     

  • How insurance can break poverty cycle

    Insurance is one of the primary solutions identified for breaking the poverty cycle in pusuit of the Financial Systems Strategy (FSS2020) goals. But, two years to the lapse of the timeline, experts warn nothing may be achieved if the government fails to tune up the industry, reports Omobola Tolu-Kusimo.

    Without insurance, the poverty and ill health cycle of any country will continue. This has led to the recognition of insurance in the Financial System Strategy or FSS2020 as crucial to breaking the cycle.

    Everyone is exposed to risk either through normal everyday existence or the enterprises that they may embark upon. Insurance enables peace of mind, which enables people to take more risks with expected  higher returns.  Insurance also acts as stabilisation against shocks in case risks materialise.

    For example, health insurance access reduces the likelihood a household has to sell some of their productive assets, like cattle, in order to take care of the health costs of any family member.

    Therefore, the importance of insurance in achieving financial inclusion vision by 2020 and ending the cycle of poverty in the country cannot be over-emphasised.

    Financial inclusion simply means making insurance services readily accessible to all and providing access to useful and affordable financial products and services that meet the needs of every individual.

    Currently, poverty and unemployment remain major challenges facing the country. As 2020 beckons, the Federal Government has shifted its focus on insurance operators and the regulator to achieve the strategic goals.

    The target is that by 2020, the number of adults in Nigeria with access to payment services will increase from 21.6 per cent to 70 per cent, savings will increase from 24 per cent to 60 per cent, and credit will increase from two per cent to 40 per cent.

    It is also anticipated that insurance penetration will grow from less than one per cent to 40 per cent and pensions from five per cent to 40 per cent.

    At present, Nigeria lags behind inclusion targets across every measure and is not on track to meet the targets by 2020.

    Experts say operators and regulator in the industry would need to brace for the purpose of saving mankind. They need to pay attention and invest in inclusive insurance markets because of their promise for the future and government expectations thereof.

    Enhancing Financial Innovation & Access (EFInA) 2016 survey estimated people living under extreme poverty at 60 per cent and pegged the rate of unemployment at 24 per cent due to economic growth’s inability to trickle down to the poor.

    The survey also showed that the total adult population, that is, individuals from 18 years and above in Nigeria, is 96.4 million.

    The questions, however, posed by industry operators, the regulator and other stakeholders at the 2018 IICC National Insurance Conference in Abuja were: Can the country eradicate extreme poverty & increase shared prosperity? Can technology and insurance help us on this mission? And can we achieve financial inclusion vision 2020 in two years?

    Founder and Chairman, Zenith Bank, Jim Ovia and Managing Director, SystemSpecs, John Obaro, are positive. The National Insurance Commission (NAICOM), insurance operators and other stakeholders also believe so.

    But despite all agreeing that the poverty cycle can be eradicated by 2020 by leveraging the use of technology, many noted that the danger in achieving this goal is the fact that the government is yet undecided whether or not to use technology to drive financial inclusion.

     

    Experts’ views

    Ovia challenged NAICOM, the Nigerian Communication Commission (NCC) and the Central Bank of Nigeria (CBN) on financial inclusion.

    He said for the financial inclusion vision to be achieved by the Federal Government, NAICOM, NCC and the CBN needed to agree and approve the use of mobile telephones to sell micro insurance to the poor and excluded adults in the country.

    He said before now, the three regulators have found it difficult to approve mobile telephones to be deployed by insurance operators to sell insurance to the public.

    Ovia, who spoke at the conference, said while NAICOM has released a new micro insurance guideline in this regard, this will not change anything if operators would still need to sell the product in the traditional way.

    He decried the fact that the industry has not started using mobile technology for micro insurance, noting that this has been the bane to deepening insurance penetration and achieving financial inclusion.

    He said: “NAICOM has a new guideline on micro insurance, but it has not been deployed through mobile telephony. The Commission can’t deploy micro insurance through the traditional ways. It should be done through new means, which is technology.

    “The NAICOM, NCC and CBN need to approve mobile telephony for the distribution of micro insurance urgently.”

    He pointed out that evidence has shown that appropriate financial services can help improve household welfare and spur small enterprise activity while economies with deeper financial intermediation tend to grow faster and reduce income inequality.

    Similarly, it is established that digital technologies can play key role in addressing poverty eradication within a balanced mix of responsible regulation, relevant skills and accountable institutions.

    He highlighted some examples of financial products, such as credit, savings, insurance and payment systems.

    “Credit helps to improve the productivity of micro enterprises or to cover health expenses; savings contributes to pay for children’s education, health care or meet other financial obligations; insurance offers protection against the financial impact of unfortunate events such as illness, accidents, burglary/theft etc; and payment systems facilitate easy movement of funds to complete financial transactions for example sending money from far away cities or abroad to family members back home.”

    He said micro insurance cannot be deployed successfully, using the conventional method, adding that the only system which have been tested and trusted is the mobile technology.

    According to him, insuring life will take about 40 years if the old method of deploying insurance is used, but with mobile technology, 12.5 per cent contribution to the nation’s GDP can be achieved.

    He further said to achieve 80 per cent target of financial inclusion by 2020, financial experts should be more innovative and creative in their business.

    The Zenith Bank chairman was of the view that insurance remains one of the best tools to break poverty circle and ill-health in the country.

    Commissioner for Insurance Mohammed Kari urged insurance operators to organise information technology forum where all stakeholders will be brought together to enhance decision making.

    He said the insurance sector plays a vital role as it helps to reduce the poverty line, helps entities and individuals manage their risks and protects them from negative adverse effects of unforeseeable events.

    Speaking on the financial inclusion strategy, he said: “In 2012, Nigeria launched the National Financial Inclusion Strategy (NFIS) to reduce the percentage of adults that are excluded from financial services from 46.3 per cent in 2010 to 20 per cent in 2020. The strategic goals are driven by a broad range of co-ordinated interventions, including simplified Know Your Customer (KYC) regulations, agent banking, micro-insurance and consumer protection principles.

    “In the area of microinsurance, NAICOM has been working with Deutsche Gesellschaft fur Internationale Zusammenarbeit Gmbh, GIZ of Germany and our own Enhancing Financial Innovation & Access (EFInA). The relationship with these two bodies have culminated in a well-documented diagnostic study of the Nigerian market, several seminars, workshops and trainings on microinsurance for both operators and staff of NAICOM and the industry at large.

    “In December 2017, the Commission went a step further and invited the Toronto Centre, Canada, to conduct a training session in Abuja for insurance operators and regulators in the West African sub-Region.”

    He said financial inclusion is the collective responsibility of all and called on stakeholders to support the drive of the sector as the regulator forges ahead in creating an enabling environment for insurance penetration and increasing access to financial services and products.

    Obaro highlighted the role of technology in achieving financial inclusion and how it can be leveraged to attain set targets in Nigeria.

    According to him, there is need for the Federal Government to leverage technology for financial inclusion.

    “Technology has demonstrated a strong potential to help improve access to and quality of financial services for the unserved and underserved. Exciting technology innovation is happening in emerging markets and very much in Nigeria through new products and services launched by start-ups and through partnerships with banks and corporates.”

    He, however, said the Federal Government is undecided about the model (bank-led or MNO-led) to adopt for financial inclusion.

    He said policy makers, including NAICOM and NCC, needed to facilitate policies that reconcile financial stability and financial inclusion.

    “They also need to be intentional in financial literacy efforts and have constant line of engagement with industry,” he averred.

    Kari said a cursory look at the access to financial services in Nigeria indicates that there is a huge deficit in terms of financial inclusion, which insurance is a veritable part.

    “Statistical analysis indicates that Nigeria requires aggressive and strategic developmental efforts towards reaping the benefits of her abundant potential. This has become an imperative rather than an option if ordinary Nigerians, who have no access to financial services must be brought to the fold,” he said.

    Economic Associates Chief Executive Officer (CEO), Ayodele Teriba said people have to first sort out other pressing needs before thinking of insurance.

    According to him, it is only a population that has means of income that can buy into insurance.

    He siad it is only an individual that has a monthly income that can afford to buy insurance.

    According to him, citizens  of a country where its population is absolutely poor will find it difficult to think of insurance.

     

    Power of digital finance

     

    According to Bill Gates, in a country where three quarter of its people have mobile phones, digital finance offers the potential to boost the economy from top to bottom.

    Right now, more than 50 million Nigerians are at the whim of chance and informal economy. With access to digital financial tools, they can cope better with disasters that threaten to wipe them out, build assets and gradually lift themselves out of poverty.

    “Consider the impact this would have on businesses. Out of the 37 million micro, small, and medium enterprises in Nigeria, more than 99 per cent are micro. According to the best estimates, digital financial services will create a 12.4 per cent increase in Nigeria’s GDP by 2025. Meanwhile, oil accounts for about 10 per cent of Nigeria’s GDP…,” he said.

     

    Distribution strategy

    According to Ovia, digital distribution is a key component of enabling financial inclusion. For example, just to insure one million lives, the traditional distribution mechanisms can take up to 40 years if not more in some developing countries.  However, the same number of people can be reached in less than one year via mobile operators.

    “Prudential Plc our global partner at Prudential Zenith, achieved a  rapid take up of micro-insurance products via mobile technology in Ghana. Their mobile offering saw a take up of about 1.5 million people in just over 12 months.

    “In 2014, micro-insurance coverage had reached three million people, an increase of over 200 per cent from 2009. This figure was largely due to a loyalty insurance scheme delivered through a partnership between Airtel, MicroEnsure and African Life Assurance Zambia,” he said.

    He said there are many players on the global financial space via digital channels.

    “It is not just the fancy names, such as Hippo, Lemonade, Oscar and Nutmeg that define these players. They are seriously disrupting the insurance and other financial models to bring financial products to people originally considered uninsurable. These players may be on a global scale in other markets, but they are beginning to look at African markets as well.

    “We have already sighted the innovative example of Prudential Life Insurance Ghana, which achieved 1.5 million policies in 12 months, using mobile phone technology. Prudential Zenith, Nigeria together with other insurance companies is now ready to deploy micro insurance products in the use of mobile phone technology as soon as both the NCC and NAICOM could collaborate and approve to do so.

    “I would like to encourage the NCC and NAICOM to collaborate and approve the use of mobile phone technology in distributing micro insurance products in Nigeria. We must be aggressively innovative, if we are to achieve the targeted goal of 80 per cent financial inclusion by 2020 in Nigeria,” he said.

     

     

  • UI names centre after FCMB Group founder Balogun

    The University of Ibadan (UI) has again honoured the Founder of FCMB Group, Otunba Michael Olasubomi Balogun, by naming its modern and multi-purpose conference centre after him.

    The centre will be unveiled and renamed Otunba Subomi Balogun Conference Centre.

    According to the university, the decision is in recognition of Otunba Balogun’s numerous and significant contributions to the development of the institution, education and the country over the years.

    UI, in a letter to the FCMB Founder from the Governing Council and signed by the Registrar and Secretary to the Council, Mrs. Olubunmi Faluyi, said: “We acknowledge with gratitude, your prayers and goodwill for the continuous progress of the University’’.

    Balogun is said to be the first Board Chairman of UI Ventures, who brought his business acumen into play to transform the organisation into a full-fledged business group. Today, UI Ventures whose hotel arm has about 110 rooms of quality standard, is into printing, landscaping and horticulture, consulting, bakery products, computer training centre, petrol station as well as a fast food business, among other interests.

    Commenting on the naming of the architectural masterpiece after him, Otunba Balogun expressed profound gratitude to the UI for finding him worthy of the honour. He stated: “I thank you for appreciating my services and commitment to the University of Ibadan by this recent honour that you bestowed on me. I feel honoured by and I deeply appreciate the long and personal relationship I have had with the University of Ibadan over the years. It is my prayer that the university will continue to retain the position of a primus-inter-pares among the tertiary institutions in Nigeria.’’

    The Otunba Subomi Conference Centre has five halls. It can accommodate between 3,000 and 5,000 guests in the main auditorium and up to 7,000 guests in the entire complex. The parking lot that can accommodate about 700 cars is also a major value added. The interior of the conference rooms are tastefully decorated.

    The centre offers an extensive range of modern facilities and services. Such facilities include presentation screens, projectors and individual highly sensitive microphones. that can be used independently in each of the halls or in all the halls simultaneously.

     

  • Nova Merchant Bank gets MD

    Nova Merchant Bank Limited has appointed Anya Duroha as its Acting Managing Director/Chief Executive Officer.

    The appointment, which is subject to the nod of the Central Bank of Nigeria (CBN), took effect from August 30.

    Prior to his appointment, Duroha was the Executive Director (ED), Wholesale Bank.

    The bank’s Chairman, Phillips Oduoza, said: “Duroha’s appointment marks the start of an exciting growth phase in the bank’s business, following the go-live of its Intellect Digital Core (IDC) banking platform as the bank begins to leverage the benefits of its investment to deliver innovative solutions for its customers.”

    Before joining the bank as a pioneer staff member, Duroha was the Head, Business Banking at Stanbic IBTC, where he was in charge of Commercial Banking and SME businesses.

    In that role, he had the responsibility for both relationship and portfolio management. He designed and implemented interventions and strategies that ensured the rapid growth and profitability of the business.

    He started his banking career at Citibank and has 25 years banking experience spanning several areas of banking. He was the Head, Corporate Banking, United Bank for Africa Plc; Head, Corporate Banking, Diamond Bank Plc and Head of Business Development (Designate), Diamond Bank, United Kingdom. In all these roles, he has managed portfolios in various sectors, including manufacturing, agriculture, construction, oil and gas, infrastructure, aviation, power, maritime, telecommunications, FMCG and structured trade finance.

    Duroha holds M.Sc. in Banking & Finance from the University of Benin and a B.Eng. in Civil Engineering from the University of Nigeria, Nsukka. He is an alumnus of Wharton Business School, University of Pennsylvania and Lagos Business School.