The Nation Newspaper

Category: Issues

  • NUP crisis deepens

    NUP crisis deepens

    It has existed for four decades as a trade union and an affiliate of the Nigeria Labour Congress (NLC). But, the Nigeria Union of Pensioners (NUP), a body overseeing the welfare of retirees, is threatened. Its leadership is rocked with allegations that some of its members belong to the pension fraud syndicate, reports OMOBOLA TOLU-KUSIMO. 

    The stage seems set for a big crisis  in the pension industry. Spoiling for war are pensioners under the Defined Benefit Scheme (DBS) and their Nigeria Union of Pensioners (NUP) umbrella body. An affiliate of the Nigeria Labour Congress (NLC), the NUP oversees the welfare of pensioners.

    An allegation by the Attorney-General of the Federation (AGF) and Minister of Justice, Abubakar Malami, that some NUP officials stole pension funds, stirred the hornet’s nest.

    Malami AGF confirmed the existence of a pension fraud syndicate, allegedly led by Abdulrasheed Maina, the fugitive former civil servant. He said the syndicate operated with some NUP executive members.

    He said there were 16,238 ghost pensioners and that N839 million was paid to fictitious pensioners monthly.

    He alleged that nine accounts were maintained with some banks by the syndicate for public officials, adding that about N200 million was remitted into the accounts monthly.

    The revelation infuriated the pensioners, many of whom have not received their gratuities, several years after retirement.

    The pensioners are accusing their leaders of financial recklessness, inefficiency and insensitivity in addressing their welfare.

    While many of the more than 300,000-members of the union abused their leaders, others have opted out of the crisis-ridden union.  They pleaded with the Federal Government to relate with them under another umbrella.

    Things fall apart

    Members of a splinter group, tagged NUP All Sectoral Units (ASU), identified themselves as pensioners from federal parastatals and private companies. They emerged from the old DBS and the new Contributory Pension Scheme (CPS).

    They claimed to have operated under the NUP for many years.

    A statement signed by the group’s Chairman Rasaq Ope reads: “We are pensioners from federal parastatals and private companies, both under the DBS and CPS. We identify with the change mantra of the government of the Federal Republic of Nigeria, particularly its zero tolerance for corruption and congratulate President Muhammadu Buhari on his courage. “It gladdens our heart that even acts of outright embezzlement, connivances and misappropriations that occurred in the past are not ignored by this government of change.

    “In this connection, we wish to disassociate ourselves from the corruption charges against some leaders of the NUP since we have consistently been opposed to leaders whose main objective in unionism is to make money, clean or dirty.

    “To buttress our claims, we shall go the memory lane to inform the general public of our consistent efforts to resist leadership that refused to be transparent but at the same time accusing others – a case of a burglar accusing the house-owner of extravagancy over what he owns or acquired legitimately.

    “The connivance of some national leaders of the union in the pension fraud between April, 2008 and March 2011, which resonated in Abdul-Rasheed Abdullahi Maina’s case as reported in the national newspaper of October 30, 2017, is one case too many.

    “When the Economic and Financial Crimes Commission (EFCC) waded into the matter and arrested some officers, our leaders kept the entire National Executive Council (NEC) members, including chairmen and secretaries of the 36 states, the Federal Capital Territory (FCT) and all the different sectors from the federal parastatal and private companies, in the dark.

    “Please note that the President Dr. Abel Afolayan was the National Vice President then. He was in the position for nine years before coming on board as president of the union for the fifth year.

    “Bringing his tenure as a principal officer of the union to over 13 unbroken years, what differences have been noted? Apart from the billions involved in the above-mentioned case, several millions of naira from pensioners’ contributions was spent on the case without any disclosure to NEC and when we, the leaders of federal parastatal and private company pensioners, agitated to know the facts, we were not only silenced but labelled rebels. We have reports of accounts showing amount expended on litigation without disclosure of what cases was being prosecuted.

    “When it became impossible to access free, illegal funds as in the pension fraud between 2008 and 2011, some leaders at the national level embarked on reckless use of contributions from state, federal civil service, parastatal and private company pensioners, particularly under the leadership. For example, the account report of 2004 showed that N132 million was spent on miscellaneous, instead of N10 million. We questioned the leadership on this budget recklessness only to our harm. Since then, amount spent annually on miscellaneous is usually more than three times higher than salaries and allowances in NUP.

    “Added to the above is the divide-and-rule posture of the leadership, where deliberate actions are taken to destabilise sectors or groups of pensioners perceived as enemies to their selfish interests, as they manipulate process of elections to remain in office.

    “With these prevailing circumstances, we considered all legally available options to sanitise the union but the best alternative for us was to cry to the Ministry of Labour & Employment as a group, praying for the regrouping of the union.

    “Having established that NUP is inefficient and ineffective in addressing the needs of the pensioners due to a monopolistic advantage, the Ministry set machinery in motion to reduce the workload on NUP for efficiency. Yes, among those lined up with us in seeking autonomy from the docile NUP, that knows nothing other than fighting over check-off dues, are the contributory pensioners.”

    In the same vein, the NUP Chairman, Electricity Sector (ES) chapter, Temple Ubani, said the crux of the matter is that all the federal parastatals, including energy and, education, are not happy with the union.

    He alleged that the NUP leaders collected check-off dues from them and do nothing to protect them. The check-off due, according to him, is one per cent deduction on every pensioner. It is a voluntary contribution.

    “We have the problem of harmonisation but they never call for it. The 33 per cent increase which former President Goodluck Jonathan approved 53.34 per cent has also not been resolved. They don’t even care who have received the 33 per cent and who have not received it. Pensioners pension has not been harmonised. We, at NUP ES, have been able to harmonise our pension through our platform.

    ”This is why we are the highest paying pensioners apart from Nigerian National Petroleum Corporation (NNPC) and Central Bank of Nigeria pensioners that have their own systems. Other Federal Government pensioners earn lower. Some NIPOST pensioners earn N5000, N10,000 as monthly pension. This is because NUP and their sectoral unit have not been able to harmonise their pension. Pensioners are suffering, particularly under this exco of the NUP. There is nothing they do for pensioners. They just rely on the check-offs, which is automatic. They make billions of naira, yet they cannot afford a befitting secretariat. There are about 255 parastatals that are under the DBS and the majority of them are not with the NUP.

    “The most important thing for us is for us to disassociate ourselves from the Maina scam. The matter has been in court. Ali Abacha, who was the National President and Elder Actor Zac, who was the Secretary, are still in the position, were the major people who are charged to court by the EFCC. Abacha left after serving out his two terms but Zac is still there because the position of the Secretary is permanent. But when the issue came up between 2012 and 2013, they were arrested by EFCC and charged to court.

    “But following the statement by the AGF, we asked them to step down. Afolayan cannot deny that he does not know anything about it because he was first vice president for eight years when those things happened. He has spent five years as national president.

    In a different twist, another group named Nigeria Union of Pensioners Contributory Pension Scheme Sector (NUPCPS) signed by Chairman, Comrade Udo S. M., Vice Chairman, Comrade Syva Nwaiwu and Secretary Publicity Secretary, Comrade Adebayo Martins urged the Minister not to listen to the Union.

    While appreciating the Minister for his role during their inauguration last February 27, as an affiliate member of the NUP, the union leaders stated that the NUP before and after their inauguration has been championing the cause of CPS retirees.

    They noted that the group urging him to help in registering another Union of contributory pensioners is doing so only for its own selfish interest. It is on record at the Presidency, National Assembly and the NLC that NUP is actively fronting for the welfare of all pensioners, especially those under the CPS. It is, therefore, uncalled for, for any CPS retiree or group of retirees to allege that NUP is in any way marginalising pensioners under the CPS.

    “Moreover, it is important for the Minister to note that leaders of the group pestering him to register another union for them are mostly people of his ethnic extraction. Not only that, they have been boasting of using that advantage over NUP to achieve their quest to bypass the rule of law and due process to register their own conceived Union. We want to state categorically that at NUP our interest is being taken care of and we have not at anytime made any request or apply for registration of a separate trade union apart from NUP from the Minister. Those doing so are only doing so in their own selfish interest and parochial agenda. We appeal to the Minister of Labour not to allow himself to be used to truncate our union.

    “We are grateful to President Muhammadu Buhari and his APC-led government for their earnest intervention in the crisis going on in the pension industry. We are, particularly, grateful to them because they were dauntless in arresting the situation, despite that the huge pension liabilities in this sector were caused by the immediate past PDP government who, in their recklessness in spending public funds, invaded pension funds set aside for the payments of accrued rights to retirees. There is no doubt that the President Buhari-led APC government has proven its change mantra in the pension sector. We, therefore, appeal to Mr. President and the National Assembly not to rest in their oars in releasing more bailout funds to clear the backlog of arrears for CPS retirees of January 2017 to date.

    Meanwhile, some aggrieved members of NUP Electricity Sector have asked the Minister to stay clear of union politics.

    NUP (ES) Caretaker Committee Chairman, Abel Eikhor, accused Chief Ubani of going through the back door to register his new association, Electricity Sector Retirees Welfare Association (ESREWA) with the support of the Minister.

    Hear him: “Chief Ubani resorted to seek assistance from the minister after he met a brick wall at the registrar of Trade Unions, which responsibilities are to protect, defend and promote the well-being and the interest of workers and pensioners alike. Having been denied registration by the RTU, he decided to get ESREWA registered by the Corporate Affairs Commission (CAC).

    “The CAC can only register business names and such companies cannot function as trade unions. When it dawned on him that ESREWA cannot function as a trade union, he went back to his kinsman, the Minister to seek further assistance. We are reliably informed that the minister is considering registering the association (ESREWA) using Section 3(2) of the Trade Union Act to do so.

    “Article 3(2) states: “No combination of workers or employees shall be registered as a trade union save with the approval of the Minister on his being satisfied that it is to register the union either by regrouping existing trade unions, registering a new trade union or otherwise. But no trade union shall be registered to represent workers or employees in a place where there already exists a trade union”

    We have it on good authority that for the minister to pacify his tribal man having already lost out in the power play going on in the electricity sector, the Minister is banking on this section to claim he wants to regroup the NUP by creating the electricity sector out of it.

    “We, the electricity sector pensioners, want to make a bold statement to the minister to stay clear of union politics. We have not approached him for any membership registration and, of course, there is even no need for such as NUP is already adequately catering for the interest of the electricity sector pensioners. We are by law an affiliate member of the NUP and we have no reason to seek for a registration of our own. Our plea, therefore, is for the Minister to please leave us alone and let us enjoy peace in our union.”

    Eikhor further said when Ubani’s first effort failed, he changed tactics and proposed another name, Electricity Sector Pensioners Union, to the minister for registration.

    Ubani emphasised that the only body  authorised to register trade unions in Nigeria is the Registrar of Trade Unions and not the Minister of Labour and Employment. He, therefore, urged the minister to distance himself from anything that contradicts the laws of the land and not bring his office to disrepute and ridicule it in the labour movement.

    The ASU Chairman, Alhaji Ope, said it was shameful and absurd for the inefficient NUP to acknowledge that contributory pensioners group was inaugurated last February 27. ‘’What has NUP been doing before the scheme was imposed on pensioners since 2004 when it became law?” he asked.

    Ope said the truth was that there had been a much larger body with nationwide spread within NUP named Federal Contributory Pensioners Association since 2012, and that leaders of this group found no comfort in NUP; rather, NUP was using them to fight for more check-off dues without even understanding their problems.

    “Now, because this NUP Electricity Sector identifies with our progressive and focused approach, the NUP hurriedly gathered some innocent contributory pensioners in Abuja to cause confusion. But we are happy that the Ministry of Labour and Employment is very much aware of all the pranks NUP is playing,” he said

    According to Ope, the various attacks on the minister are futile efforts and no amount of misrepresentation and absolute lies could change the fact that NUP national headquarters, over the years, has shown lack of capacity to care for pensioners. He also said some state councils were doing better than the national headquarters, both in human management and in the constructive use of funds. He said the evidence is clear for anyone who cares to see that pensioners’union was not registered to enrich its leaders.

    “How does it sound that out of about 24 national posts in NUP, only one is reserved for the Federal Civil Service and the federal parastatal pensioners?,” Ope asked, noting: “We are better off on our own than remain in a marriage of inconvenience with a local government and state government pensioners dominated union. We have suffered enough under the tyranny of NUP.

    “We thank President Buhari for his anti-corruption crusade and pledge our support. We also appeal to the Minister of Labour and Employment not to give any thought to the ranting of visionless individuals or groups, who do not mean well for this country and for Federal Civil Service andfederal parastatal retirees. We urge him not be distracted.”

    NUP President denies allegation

    Afolayan has denied being part of the pension syndicate that connived to steal over N20 billion fund in the Mainagate pension scandal.

    In an interview with The Nation, Afolayan said some NUP former executives were alleged culprits in the Maina scandal.

    He however disclosed that he was part of the former executive as the second national president and as such, he is aware of the case.

    He affirmed that the syndicate were able to operate smoothly with the connivance of the NUP.

    But he absolved himself and his colleagues of the scandal.

    He stressed that the allegation against the former executives has since been a matter of litigation at the Abuja High Court, Abuja.

    He said: “What the Attorney-General said about NUP being part of pension fraud syndicate does not concerns us. It concerns the former – our predecessors. The aspect that involves the NUP president has been in court.

    “I was the second national president and so I know about the case. I assumed office as National President in August 2013 after the alleged fraud, which occurred between 2012 and 2013. But the matter has being in court for the past four years. The leadership of the NUP has also for the past four years been going to court,” he added.

    The union spokesperson, Comrade Bunmi Ogunkolade, alleged that Ubani has been removed since last April, hence he could not call for the regrouping of the union.

    He said they had established another exco and over 1000 pensioners from the NUP (ES).

    He further alleged that the minister has been listening to his group because they are from the same tribe.

    “The union have asked the minister to disregard proposals from some group to regroup the union. He lost out in the power play and he cannot create a parallel union. But he can approach the elders for mediation and reconciliation, if he likes. He can come to the national headquarters and they will accept him.

    “The contributory pensioners are not paying check-off dues and we have been supporting them to ensue they receive their pensions as and when due. So it is not true that we are inefficient in the areas of pensioners welfare.”

    Ministry reacts

    Meanwhile, the Ministry has denied the allegation of aiding and abetting. An official, who spoke on condition of anonymity, admitted that some proposals had been submitted to the ministry by various pension groups. He, however, debunked alleged bias, noting that the minster does not know Chief Ubani.

    Pensioners lament

    Pensioner Williams Olabode is 78 years old. He has never received pension, neither is he on the Federal Government’s pay roll. “I have faith that one day, I will receive my pension. The issue of corruption is very deep in the country. But with Buhari, I am hopeful.

    “I retired in 2006. I received gratuity, but did not get pension. I am not even on payroll,” he said.

    Olabode said he was not a ghost worker and so there was no reason they would  not put him on pay roll. “I am not the only one. I want the Pension Transitional Directorate Department (PTAD) to put me on payroll, so that they can pay my pension arrears,” he added.

    Olabode lamented that he worked at the Federal Ministry of Works, now Federal Ministry of Works and Housing, and had done various verification, but yet o be put on payroll.

    Another pensioner,  Mrs Felicia Adebayo, 80, retired in 1989 at the Ministry of Education, but is still being owed her federal share of her pension. “I have done several verifications. I appeal to Buhari to put us first, she said, accusing some people of stealing pensioners’ money.

    Similarly, 88-year-old Mr Emeka Anyanwu, who retired from the Ministry of Works, lamented that his pension was stopped. “Now, I am owed about 10  years’ arrears. We are not being treated well. We were robbed of our pension by Maina and they are not able to arrest him.

    “We are appealing that the Federal Government should pay us our pension before we die. President Buhari should help us,” he appealed.

  • How ‘Executive Order’ can boost local manufacturing, trade volume

    How ‘Executive Order’ can boost local manufacturing, trade volume

    The recent Federal Government’s Executive Order directing MDAs to grant preference to local manufacturers in their procurement of goods and services, observers say, could have far-reaching positive outcome for manufacturers and the economy, Assistant Editor OKWY IROEGBU-CHIKEZIE writes.

    It is encouraging to note that the Federal Government is currently working on plans to promote the production and consumption of local products. Aside providing solutions to the unemployment problem in the country, encouraging the production and consumption of local products could usher the country into the path of the much desired economic prosperity. This is the secret behind the rising profiles of the now prosperous Asian tigers. Nigeria’s ability to achieve similar feat will depend on her capacity to harness human and material resources towards the promotion of made-in-Nigeria goods that can compete in both local and international markets.

    The time has come for the country to encourage the development of local industries in the country as a way of promoting the patronage of locally made goods and products. The country’s reliance on crude oil as the primary export commodity and foreign exchange earner has, no doubt, worsened the situation of local industries in the country.

    Fortunately, Nigeria has an amazing advantage in our size. Conservatively, the country’s population is put at over 175 million. It is variously touted that out of every five blacks, four are Nigerians. Our population is therefore a major source of strength and it behoves on us as a nation to leverage on this factor to promote the Nigerian brand in terms of products and services as this remains the only means through which sustainable employment can be guaranteed. Nigeria is in a position to play a strong continental and global role because it benefits from a large population of energetic, educated and entreprising people, as well as from an abundance of natural resources.

    Industry players agree that for local goods to enjoy sufficient patronage from local consumers, there is need for the National Assembly to come up with a local patronage bill that would ensure that made-in-Nigeria goods and local producers are protected.

    They lamented that a situation where Nigerians depend solely on imported goods is unhealthy for the nation’s economy and that the idea of patronising made-in-Nigeria goods should be encouraged and viewed as a call for a nationwide partnership to develop the kind of collective commerce pattern that would have a positive bearing on national development.

     

    Government position

    Minister of State, Industry, Trade & Investment, Mrs. Aisha Abubakar, said the nation’s abundant natural resources can only be relevant when exploited, lamenting that though we have abundant natural resources, they’ve  not been adequately deployed to benefit the citizenry. She called for a holistic overhaul of our importation policy to discourage items that can be manufactured locally.

    Speaking on the ‘campaign for patronage of made-in-Nigeria products and services’, she said the inward looking initiative of the administration is expected to boost the nation’s economy, by reviving the local industries to produce quality products of international standards. She said the nation has comparative advantage in textile, furniture, food and drinks, as well as leather and its bye products, saying if exploited, this will lead to generation of massive employment, boosts the culture and tourism sector, create wealth, reduce poverty and increase the foreign exchange earnings’ capacity of the country.

    Mrs. Abubakar said: “The promotion of made-in-Nigeria products and services will also stimulate growth and promote innovation in our Medium Small & Micro Enterprises (MSMEs). In addition, it will boost financial inclusion and overall security of the country, two key elements essential for sustained economic prosperity and development.”

    She said the Federal Government has set in motion plans to translate MSME’s into bigger platforms, stating that although many of the operators are small, they are churning out quality products. She said they have not only improved their quality and standards, but also packaging over time. Mrs. Abubakar said government is prepared to group the small businesses into clusters, boost them financially and also offer advisory services in the areas of marketing.

    Minister of Information & Culture, Alhaji Lai Mohammed, said the ‘Executive Order’ is expected to boost the patronage of locally produced goods and services, saying the new procurement policy makes it compulsory for MDAs to patronise locally made goods. He encouraged manufacturers to continuously work to improve their goods quality and also deploy Information technology in marketing their products.

    Also the Lagos State Governor,  Akinwunmi Ambode said the citizenry’s unchecked alure for foreign goods and services brought the country to its current situation. He urged the federal government on the need to stimulate export and encourage the consumption of locally produced goods with innovative policies. While commending the ‘Executive Order’ and the need to have policies that will stimulate locally made products, Ambode said the state’s partnership with Kebbi State  in rice production, has resulted in sharp drop on rice importation and the conservation of the nation’s foreign exchange.

    He said: “As a state, we have encouraged the growth of several MSMEs through various capacity & empowering programmes, in addition to ensuring supportive investment matching of small businesses in the state. This has encouraged employment generation and wealth creation for entrepreneurs in the state. Our belief is that the nation cannot grow sustainably, except non oil export is encouraged”.

    Director-General, Raw Materials Research and Development Council (RMRDC), Dr. Hussaini Doko Ibrahim, said the Council primarily serves the interest of the Organised Private Sector (OPS), especially the  MSMEs, which form the bulk of resource-based manufacturing in the nation. He said the Economic Recovery and Growth Plan (ERGP) of the Federal Government is based on optimising the use of local content in empowering local businesses.

    Ibrahim said RMRDC is committed to providing opportunities for synergy among stakeholders in the raw materials value chain, aimed at enhancing sourcing of local raw materials for manufacturing.

    He said: “We have to showcase available industrial raw materials in the country, as well as the efforts of our scientists, technologists, engineers and fabricators in raw materials production, processing and utilisation for the benefit of the manufacturing sector of the economy,” saying more than ever before, it is now possible for industries to secure high quality starch, glucose syrups and extracts, fruit juice concentrates,  besides creating a platform for highlighting the challenges to local sourcing of gypsum as cement industries now source it from local miners.

    The RMRDC boss decried the poor linkage between the researches, prospective investors and entrepreneurs to commercialise these innovations.

    On how to address the challenge, Ibrahim canvassed the need for manufacturers to get involved in Research & Development (R&D) for the development of local raw material substitutes to imported ones, new technologies in raw materials processing, or new products development for the local market.

    He urged manufacturers to venture into R & D so as to stimulate the sector and also take advantage of the incentivised tax laws for the manufacturing sector.

     

    Private sector thinking

    Managing Director, Automacs Nig Limited, manufacturers of cars and Industrial filters,  Obiora Ogonsiegbe, said his organisation is in support of plans by the Federal Government to discourage the importation of certain items the country has the potential of producing locally.  He said: “We need to embrace attitudinal, structural, and cultural change that would enable major stakeholders to modify their outlook towards made-in-Nigeria goods. In our drive towards a varied and dependable economy, it is vital that we build internal structures that will establish it as an independent commercial hub wherein our position will be strengthened in the course of international collaborations and our negotiation powers leveraged by a culture of home-grown technical expertise”.

    He urged government on the need to implement extensively the ‘Executive Order’ noting that made-in-Nigeria goods will boost the nation’s manufacturing sector and by extension create more jobs. According to him it is through this that indigenous firms can take advantage of bigger markets at regional, continental and global levels. It is important for the country to appreciate its fundamental dynamics by making policies that will ensure sustainable economic development.  He added that advocating and supporting made- in -Nigeria goods is a sure way to turn around our dwindling economic fortune.

    He advised Nigerians on the need to encourage indigenous entrepreneurs by patronizing locally produced goods and services. Reiterating his conviction on the need to develop and transform local industries, he said: “There is no country that has managed to transform itself without adequate industrial growth or wholesome dependence on imported goods. Therefore, we need to empower local industries, and this could only be done by embracing locally made goods. Recent giant strides in the cement industry have sufficiently demonstrated that local industries could act as catalysts for economic growth if only the needed impetus for growth and development are put in place”.

    He called on the Bank of Industry (BOI) to intensify efforts on her support for the Small & Medium Enterprises (SMEs) with more robust products without stringent conditions. He further canvassed for more banks and financial institutions to buy into the ‘made –in-Nigeria’ vision in order to ensure enhanced and sustainable industrial growth in the country.

    On the draw backs for the realisation of the ‘Executive Order’, he stated that it is the all important question of stable power supply.  He said: “Presently, the power situation in the country is epileptic and, nobody would be encouraged to venture into local entrepreneurship in view of the high cost of sustaining alternative power source. It is not enough that the power sector has been deregulated to encourage private investors, much still need to be done for us to have a reliable power sector that could drive the local industries”.

    He advised that there are immense benefits in supporting and embracing locally made goods as it remains one of the sure ways to fully realise our potential as a nation and possibly one possible way out of the current economic dependency and poverty.

    Managing Director  Nestle  Nig Plc, Mr. Mauricio Alarcon have said that their backward integration policy and the use of more familiar and common ingredients has not only improved the nutritional profile of their products  but also has built the nation’s   local economies. He said they have over 4,000 farmers.

    At the launch of their new variant of  their seasoning called Maggi Naija Pot in Sagamu, Ogun State, he said the new seasoning helps families cook better-tasting wholesome Southern dishes with less effort while delivering the delicious’ bottom of the pot taste ‘. He said the raw material used is 80 per cent locally sourced which has helped them in their factory expansion.

    He said: “Most consumers want minimal processes but desire adequate nutritional needs from any purchased products. With that in mind we fortified our Maggi Naija pot with iodine and other essential nutrients.  We have further trained over 1,600 farmers in local technology using soya beans with over 7,000 local Maggi traders. In doing this we have not only increased our capacity but is also creating wealth.”

     

    Advocacy groups & multi-lateral agencies

    The Lagos Chamber of Commerce & Industry (LCCI) in their remarks commended the  Executive Orders  signed into law by the then Acting President, Prof. Yemi Osinbajo, geared towards changing the ways government business and operations are conducted.

    In a statement former LCCI President, Mrs. Nike Akande, maintained that the three main pillars of the executive orders namely promotion of transparency and efficiency in the business environment, support for local contents in public procurement by the Federal Government, and efficient operation and implementation of the federal budget, have been key focus areas of LCCI advocacy campaign over the last few years.

    She argued that the executive orders will impact the ease of doing business, fast-track budgetary administration as well as promote made in Nigeria products. She urged the government to ensure that stipulated timelines are strictly adhered to by all the parties affected by the order.

    She further asked for continued consultations and engagement with the business community and the bureaucracy in building understanding and buy-in of all stakeholders.

    She pledged the preparedness of the advocacy group to track the compliance with these orders by relevant Ministries Departments and Agencies (MDAs) with follow up compliance and report outcomes and feedback from private sector players on an ongoing basis.

    Urging government to support Micro Small & Medium Enterprises (MSMEs) in her bid to ensure the success of the ‘Executive Order’, Akande  asked government to rekindle efforts at reviving growth in the non-oil sector which she described as a guarantee for a more sustainable growth beyond the volatility of oil prices in the international market.

    She said: “This opinion was confirmed in the World Bank report that opined that in the 1960s, Nigeria was a major producer of palm oil, cocoa and rubber and agricultural exports generated about 75 per cent of its foreign earnings. Taking a cue from its history, agriculture is again expected to play an important role in Nigeria’s growth story.”

    Akande said MSMEs have challenges stalling their growth ranging from lack of appropriate bankable business plans, competitive marketing strategies, standard accounting systems and dearth of technical abilities.

    However, she expressed the belief that Nigerian entrepreneurs were resourceful and have the capacity to aid the economic recovery process.

    She said: “There is need for a stable policy and regulatory environment that supports the reforms on the ease of doing business in Nigeria. Issues of taxation, trade and foreign exchange policies should be managed in line with international best practices. This should consider policies that facilitate trade, attract foreign investment and protect businesses from avoidable regulatory pressures.”

    For the Country Director, United Nations Information Center (UNIC) Ronald Kayanja, efforts  driven at inclusive socioeconomic growth may not yield desired results without institutional support for Micro, Small and Medium Enterprises (MSMEs). He said businesses within the cadre efficiently respond to immediate societal needs and contribute a significant quota to income generation as well as poverty alleviation, particularly in rural communities.

    He urged policy makers and finance groups to help materialise the sustainable development goals of eliminating poverty and hunger, through expansion of finance portals with  flexible modalities for MSMEs.

    “Although MSMEs generate the most new jobs, they face many challenges which access to finance is often cited as primary obstacle. Financing constraints are also magnified for informal firms which tend to be small in size by contribute significantly to economic activity. The banking institution and the financial sector in general should create a tailor-made intervention for MSMEs to get funds. They need to be encouraged as they are keys to inclusive sustainable development,” he said.

    Lagos State Coordinator, Small &Medium Enterprises Development Agency of Nigeria(SMEDAN)Coordinator, Mr. Yinka Fiicher stressed the need for the government to engage in critical infrastructural development concurrently with the course of easing business environment, describing it as  cardinal for productive economy.

    He said SMEDAN has earnestly empowered fresh entrepreneurs in the country through its Industrial Training Centres (ITC), revealing various technologies are made available for advancing vocational and technical knowledge

    President, Manufacturer’s Association of Nigeria (MAN), Dr. Franks Udemba Jacob hailed government’s decision and efforts at pulling the economy out of recession.  While commending the Economic Recovery and Growth Plan (ERGP) and the ‘Executive Order’ aimed at deepening the diversification and backward integration of the economy, he also commended the establishment of the Presidential Enabling Business Environment Council (PEBEC) with the mandate to improve the Ease of Doing Business (EOBD). He stated that it will among other things enhance productivity and overall performance in the manufacturing sector.

    Commending the government actions further, Jacob revealed that an assessment and verification of the performance score card of the Presidential Enabling Business Environment Council (PEBEC) and the 60-Day National Action Plan showed that 70 per cent of its 7 points objective modeled after  the World Bank Indices of Ease of Doing Business (EODB) has been achieved within the set timeline.

    He said: “The Council scored above 60 per cent performance on six objectives and only one recorded a low score of 33 per cent. Overall, the performance of the Council is an indicator of other developments that would come from the Council. We are hopeful that the processes and procedures required to fully actualize these objectives would be effectively implemented so as to permanently remove constraints to the EODB and improve the global ranking of Nigeria by the World Bank”.

    Udemba advised the government to sustain and consolidate all the achievements recorded within this short period by removing all trade facilitation constraints and attract foreign capital inflow to the country.

    He also cautioned that government should also ensure that other aspects of the objectives that are currently Work-In-Progress are properly implemented with a view to improving Nigeria’s competitiveness. He pledged the preparedness of the Organised Private Sector (OPS) to   continue to encourage her members and other investors to take advantage of the various initiatives to increase their investments.

    He however, pointed out that to enable the private sector to effectively key-in and benefit from an over-all lower cost business environment, there is the need for the government to expand the scope of the programme and take cognisance of other constraints to businesses.

    On the constraints to businesses, Udemba said they include but not limited to the cumbersome procedures and exorbitant administrative charges of regulatory agencies, harmonise multiple taxes and levies across the three tiers of government and to encourage ministries, departments and agencies (MDA’s).

    Others are to deepen the existing reforms by including indices that will effectively enforce the reduction in the cost of doing business, develop other easily verifiable platforms for the simplified VISA on arrival programme. He regretted that what is currently available is just an e-mail address which is not sufficient for effective performance evaluation.

    The MAN boss also asked for  the expansion of the  set objectives under “getting electricity” to include those that would address the challenges of electricity inadequacy, improper pricing and metering and the need to examine the performance level  of the special funding windows provided by government for businesses with a view to addressing the current poor access to credit.

    He further asked for the elimination of all forms of road blocks set up by commissioned revenue collection agents of government in active connivance with security agencies on the highways, improve on the websites that are currently not operator-friendly and make them more interactive. He implored government institutions such as Transmission Company of Nigeria (TCN), GENCOs and Nigerian Electricity Regulatory Commission (NERC) to resolve the dispute between manufacturers and the Distribution Companies (Discos) to avert the failure of the Nigeria Electricity Supply Industry.

    Finally, he called for the review and effective monitoring of the implementation of all activities under “trading across borders” which he said operators have confirmed is yet to be implemented.

  • Making agriculture mainstay of economic growth

    Making agriculture mainstay of economic growth

    Agriculture was the mainstay of Nigeria’s economy before the discovery of crude oil. From 1960 to 1969, the sector accounted for an average of 57 per cent of the Gross Domestic Product (GDP) and generated 64.5 per cent of export earnings. To sustain contributions of the agricultural sector to the GDP, the Central Bank of Nigeria (CBN) amended the Commercial Agriculture Credit Scheme (CACS) and encouraged more commercial banks to lend to farmers at a single digit interest rate but insisted that no loan under the scheme should exceed N2 billion, writes COLLINS NWEZE.

    Agriculture was the mainstay of Nigeria’s economy before the discovery of crude oil. From 1960 to 1969, the sector accounted for an average of 57 per cent of the Gross Domestic Product (GDP) and generated 64.5 per cent of export earnings.

    From 1970 to late 2000s, the sector’s contribution to the GDP and export earnings steadily declined because Nigeria’s focus shifted to petroleum exploration. Over the past five years, the sector has contributed an average of 23.5 per cent to GDP and generated 5.1 per cent of export earnings.

    The recent fall in crude oil prices has triggered conversations around the role of agriculture in economic diversification. The agricultural sector requires massive investments to increase production and to create value addition across the most-profitable segments of the value chain.

    Despite the challenges faced in the sector, there has been improved lending to the agriculture.  For instance, before now, no lender would give depositors’ funds to a farmer. Such loans would be considered lost from the date of approval. But today, the lenders have begun to scramble for agric businesses, having seen the potential, and knowing how much a well-priced loan can add to their profitability, many lenders are keying into the agriculture financing scheme.

    To make this happen, the Central Bank of Nigeria (CBN) has amended the Commercial Agriculture Credit Scheme (CACS) following which it pegged maximum loan intake for any project under the scheme at N2 billion.

    It equally pegged the maximum interest rate to the borrower under the scheme at nine per cent, inclusive of all charges.

    The apex bank also approved the participation of deposit money banks in the scheme, with the participating banks required to sponsor projects from any of the target areas in the guidelines, and bear all the credit risk of the loans they will be granting.

    The CACS is being financed from the proceeds of the N200 billion, three-year  bond raised  by  the  Debt  Management  Office  (DMO).  The fund will be  made  available  to  participating  bank(s), to  finance  commercial agricultural enterprises.

    “The single obligor for any project from a participating bank under the Scheme shall be N2 billion while for state governments shall be N1 billion. However, for special schemes and programmes for agricultural development, state governments may be granted concessionary approval for more than N1 billion,” said the CBN.

    The scheme is also expected to help  fast-track  development  of  the  agricultural  sector  of  through the credit  facilities; enhance  national  food  security  by  increasing  food supply  and effecting  lower  agricultural  produce  and  product  prices,  thereby promoting low food inflation.

    The  CBN Governor Godwin Emefiele said agric financing is the way forward for the economy. He explained that part  of  its  developmental  role, the CBN has in collaboration with the Federal Government of Nigeria, represented by the Federal    Ministry    of    Agriculture    and    Rural    Development    (FMARD) established  the  Commercial  Agriculture  Credit  Scheme for  promoting commercial agricultural enterprises in  Nigeria, which is a sub–component of    the    Federal    Government    of    Nigeria    Commercial    Agriculture Development  Programme  (CADP).

    The fund, he added, will complement  other special initiatives of the CBN in providing concessionary funding for agriculture such as the Agricultural Credit Guarantee Scheme (ACGS)   which   is   mostly   for   small   scale   farmers,   Interest   Draw-back scheme,    Agricultural    Credit    Support    Scheme    and    other    similar developmental initiatives.

    Emefiele said there was no need to allocate scarce forex to rice importers when vast amounts of paddy rice of comparable quality produced by poor hardworking local farmers across the rice belts of Nigeria are wasted, and farmers are falling deeper into poverty while we export their jobs and income to rice producing countries abroad? Few decades ago, Nigeria was one of the world’s largest producers of palm oil but today we import nearly 600,000 Metric Tonnes while Indonesia and Malaysia combine to export over 90 per cent of global demand. Under these circumstances, I believe it is appropriate, and in fact, expected, that the CBN contributes to protecting the jobs and incomes of local farmers, using some of the same principles Western Economies use to justify the protection of their farmers through huge subsidies.

    He said that agriculture remains the largest employer of labour in Nigeria and contributes about 24.2 per cent of our GDP. In addition, a good share of the demand for forex today go directly to importing agricultural produce. So, the CBN has both a direct and indirect rationale to ensure that this sector is revived in a significant way. In this regard, we are gratified that the CBN’s Anchor Borrowers’ Programme, together with other initiatives like the Commercial Agriculture Credit Scheme and NIRSAL, are proving to be successful in several states.

    He explained that in Kebbi State alone, over 78,000 smallholder farmers are now cultivating about 100,000 hectares of rice farms. It is expected that over one million metric tonnes of rice will be produced in that State alone this year.

    And this is the bedrock of the recently-launched Lake rice, which is an innovative partnership between the Governments of Lagos and Kebbi States. The CBN remains committed to do more in the identified crops such as rice, maize, sorghum, tomatoes, cassava, cocoa, cotton, dairy, and groundnut.

    “We also need to find ways to make land titling much easier especially for smallholder farmers. In this regard, the Nigeria Incentive-based Risk Sharing System for Agricultural lending (NIRSAL) can assist with technical knowledge and deployment of relevant GIS and Satellite imaging that will realize this within a short period of time,” he said.

    Emefiele said at a workshop on innovative agricultural insurance products, in Lagos that the agricultural sector provides up to 70 per cent of employment in Nigeria and accounts for about 42 per cent of the country’s Gross Domestic Product (GDP).

    Emefiele said the large import food products include wheat, rice, flour, fish, tomato paste, textile and sugar.

    “We are confronted, as a nation with a wide range of development challenges especially with the dwindling global crude oil prices and the nation’s dependence on it as its major source of revenue. There is the need to diversify the mono-cultural tendencies of the economy by developing other sectors of the economy especially agriculture,” he said.

    He said that Nigeria’s formal financial system is lending about four per cent of all formal credit to the agricultural sector compared to three years ago when only about one per cent of all credit went to agriculture. He insisted that lending is still low given the lingering perception by banks that agriculture is highly risky.

    Emefiele said development and expansion of the agricultural insurance sub-sector will go a long way in mitigating against natural disasters and eventually encouraging banks to lend to agriculture.

     

    Bankers’ Committee

    The CBN and deposit money banks, under the aegis of the Bankers’ Committee also restated its commitment to expanding bank lending in agro-business in order to discourage importation of goods can be produced locally.

    The bankers also stated their resolve to explore large corporates as anchors to lend to participants across the value chain to improve the capacity of Nigeria’s agro-businesses so as to create sustainable jobs and inclusive growth.

    The bankers also affirmed their commitment to financial deepening of the economy, improving financial access to key sectors of the economy, innovative solutions for the critical finance of generation, provide finance for small and medium enterprises, among others.

    “We note that four basic commodities that are consumed by Nigerians – rice, wheat, fish and sugar jointly account for a significant amount of the country’s annual import bill. We are convinced that the nation has the capacity to produce these consumables in required amounts to meet our domestic consumption needs. With its attendant impact on Gross Domestic Product (GDP) and job creation, agriculture remains a critical focus sector of the financial system,” it added.

     

    CBN’s roles

    The CBN set the tone when it introduced Nigerian Incentive-Based Risk Sharing Agricultural Lending (NIRSAL) to the banks. By that single policy, banks can lend to agricultural sector and its value chains without fear of losing such funds. The NIRSAL is already being implemented by the banks and is expected to drive agricultural revolution in the country.

    The CBN explained that NIRSAL, unlike previous schemes which encouraged banks to lend without clear strategy to the entire spectrum of the agricultural value chain, emphasises lending to the value chain and to all sizes of producers.

    The Federal Government also plans to double agriculture’s share of banks’ credit to 10 per cent in two years. Also, the Federal Government has made a fundamental shift that agriculture is not a developmental activity, but a business. “The CBN has shifted the mind-set of the banks. It’s a new agriculture sector in which they can actually invest money and make money,” the bank said.

     

    Agric potential

    Already, banks and the CBN are discussing how to increase lending to the sector. For the apex bank, government needs to pay more attention to agriculture, which still has one of the greatest potentials in growing the economy.

    The CBN said that one way of achieving this, is by collaborating with the banking system to fix the value-chain problems in the agricultural sector. She said economic development was about enhancing the productive capacity of an economy by using available resources to reduce risks, remove impediments, which otherwise could hinder investment.

     

    NIRSAL performance

    According to the CBN, NIRSAL is also expected to be a catalyst for innovative risk management strategies, long-term financing for agribusiness and significant job creation by new entrepreneurs.

    “The mandate of NIRSAL is to act as the custodian of all credit guarantee schemes, interest draw back schemes, and commercialisation initiatives related to an integrated value chain approach to agriculture and agribusiness in Nigeria,” the CBN said. Under NIRSAL, there are five pillars to be addressed by an estimated $500 million that will be invested by the CBN, according to the programme document.

    There is also a Risk-sharing Facility of $300 million, planned to address banks’ perception of high-risks in the sector by sharing losses on agricultural loans. There is equally an insurance Facility of $30 million intended to expand insurance products for agricultural lending from the current coverage to new products, such as weather index insurance, new variants of pest and disease insurance.  Besides, there is also a Technical Assistance Facility amounting of $60 million meant to equip banks to lend sustainably to agriculture, producers to borrow and use loans more effectively and increase output of better quality agricultural products, among others.

    The improvement in the sector was linked to access to credit through the new policy on increasing private sector participation, emphasis on the entire agriculture value chain, and using agriculture to boost employment, wealth creation and food security.

    Analysts have commended the performance by the banks as a demonstrating of their belief in the ability of agriculture to transform the economy. The CBN said with the credit trend in the banks, Nigeria may be close to realising its economic diversification objectives that will lead to less dependence on oil.

     

    Stakeholders speak

    Chairman, the Tractor Owners & Hiring Facilities Association of Nigeria (TOHFAN), Alhaji Danladi Garba,

    said Nigeria could produce food, noting that agric business is profitable. He said that gone were the days when borrowers beg banks to lend to the agric sector. Today, the tides have turned. The buzz for agric financing is on, and no lender wants to be left behind.

    Also some banks are also supporting agriculture. For instance, Sterling Bank Plc has financed the purchase of tractors for members of the TOHFAN. The bank noted that its involvement in the agricultural sector was based on the need to reposition the sector as the main stay of the economy given the dwindling oil revenue.

    The bank’s Managing Director, Yemi Adeola, said it finances the purchase/acquisition of tractors from reputable manufacturers such as Massey Ferguson, Mahindra, New Holland, John Deere and Tak Tractors, who will also provide basic training on utilisation and offer after-sales maintenance services.

    The tractors which have been distributed to members of the association following the first disbursement would help in the adoption of mechanised agriculture, leading to additional hectare coverage, higher yields and enhance food security in the country.

    “Sterling Bank Plc has continually restated its commitment to the strategic growth of the agricultural sector by providing adequate funding in alignment with the ongoing reforms in the sector aimed at repositioning it as an attractive business proposition, an input provider for the manufacturing sector and a key foreign exchange earner.

    “The best bank in Agric Award was conferred on the Bank in recognition of its critical role in the dispensing of financial services to actors in the Nigerian agricultural value chain. This we have demonstrated again with the financing of the tractors which will add value to the sector,” he said.

    Also, First City Monument Bank said it will continue to  intensify its support to the agricultural sector and its value chain including lending more to the subsector in the interest of the economy.

    “We note that four basic commodities that are consumed by Nigerians – rice, wheat, fish and sugar jointly account for a significant amount of the country’s annual import bill. We are convinced that the nation has the capacity to produce these consumables in required amounts to meet our domestic consumption needs. With its attendant impact on GDP and job creation, agriculture remains a critical focus sector of the financial system,” it said.

    The bank said the lender is focused on being a strategic partner to the government and other stakeholders in the agric sector to ensure food sufficiency, employment and revenue generation.

  • Counting the cost of Apapa gridlock

    Counting the cost of Apapa gridlock

    The deplorable state of access roads to the nation’s premier seaports in Lagos has become a pain in the neck for port users, residents and stakeholders in the maritime sector. Despite the huge revenue generated from the ports daily, successive administrations, curiously, have failed to muster the political will to fix the roads. Maritime Correspondent OLUWAKEMI DAUDA reports that the situation is taking a huge toll on businesses.

    The worsening gridlock along the road leading to Apapa and the Tin-Can Island ports in Lagos has thrown the Nigerian maritime sector into confusion.

    Apart from adding to the cost of doing business in the area, it has made the ports unattractive while hurting the trade facilitation programme of the Federal Government. It also  ridicles the status of Lagos as Nigeria’s  commercial nerve centre.

    To operators and stakeholders in the maritime sector, the deplorable state of access roads to the ports has exposed the complacency of successive administrations in resolving an major issue that stands in the way of boosting the nation’s economy and promoting the wellbeing of Nigerians through efficient use of the nation’s seaports.

    Some operators and stakeholders, who spoke with The Nation, wonder why the current administration has not considered it expedient to fix the access roads to the ports two years after mounting the saddle.

    They, therefore, called on President Muhammadu Buhari, the Federal Executive Council ( FEC), and the Minister of Power, Works and Housing, Mr Babatunde Raji Fashola  (SAN), to urgently fix the roads.

    For instance, one of the residents of Apapa who is also a  lawyer, Mr. Francis Adeyemo, bemoaned the deplorable state of the roads leading to the ports and urged the Federal Government to address the problem.

    His words: “The situation on the two major roads leading to the Lagos ports is so bad that motorists accessing the ports and adjoining areas get trapped in the traffic congestion for over six and seven  hours.

    “Workers, residents, importers, port users and other stakeholders going to and from work or businesses at the ports and its environ lose vital main hours translating to huge financial losses.

    Added to this is the toll on the health of the people plying the road from stress of sitting down for long hours in the tormenting traffic while inhaling dangeros fumes from vehicles.

    Adeyemo lamented that the problem is  taking a huge toll on users of the nation’s seaports because of the slow evacuation of cargo from ships berthing at the ports due to slow turnaround time for containerised trucks which are trapped in the gridlock in and out of the ports.

    Accordin  to him, the dwell time of ships has increased from three days to a minimum of 12 to 15 days now and the financial implication of the problem on shipping business is that importers and exporters are incurring extra cost to charter vessels and pay for insurance .

    “It is appauling that the Federal Government under Buhari and the Minister of Power, Works and Housing, Mr Fashola who is the immediate past governor of Lagos State allowed the traffic crises on the roads leading to the Lagos ports to degenerate to this shameful stage. This has eroded the competitiveness of the two  ports compared to the neighbouring countries,” Adeyemo lamented.

     

    Access  to the ports paralised:

    When The Nation visited the ports, last week, access to the two Lagos ports was virtually non-existent. Road and rail transit to and from the ports remained paralysed. This was in spite of efforts of the Managing Director of the Nigerian Ports Authority ( NPA), Ms Hadiza Bala Usman, to collaborate with the private sector to salvage the situation. “The work done so far by the contractors handling the Apapa road is far below stakeholders’ expectations. The contractors have done only about one per cent of the entire project.  We are not happy that the project is moving on a snail speed and that was not the promise made to us when the job was given to Dangote Group, a port user, who spoke with The Nation, said.

     

    Manufacturers’ cargoes trapped

    Clearing agents of some manufacturing firms said they are finding it tough at the Lagos ports to clear their consignments.

    Some of them told The Nation that their goods have been trapped because of the traffic gridlock on the roads and that they suffer unnecessary delay in moving their goods out of the ports.

    “This explains why goods from the nation’s  sea ports are some of the most expensive in the world because of the difficulties we face in clearing and moving them out.,” said Mr Kayode Ogunsanu.

    Ogunsanu said goods worth billions of naira belonging to eight firms and some news print belonging to some newspaper companies are trapped at the Tin Can Island and Apapa ports.. The delay, he said, has serious implication for the firms’ production, if the government fails to address the issue.

    “Already, the delay has led to the payment of huge demurrage to shipping companies and rent to terminal operators. It is also affecting  their targets for the last quarter of the year.

    “The firms’ agents are shuttling from office to office, in and outside the ports, to sped up clearing.

    “Importers and clearing agents are also in the same boat because banks are on their neck to service their loans and that is why we  are urging the Federal Government to exercise its power under Section 152 of CEMA to waive all demurrage and other charges on the affected goods.,” Ogunsanu  said.

    He lamented, for instance, that banks have been pursuing his principals for part payment, which was due last month and the demurrage is huge.

    Investigations revealed that over one million containers laden with various cargoes said to be worth over N3 trillion are currently trapped at the Lagos port complex due largely to the inability of importers to evacuate them on time because of the gridlock caused by the bad roads.

    Some sections of the road were blocked by the contractors carrying out the epileptic repair when The Nation visited the site at the weekend.

    The President, Association of Nigerian Licensed Customs Agents ( ANLCA), Prince Olayiwola Shittu, berated the government for not paying adequate attention to the road. He, however, gave kudos to NPA for the N1.8billion released so far by the agency to facilitate the work on the road.

    “The gridlock along the the port access road is not only a shame, but a national embarrassment.  It is a big threat to the nation’s economy and national security.

    “A situation in which massive volumes of imported cargo cannot be cleared or discharged has direct economic consequences. Port charges are mounting, importer credits are growing; the supply chain for both consumer goods and essential raw materials is disrupted,” Shittu said.

    He stated that although, the current management of NPA has shown its displeasure over the state of the road and released a huge amount of money for its repair, Nigeria’s image as a prefered destination has continued to get worse, just as her reputation for quick cargo clearance is sinking.

    “President Buhari needs to do something urgently about the road. We are tired of the slow space of the work. Government must not wait for the repairs on Warf road to be completed before normal port operations would be restored.

    “The road repairs and the decongestion of the port must be treated as clear national emergencies requiring the mobilisation of all known institutional resources to restore sanity in and around our ports,” Shittu said.

     

    Apapa was built with a plan:

    Apapa was built with a plan. It was designed to host commercial, residential, marine and other related business activities. Apapa has a Government Residential Area (GRA), with world-class  buildings that have manicured flowers and date palms bordering sturdy roads.

    Its Lagos Port Complex was  designed to have options for goods leaving the terminal  with freight either through roads or through the railway. To show its world class status, the former Premier of the Wester Region and the late sage of Ikenne Chief Obafemi Awolowo had his residenial house there. Hordes of heavy duty trucks were never meant to cause terror on the roads neither were it envisaged that those who promised good leadership like Awolowo would neglect the roads and deliberately kill the business activities in the area.

     

    NPA assures stakeholders:

    Few week ago, Usman and other stakeholders in the maritime industry expressed displeasure over the slow pace of work by contractors handling the Apapa Road when she visited the site.

    The two-kilometre road starts from the Lagos Port Complex,  Apapa to Ijora Bridge end of Western Avenue..

    Ms Usman directed the contractors to bring more equipment to site and increase the number of moles used to fast-track the completion of the road as specified in the terms of agreement with the Federal Government.

    Addressing reporters, after over three hours inspection on the level of work and the quality of job done so far by the contractors, she bemoaned the snail speed at which the contractors were carrying out the project.

    “The contractors have not been able to reach optimal performance. They are still within one to two per  cent completion. I have made them to understand that their level of performance is unacceptable. They need to increase the tempo of their work and deploy more efficiently. I have assured them that I am committed to seeing that relocation fund is released to them. But the level of the work as we have seen it now is not in the manner that we want. Therefore, we have made it clear to the contractors the equipment they need to complete their job on time,’’ Usman said.

    She said NPA will ensure that the two-kilometre road is completed within the period stipulated, adding that the concerns  raised would be resolved as the NPA has put in place a robust monitoring mechanism.

    Residents of the area and motorists, who expressed their delight over the visit  to the site, said there was the need for the total regeneration of the roads by the Federal Government.

    This was sequel to complaints by port users including  truck drivers and Apapa residents and its environ over the parlous state of many roads in the area and the inability of the contractors to mobilise enough equipment to site.

    Many of them expressed worries that not much has been done by the contractors to alleviate the sufferings of the people working or residing in Apapa. The slow level of the work done so far, stakeholders say, requires immediate government intervention.

     

  • Anxiety over struggling airlines

    Anxiety over struggling airlines

    The high mortality rate of domestic carriers has become a source of worry to operators, regulators and passengers. The disappearance of airlines and, sometimes, depletion of their aircraft fleet may have put the few surviving ones on edge. Experts warn that the existing airlines may be living on borrowed time, if the myriad of operational challenges bedeviling the sector are not addressed. Senior (Aviation) Correspondent KELVIN OSA-OKUNBOR reports.

    The air transport sector is troubled. Since 1985, when the sector was deregulated, several attempts by private sector operators to run successful carriers have failed to achieve the desired result. Many aircraft that have hit the skies disappeared a few years after, leaving a sour taste in the mouths of their promoters, passengers and industry regulators.

    Harsh operating environment, which has seen cost of operations rising higher than revenue; heavy taxation and dearth of infrastructure, among others, are responsible for the short lifespan of the airlines.

    With the average lifespan of airlines put at 10 years, experts fear that the few existing ones may soon fizzle out, unless urgent steps are taken to stem the tide.

    For instance, the Aviation Roundtable President, Mr. Gbenga Olowo, did not mince words when he warned that airlines would continue to fail until the government addressed the afore-mentioned challenges of the operating environment. He noted that carriers had not done well in the last four decades because of the challenges.

    Olowo put the disturbing situation in perspective. Hear him: “Going back to almost 40 years, the government-owned airline, Nigeria Airways, failed. Pioneer private airlines, such as Okada and Kabo, failed. The third generation airlines – ADC, Bellview, Chanchangi and Sosoliso – failed.

    “Similarly, the fourth generation airlines, such as Richard Branson’s Virgin Nigeria, and Air Nigeria also failed. Believe me, given the same operating environment the national carrier yet to be born will fail.”

    Olowo is not an alarmist. Checks by The Nation revealed that in the last few decades, scores of airlines have collapsed, leaving their promoters, passengers and industry regulators disheartened.

    They include ADC Airlines, Afrijet Airlines, Air Atlantic Cargo, Air Nigeria, Albarka Air, Al-Dawood Air, Amako Air, Amed Air, Arax Airlines, Axiom Air, and Barnax Air.

    Others are Bellview Airlines, Capital Airlines, Chrome Air Service, Dasab Airlines, Earth Airlines, EAS Airlines, Easy Link Aviation, Freedom Air Services, Fresh Air, GAS Air Nigeria, Hamsal Air, Harco Air Services, Hold-Trade Air and  IAT Cargo Airlines.

    There are also Intercontinental Airlines, Mangal Airlines,   Meridian Airlines, NICON Airways, Nigeria Airways, Nigeria One, Nigerian Eagle Airlines, Nigerian Global Aviation, Okada Air, Overnight Cargo Nigeria, Pan African Airlines, Premium Air Shuttle, Sosoliso Airlines, Space World International Airlines, TAT Nigeria, Trans Sahara Air, Trans-Air Services, Triax Airlines and Virgin Nigeria Airways.

    The Centre for Aviation Safety and Research (CAS-R) Chief Executive Officer (CEO), Sheri Kyari, attributed the depletion of aircraft to the absence of a viable maintenance, repair and overhaul (MRO) facilities in the country. He said it was costlier to do checks abroad.

    Kyari said: “The issue of fleet depletion that we are witnessing is nothing new because the main factor is the lack of MRO facilities. If there are MROs, people will simply move their airplanes to such MRO and you can have a slot that is well-planned for you.

    “But a situation where we take our aircraft outside the country means that if they don’t get a slot here, they have to start looking for slots around the world, which is not good enough.

    “Two, if they are going to do checks in the country, it’s going to be a lot cheaper.”

    There is a high tendency that you are going to have cheaper labour at home and you are going to pay in naira. But what is happening today is that operators take their aircraft outside the country and start sourcing for dollars.”

    Kyari added that, for some, who are leasing aircraft, if the aeroplane is due for check and they take it down or it’s due for check and they cannot pay, it is removed from their inventory.

     

    Airlines’ dramatic decline

    The government-owned Nigeria Airways Limited, perhaps, set the stage for the crisis  in the sector, which forced many of them to disappear. Arguably one of the first generation airlines, Nigeria Airways attained its peak with about 32 aircraft in the 1980s.

    However, a combination of poor planning, accumulated debts, mismanagement and undue government interference brought it on its knees. Consequently, the Federal Government liquidated the national carrier in 2003.

    Other private-owned airlines that rose from the ashes of the liquidated airline soon started experiencing difficulties.

    The General Manager, Public Relations, Nigerian Civil Aviation Authority (NCAA), Mr. Sam Adurogboye, recalled, for instance, that of the 150 carriers on the regulator’s register in 2000, only eight were still operating.

    They include Arik Air, Air Peace, Overland Airways, Medview, AZMAN Air, Dana Air, First Nation Airways and Aero Airline.

    Adurogboye said: ”At the time NCAA started in January 2000, we had about 150 airlines in our register. In 2006, the number came down to 28. The rest went under. It was not because NCAA did not do its regulation properly. At a point, the number reduced to 12. And as we speak, we have eight airlines. It is because we do what we need to do, that is why those who have to fizzle out will naturally do out.”

    Indeed, by 2000, Albarka Air, Amako Airlines, Axiom Air, DASAB Airlines, Earth Airlines, EAS Airlines, Easy Link, Freedom Air Services, Fresh Air, Meridien Airlines, Spaceworld International Airlines, Chrome Air Services, Capital Airlines, Bellview Airlines, Trans Sahara Airlines, Wings Aviation, Sosoliso Airlines, Virgin Nigeria Airways, and Hamsal Airlines were still operating, utilising different aircraft types in their fleet.

    However, a few years down the line, the number of carriers shrunk due largely to air crash, ban of the use of certain aircraft type, and the recapitalisation policy introduced by the government. Experts also cited the non-implementation of gazetted policies as another factor that limited the performance of airlines.

    For instance, from the robust list of carriers in 2000, the air transport sector experienced a downward trend, partly as a result of a series of air crash that hit the sector. There was the EAS Airlines crash in Kano, 2002; Bellview Airlines crash in 2005, in Lisa, Ogun State, as well as ADC Airlines crash in Abuja the following year.

    The bout of air crashes that hit the sector provoked concerns over air safety, forcing the Federal Government to introduce some stringent measures to stem the tide. Consequently, the government, to ensure better services and safety, set a deadline of April 30, 2007, for all airlines operating in the country to re-capitalise or be grounded.

    About seven airlines were said to have failed to meet the deadline and were banned from flying in Nigeria’s airspace from April 30, 2007. Some of the affected airlines were ADC Airlines, Fresh Air, Sosoliso Airlines, Albarka Air, Chrome Air Service, Dasab Airlines and Space World Airline.

     

    Ban on aircraft type

    Apart from the recapitalisation policy, another significant measure that reduced the number of airlines between 2000 and 2007 was the 22 years age limit placed on aircraft to be ferried into the country by new airlines, as well as the ban on the use of BAC 1- 11 aircraft type that was involved in the EAS Airlines crash

    Apart from EAS Airlines, other carriers affected by the BAC 1-11 aircraft ban included Okada Air, Albarka Airlines, Trans Sahara Airlines, and Freedom Air Services. This ban sounded the death knell for the affected airlines, which primarily had BAC 1- 11 aircraft in their fleet.

    Also, the ban on the use of Boeing 737-200 series for scheduled flights, affected Chrome Air Services, Associated Aviation, Chanchangi Airlines, Fresh Air and Bellview Airlines.

    These developments are said to be responsible for the dwindling fortunes and reduced fleet size of airlines’ fleet.

    More carriers have also exited the scene because of NCAA’s requirement that no airline should carry out scheduled flights with a single aircraft on its fleet. This directive affected Afrijet, Discovery Airlines, IRS Airlines and Air Nigeria.

     

    Hope for troubled sector

    But it has not been entirely a tale of woes for carriers. In the face of the daunting challenges that have forced not a few operators out of business, some carriers appear to be trudging forward. For instance, within three years of commencing operations, Air Peace said it has grown its fleet of aircraft exponentially.

    Its Corporate Communications Manager, Mr. Chris Iwarah, said: “Our fleet has grown in the last few years that we introduced revolution in the sector. From a fleet of three Dornier jets and five Boeing jets, we have grown our aircraft to about 24 with the delivery of triple seven Boeing aircraft for our international operations.”

    He announced that while some airlines may be experiencing depleting fleet, “Our fleet has continued to increase over the years.”

    Dana Air and Med-View have also maintained their fleet. For Med-View Airline, which went public last year, four of its five aircraft are active. Similarly, all the four aircraft in the fleet of Azman Air are active.

    Also, in the last few years, the coming of Arik Air, for instance, upped the ante with its unique selling point of “brand new airplanes”.

    Apart from its rapid fleet expansion programme, which saw an addition of about 28 aircraft in the last 10 years, Arik Air was able to raise the stakes by competing with foreign carriers until it began to experience industry challenges.

    For instance, from its fleet of 28 aircraft, the airline has about 10 serviceable aircraft, and debts running into billions of naira.

    Similarly, Medview Airlines has grown in fleet size and operational scope as the only carrier operating flights on intercontinental routes.

    The Nation learnt that the fleet of the country’s carriers has reduced from almost 81 aircraft about a year ago to just 42, leaving 39 others grounded. Over the past year, airlines’ aircraft fleet depleted by 58.9 per cent.

    Apart from Air Peace and Azman, many carriers are said to be downsizing. The most affected airlines are Arik Air and Aero Contractors, which experienced reductions from 26 to 10 and 13 to two aircraft.

    First Nation Airways has only one active plane in its fleet of two, as one of its jets has remained grounded at the Murtala Muhammed International Airport in Lagos since last year.

    The dwindling fortunes of Arik and Aero have not been helped by their take over by the Asset Management Corporation of Nigeria (AMCON). Since then, the two airlines’ fleet size and operational capacity have shrunk.

    Officials of the two airlines, however, declined to comment when The Nation contacted them on issues around their operations since the takeover by AMCON.

     

    Way forward

     

    Air Peace Chairman Mr. Allen Onyema has called on the government to set up a probe panel to unearth the reasons behind the high rate of operational failures of domestic airlines.

    Onyema listed some of the challenges responsible for the failure of most domestic airlines to include high cost of aviation fuel, otherwise called JET A1 (aviation fuel alone gulps about 40 per cent of total operating cost of an airline); high cost of insurance, harsh operating environment, lack of unity among airline operators, harsh policies of the government and multiple charges.

    The Air Peace chief said, for instance, that there were about 37 charges levied against airline operators by various authorities, including the NCAA, Federal Airports Authority of Nigeria (FAAN) and Nigerian Airspace Management Agency (NAMA).

    “If these taxes are not reduced, more airlines will die,” Onyema warned, adding that some legislations also lead to the failure of airlines.

    According to him, other problems affecting the survival of airlines include lack of foreign exchange, spare parts, and maintenance facilities, such as the Maintenance Repair and Overhaul (MRO) facility.

     

    Airline operators’ perspective

    The Airline Operators of Nigeria (AON) Chairman, Capt. Noggie Meggison, said the shrinking size of domestic carriers and the sector at large was the reflection of the tough business environment that had continued to take its toll on the industry.

    He expressed fears that none of the surviving airlines were immune to collapse as almost all wee running at about 50 per cent of their strength.

    Meggison said: “Considering that the cost of fuel accounts for about 40 per cent of the operational cost of most airlines, the colossal rise in price of the product by over 100 per cent has equally increased the operational cost astronomically.

    “In the light of this, our feasibility studies and financial projections are greatly threatened, thereby putting the airlines in a dangerous and difficult financial position.”

    Although airlines have been shrinking in their numbers in the last 10 years, with corresponding fleet depletion, passenger traffic has been increasing.

    According to data from FAAN, passenger traffic movements at domestic airports in 2005 increased from 3,817,338 to 3,848,754 in 2006, representing 0.82 per cent.

    The figures moved from 4,162,424 in 2007 to 5, 136,920 in 2008, representing 23.41 per cent; whereas the figures moved from 5,644,572 in 2009 to 6,273,545 in 2010, representing 11.74 per cent.

    In 2011, passenger figures increased from 6,746,290 to 6,879,286 in 2012, representing 1. 97 per cent. In 2013, passenger movements increased from 7,261,178 to 7,374,509 in 2014 and 7,164.169 in 2015.

    The upward swing in passenger traffic has, perhaps, underscored the urgent need to address the challenges facing airlines in order to meet the demands of passengers.

  • Allianz brand’s value hits$10.06b

    Allianz SE for the seventh year running clinched 49th place in Interbrand’s Best Global Brands ranking with brand value at $10.06 billion.

    In a statement by the company’s corporate communication officer, Lerato Kiviet, there was six per cent increase of brand value in 2017 compared to 2016.

    The statement read: “Allianz brand value now stands at USD 10.06 billion. For the seventh consecutive year, Allianz has climbed the interbrand ranking of the 100 most valuable brands in the world. Allianz started its rise with a brand value of $4.9 billion in 2010. Allianz’s 2017 growth momentum is similar to brands such as Google, SAP and Gucci, according to the study.

    “It’s better to lead change than to be led by it. We are transforming a traditional financial group into an agile company by experimenting with new technologies and ways of working. New forms of collaboration and partnerships have proven invaluable,” said Jean-Marc Pailhol, Head of Group Market Management & Distribution at Allianz SE.

  • Forex: Playing by the rules

    Forex: Playing by the rules

    The improvement in the supply of foreign exchange to the domestic economy demands that banks and other stakeholders comply with set rules. The improvement in inflation figures, even though pundits believe that the September figure will rise, and the Investors’ & Exporters’ (I&E) FX Window turnover of $11.3 billion, are indicators of the economy’s health. The Central Bank of Nigeria (CBN) has promised to sanction lenders flouting forex rules to ensure that the success is sustained, writes COLLINS NWEZE.

    As long as Nigeria’s economy remains import-driven, the demand for foreign exchange (forex) will continue to increase substantially.

    Both manufacturers and other end-users always find one reason or the other to demand for forex, including payment for production, raw materials, school fees or even medical fees abroad. All these run into billions of dollars weekly, hence the need to ensure that only genuine forex demands are met.

    This has prompted the Central Bank of Nigeria (CBN) to issue operational guidelines for banks and sanction those violating the rules.

    That explains why commercial banks were last week hit with allegations of not keeping to the rules guiding their forex transactions.

    CBN Director, Banking Supervision, Ahmad Abdullahi, threatened to sanction any Deposit Money Bank (DMB) in breach of the apex bank’s directive of March 3, instructing them to, among other things, open teller points for retail forex transactions and have electronic display boards in all their branches, showing rates of all trading currencies.

    While noting that the objective was aimed at creating awareness among members of the public regarding the availability of such facilities in branches of banks at clearly disclosed prices, the CBN frowned as the banks are not fully complying with its directives.

    A circular issued by the apex bank warned that the CBN would apply stiff regulatory sanctions to banks that fail to comply fully with the earlier directive by October 13, 2017.

    The CBN had directed banks and authorised dealers to open a teller point for retail forex transactions involving Personal Travel Allowance/Business Travel Allowance and Small and Medium Enterprises (SMEs). Such facilities would make it easy for their customers and other forex users to buy and sell forex in all locations and ensure access to foreign exchange without any hindrance.

    The CBN had also directed commercial banks to have electronic display boards in all their branches, showing rates of all trading currencies, which it urged customers to insist on in processing their forex transactions for invisibles and the SMEs window.

    “The CBN has given the erring banks a four-week period, expiring on October 13, 2017, to fully comply with its directives or face regulatory sanctions, which include but not limited to being barred from all future CBN foreign exchange interventions,” the bank said.

    The apex bank also said it will sustain forex interventions in the various sectors of the inter-bank foreign exchange market with the injection of $545 million.

    Giving a breakdown of the bank’s latest forex injection, its Acting Director, Corporate Communications, Isaac Okorafor, said the retail Secondary Market Intervention Sales (SMIS) received the largest intervention of $285 million.

    Other components of the released figures include the $100 million offered for wholesale SMIS, $90 million for Small and Medium Enterprises (SMEs) window and $70 million for invisibles such as Basic Travel Allowances, tuition fees and medical payments.

    According to Okorafor, the amount released underscored the CBN’s avowed commitment to ensure a liquid interbank foreign exchange market, where all genuine requests will be met in line with extant forex guidelines.

    Speaking further, the CBN spokesperson expressed optimism that, with the accretion to the nation’s foreign reserve, the Bank would continue to fulfil its mandate of safeguarding the international value of the legal tender. He further disclosed that the Bank’s management also remained optimistic about achieving a convergence between the forex rates at both the inter-bank and BDC segments.

    This was not the first warning to lenders over breach of forex rules. In August 2016, CBN Acting Director, Trade & Exchange, W.D. Gotring, in a circular to authorised dealers titled: Re: Transactions in ‘Free Funds’ by Authorised Dealers’,  accused banks of buying and selling forex without following stipulated guidelines.

    He reiterated that as provided in the laws and regulations governing dealings in foreign exchange, authorised dealers shall not sell foreign exchange without appropriate documentation and disclosure to the regulatory authorities, irrespective of the source of the funds.

    “Accordingly, authorised dealers shall deal in eligible transactions only, and not engage in any foreign exchange transactions on terms inconsistent with the extant laws and or regulations,” he said.

     

    Improved forex access

    Access to forex by manufacturers and other end-users has improved in recent months. That improvement has made positive impact on the economy.

    The manufacturing sector, which for nearly two years recorded poor performance, has been upbeat in the last five months.

    These boom time was supported by the Investors’ & Exporters’ (I&E) FX window, also known as willing-buyer, willing-seller window, launched by the Central Bank of Nigeria (CBN) in April 24 and has so far improved manufacturers access to foreign exchange as well as brought substantial improvement in exchange rate stability.

    CBN Governor, Godwin Emefiele, spoke of huge success in exchange rate stability, based on some of the actions the apex bank took in the last couple of months. The CBN boss said: “We have seen exchange rate stability with some of the actions we have taken in the last couple of months. We do expect that if this trend continues, we should get better. Firstly, with inflation trending downwards, we are hopeful that in the course of time, we will get back again to single digit inflation.”

     

    Exchange rate stability

    The recent stability in the forex market has waxed stronger owing to increased volume and frequency of interventions by the CBN as well as the establishment of the Investors’ & Exporters’ (I & E) FX window.

    Accordingly, the naira strengthened at all segments of the forex market last week as the CBN sustained pace of intervention while foreign investors positioned at primary market sale of T-bills held mid-week.

    At the official market, the CBN continued with its weekly Small and Medium Enterprises sales worth $100 million for spot and short tenured forwards under 60 days while the official rate improved from N305.95/$1 the preceding Friday to N305.90/$1 on Monday before eventually closing the week at N305.85/$1.

    This implies a marginal 3bps appreciation week-on-week. Similarly, at the interbank market, the domestic currency depreciated from N354.99/$1.00 on Monday to N356.99/$1 on Wednesday, but strengthened to N353.50/$1 by the close of the week, up 0.4 per cent week-on-week. At the parallel market, the naira exchanged for N369.70/$1 on Monday, strengthened to N367/$1.00 on Tuesday and traded till the end of the week, up 0.5 per cent week-on-week.

    Despite the spate of forex interventions by the CBN, the external reserves have remained on the uptrend, reaching a 31-month high of $31.9billion on September 19. This accretion to the reserves has been largely due to the stability in oil prices as well as improved production volumes and we believe this will give the CBN more impetus to continue with its interventions.

  • NIRSAL disburses N66.36b in four years

    The Nigeria Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL) has facilitated the disbursement of about N66.36 billion since 2013, when it started operation, the Chief Executive Officer, Aliyu Hameed, has said.

    He disclosed this at the Nigeria Agribusiness Group (NABG) 2017 Conference and Agriculture Expo, held yesterday in Abuja.

    Hammed said the institution, which is solely owned by the Central Bank of Nigeria (CBN), was setup to ease risk of credit lending to farmers, adding that despite the agricultural potential in the country, capital was a major challenge.

    He disclosed that Nigerians cannot eat potential but needed capital, which comprises finance, capital equipment, human capital as well as technology, to really drive the sector and achieve food sufficiency.

    His words: “In the last three and half years up to the moment, we have been able to catalase facilitate up to N66.36b in additional lending to the entire value-chain in agriculture and we paid up to N940 million directly as interest drawback to the borrowers account.

    “The interest drawback is a key support component. If you borrow money and you are able to payback as at when due, in the NIRSAL model, you can come back every three months and we give you up to 40 per cent rebate.”

    Hameed restated NIRSAL support to the rural farmers, mechanization suppliers and other members of the NABG to process their logistics and facilitate both local and foreign markets.

    He assured bankers and other investors of his commitment to de-risk investments in the agricultural value-chain.

    “Whatever happens to their money based on the level of guarantee we give, such an investor and financiers can come back to us and say there is a loss. We then pay you back whatever you lose based on our agreement so it will enable you reinvest,” he added.

    Earlier, President of the NABG, Alhaji Sani Dangote described the conference as opportunity to discuss issues affecting the sector and provide workable solutions, as well as develop new innovations that could boost agricultural productivity.

    He urged the stakeholders to put a stop to being over-dependent on the Federal Government, stressing that the private sector remains vital to repositioning the sector while federal government is expected to create workable environment.

    “The government should listen to us and should come up with policies that will develop the sector. We should be able to influence their ideas to see the reality because we are the actual participants. We are the ones to get it done, government is just the facilitator.”

     

     

    He appealed to stakeholders to develop innovative ideas that would make agriculture interesting to youths.

    Describing 70 per cent of the population as youths, Dangote emphasized need to engage them in agro-allied activities. He agriculture should be treated as a serious business rather than a development programme.

    In his keynote address, Chief Executive of Dangote Groups, Chief Aliko Dangote, urged the federal government to focus on agriculture to achieve Nigeria’s food need.

    He decried situations where the nation remained net importer of food despite the potentials to locally grow those foods imported and still do exports.

    Dangote, who was represented by the Group’s Executive Director, Stakeholders Management and Corporate Communications, Mansur Ahmed, identified land acquisition as one of the major challenges confronting the sector.

    He listed others to include insecurity, poor market structure, finance, poor access to better farm inputs such as seeds, fertilisers etc.

    He urged the State Governments to reciprocate government seriousness on the agriculture sector to achieve holistic growth in the country.

    Other personalities present were Director General, Federal Institute of Industrial Research (FIIRO), Prof. Mrs. Gloria Elemo, Deputy Regional Economic Counselor, Mr. Francis Widmer.

     

     

  • Forces against push for sugar self-sufficiency

    Forces against push for sugar self-sufficiency

    The Federal Government plans to achieve self-sufficiency in sugar. It targets domestic production of 1.7 million metric tonnes of sugar by 2020, to, among others, halt the yearly loss of about N350 billion to importation of the product and create jobs. But the realisation of these targets via the implementation of the National Sugar Master Plan (NSMP) is being threatened by smuggling, community hostility, and flooding, among others. Already, investors are worried that they may not savour the sweetness of their multi-billion naira investments in sugar, unless remedial steps are taken urgently. Asst. Editor CHIKODI OKEREOCHA reports.

    The three major investors in the Nigerian sugar industry – Dangote Sugar Refinery Plc, BUA Sugar Refinery Limited and Golden Sugar Company Limited – are, no doubt, big ticket investors credited with having the Midas touch. Their successes in turning businesses into extremely profitable ones are widely known. However, their foray into the sugar sector appears not to be enjoying a smooth sail.

    The Nation learnt that the investors’ prospects of reaping bountifully from their substantial investments in the Federal Government’s Backward Integration Programme (BIP), to boost the implementation of the National Sugar Master Plan (NSMP), have come under severe threats. The activities of smugglers and host communities’ hostilities as well as incessant flooding of sugar estates, among others, may have conspired to prevent the investors from savoring the sweetness of their investments in sugar.

    The implementation of the NSMP commenced in January 2013. It was aimed at achieving self-sufficiency in sugar production by stepping up its production within 10 years. Specifically, Nigeria, under the plan, targeted domestic production of 1.7 million metric tonnes of sugar by 2020. This was in the hope of halting its importation that has been digging a hole in the Federal Government’s purse to the tune of N350 billion annually.

    It also sought to create numerous job opportunities, contribute to production of ethanol and generate electricity. While 37,378 and 79,803 direct and indirect/seasonal jobs were expected to be churned out from the sector, respectively, the plan targeted the production of 161.2 million litres of ethanol annually. It also envisaged that Nigeria will ride on the back of the sugar master plan to generate 411.7 megawatts (mw) of electricity yearly.

    To meet these ambitious targets, the NSMP said there was the need to establish about 28 sugar factories of varying capacities, and bring about 250,000 hectares of land into sugarcane cultivation. The sugar master plan made it clear that the bulk of the investment capital required to meet the targets would come from private investors.

    This was why the government entered into a tripartite arrangement with Dangote Sugar Refinery Plc, BUA Sugar Refinery Limited and Golden Sugar Company to drive the implementation of the roadmap. Accordingly, each of them, driven by a combination of patriotism and prospects of bountiful returns on investment, has committed significant investment capital into the sector.

     

    Dangote throws his hat in the sugar ring

    Pan African investor and President of Dangote Group Alhaji Aliko Dangote last month signed a Memorandum of Understanding (MoU) with the Niger State Government for the establishment of a $450 million fully-integrated sugar complex.

    The MoU will allow the indigenous conglomerate access to 16,000 hectares of land at Lavun Local Government Area of the state for the production of raw sugarcane. The project, on completion, will create over 15,000 jobs in the state. It will also turn around the state’s economic fortunes, according to Dangote.

    “The Dangote’s Integrated Sugar Project in Niger State will include the establishment of integrated sugar mills, generate power, produce molasses, ethanol fuel, biomass and produce animal feeds,” the serial investor said, during the signing of the MoU in Government House, Niger State, in August.

    Giving more details on the project, which has put Niger State Governor Abubakar Bello and the people of the state in an expectant mood, the Group Managing Director of Dangote Sugar Plc, Abdullahi Sule, said the integrated sugar mills have the capacity to produce 160,000 mt of raw sugar. He described the MoU as a game changer for Niger State economy and Nigeria as a whole.

    However, the $450 million investment in the state was not the only project upon which Dangote hinged his hope of giving impetus to the BIP on sugar and, by so doing, making profit. The conglomerate, which boasts of Africa’s largest sugar refinery in Lagos, also has a sugar cane plantation in Numan, Adamawa State.

    Dangote Sugar Refinery, according to Sule, was also developing a sugar backward integration plan, through the production of 1.5 MT/PA in 10 years in Nasarawa, Adamawa, Kogi, Kwara, Taraba and Niger States.

    The Nation learnt that since 1981 when the Group started its foray into sugar business, it has injected a $104 million into the Savannah Sugar Company Limited, which it acquired from the government in 2003. This year alone, the acquired firm is said to have produced 20,000 mt of raw sugar from its plantation.

     

    BUA Group takes the plunge

    BUA Sugar Refinery Limited has never hidden its intention to give Dangote Sugar Plc a run for its investment in sugar. The 2008 acquisition of Lafiagi Sugar Company (LASUCO), in Kwara State, which has over 20,000 hectares of arable land suitable for sugar cane plantation, was seen as a demonstration of its resolve in this regards.

    “BUA is serious and is ever ready to surprise Nigeria and Nigerians in its current efforts to become a mega local sugar producer and first sugar exporter in the country,” the Managing Director of BUA Sugar, Mr. Ibrahim Yaro, said.

    That was at the recent visit of the Minister of State for Industry, Trade and Investment, Hajia Aisha Abubakar, and the National Sugar Development Council (NSDC) to the firm to ascertain the level of progress at the LASUCO sugar plantation.

    The NSDC is a parastatal of the Federal Ministry of Industry, Trade and Investment. The Council developed the road map called the NSMP for the attainment of self-sufficiency in sugar. It’s mandate was to articulate policies and programmes that will bring about rapid development of the sugar sector.

    Specifically, the Council was charged with progressively reducing the level of sugar importation by increasing local production so as to achieve self-sufficiency. Its mandate also included encouraging greater private sector participation in sugar production while reducing direct government involvement.

    During the Minister’s visit in the company of the Council, Yaro announced the company’s investment of $300 million in its sugar plantation, in line with the Federal Government’s BIP in the sugar industry. He said the sugar plantation, which will gulp over $300 million, was strategically located to serve the northern and southern markets.

    He explained that the 500 hectares the company earmarked for nursery development in 2016 has been developed. According to him, what is ongoing is the land clearing and development preparation for additional 5,000 hectares, which would take the company through 2018.

    Yaro said: “We are focused, determined and vigorously marching forward to meet our set targets. LASUCO targets the production of two million tons of sugar cane annually and this segment alone could produce over 4,000 jobs. LASUCO operates the second largest sugar refinery in Sub-Saharan Africa.”

    The Group’s investment in sugar includes sugar refineries in Lagos and Port-Harcourt and cane-sugar estates in Kwara and Kogi states. The combined capacity of its two sugar refineries of around 1.5 million mt/p.a makes BUA Group, arguably, the largest single refiner of sugar within Nigeria.

     

    Golden Sugar Company Ltd also

    Since its inauguration in June 2013, Golden Sugar Company Ltd’s state-of-the-art N40 billion sugar refinery has been delighting customers and businesses with its premium white sugar. With a production capacity of 750,000 tonnes of sugar, it is one of the largest facilities in Africa.

     

    Why investors walk tightrope

    For investors in the sugar value chain, the stage appeared set for the transformation of the sector by riding on the back of the BIP on sugar. With their mind-boggling investments and NSDC’s commitment towards achieving set targets, the investors looked forward to rewarding returns.

    They sure have reasons to be expectant. For one, the implementation of the BIP in the cement sector in 2002, during the administration of former President Goodluck Jonathan, paid off.

    The adoption of the policy in the production of cement by ensuring  that cement import licences were granted only to importers who show proof of building factories for local cement manufacturing in the country, worked magic.

    On the strength of the BIP on cement, Nigeria has since moved from the era of cement importation to exportation. And this has significantly cut the huge foreign exchange spent on the importation of the product while also creating several jobs.

    However, government’s and investors’ attempts to replicate the BIP’s success in the sugar industry appear to have been met with daunting challenges. The activities of smugglers across the nation’s numerous porous borders, host community hostilities, persistent flooding of sugar estates and dearth of infrastructure, among others, may have instilled fears in the investors that their investments might go down the drain, if nothing is done urgently. They have also raised fears that the sugar self-sufficiency target may not be realised.

    For instance, despite the Federal Government’s ban on the importation of sugar to encourage operators in the sugar value chain, it still lacked the political will to enforce the ban.

    Interestingly, it was NSDC that brought this situation to the fore when it recently expressed regrets that St. Louis cube sugars are still being smuggled into the country. Its Executive Secretary, Dr. Latif Busari, lamented that smuggling was threatening the businesses of local cubing and packaging companies.

    Busari, who spoke at NSDC’s recent mid-term implementation report in Abuja, however, said the Council has evolved new strategies for effective implementation going forward, including increased inter-agency cooperation and sanctions for defaulters.

    But as investors and stakeholders in the sugar industry await such increased inter-agency cooperation to begin to yield fruits, about N190.3 billion worth of sugar was said to have been shipped into the country from Brazil between April 2016 and April 2017.

    That was not all. The Nation also learnt from reliable industry sources that between March and April this year, 137, 000 metric tonnes of raw sugar estimated at N23.7 billion were discharged at the nation’s seaport.

     

    Host communities throw spanner in the works

    As if smuggling of sugar into the country was not enough to push investors to the panic mode, many of their projects, which would have raised the NSMP’s implementation profile were said to have been stalled by government and host community’s unwillingness to give out land.

    For instance, despite Dangote Sugar Refinery’s acquisition of 6,500 hectares of land in Guyuk for the expansion of its Savannah Sugar Company Limited, Numan, in Adamawa State, the project, according to the report, was stalled by unrealistic demands by local community leaders.

    The company’s project site in Lau/Tau in Taraba State, also suffered the same fate. Although, the company was said to have gotten a certificate of occupancy, and had paid compensation following which 20 hectares of nursery was established for further development, the Taraba State administration allegedly frustrated the projects with its “untenable demands.”

    The pan-African investor also got a raw deal from the political elite in Kebbi State. The report said that despite undertaking preliminary perimeter surveys and initiating action for topographical and soil surveys for the establishment of a sugar estate in Zaria Kalakala, Kebbi State, political elite’s interference and demands stalled the project.

    The Sugar Council also said the establishment of a new green field project by the Great Northern Agribusiness Limited – Lee Group, a Kano-based conglomerate – was disrupted by political elite interference.

    Golden Sugar and BUA Sugar also suffered similar fate. For instance, Golden Sugar Estate, Sunti, according to the report, witnessed many disruptions during its development, even as recent as March 22, 2017, requiring interventions by police and local chiefs.

    “The company’s intention to expand its cane fields stalled due to hostile and anti­-investment sentiments,” the Council said. Same for BUA Group, which reported community hostilities against operations at its project site in Lafiagi Sugar Estate.

    According to NSDC, BUA Group recorded four incidents of physical attacks against contractors working on estate roads and irrigation canals. Flood protection dykes constructed at very huge costs were breached and cane fields washed away. Farm infrastructures – irrigation systems were damaged.

     

    Long road to sugar self-sufficiency

    In fairness to NSDC, the mid-term implementation report gleaned from its website indicated that some considerable achievements were recorded during the review period.

    For instance, the mid-term implementation report showed that the sector attracted N157 billion in new investments. And the establishment of a new 50, 000 tons per annum sugar estate at Sunti was said to be the best investment in sugar.

    Also, 9,000 hectares of land were brought under sugarcane cultivation as at 2016. It was an increase of 250 per cent from 2013 when NSDC’s implementation commenced.

    The NSDC mid-term report also showed that 481 hectares of out-grower farms supplying cane to sugar estates were in place, up from 81 hectares in 2013. This represented 600 per cent increase.

    The sector also created 7,850 jobs, up from a total of 3, 500 employed by all the refineries as at 2013. It was 224 per cent increase.

    Two new companies namely, McNichols and Dogan’s also came on stream at the downstream segment of the sugar value chain. This, according to the Council, led to the emergence of Packaged Sugar Producers Association of Nigeria (PSPAN).

    However, not a few experts and industry stakeholders note that when these achievements are placed side by side with the projections of the sugar master plan, the success rate was everything but inspiring.

    For instance, the three major sugar producers – Dangote Sugar, BUA Sugar and Golden Sugar (a subsidiary of Flour Mills of Nigeria Plc) were said to have achieved only 40.3 per cent of the target set in the NSMP.

    While the NSMP projected that five new projects would come on stream in the sugar sector by 2016, up from one that existed in 2013, four new projects were recorded within the review period.

    It also projected the establishment of new or refurbishment of five sugar factories by 2016, up from one in 2013. But only two were recorded by 2016. Against the 39,200 hectares of land expected to come under sugar cane cultivation, from 3,600 in 2013, only 9,000 was achieved by 2016.

    Also, while local sugar production was projected to hit 145,300 by mid-term of the implementation of the master plan, up from 6,000 in 2013, only 21,000 metric tons of sugar production was recorded in 2016.

    Moreover, by the middle of the implementation of the plan, 16,236 jobs were expected to be churned out. But only 7,000 jobs were recorded by 2016. On the other hand, out-growers farms stood at 281 as at 2016. Eighty-one out-growers farms were available in 2013. This was below the plan’s 3,250 projections.

     

    To meet the target

    The Minister of Industry, Trade and Investment, Dr. Okechukwu Enelamah, was emphatic that Nigeria must get the sugar revolution right just as she did in the cement sector.

    According to him, the value of getting it right will be enormous in an economy as large as Nigeria’s with a huge market unrivalled in Africa.

    The Minister, who was at the public presentation of the status report on the mid-tern implementation of the NSMP, said revolutionising the sugar sector will have huge effects on job creation and reduction on foreign exchange for sugar imports.

    He, therefore, pledged Federal Government’s commitment to assist investors involved in BIP in the sugar sector to overcome their challenges.

    Although, Busari said the prospects for the effective implementation of the NSMP over the next five years was “bright,” the Director General, Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), Emmanuel Cobham, said less emphasis on market monopoly will do the tricks.

    Cobham, who observed that sugar production companies are there to make profit and monopolise the market, said rather than investors thinking more of monopolizing the sugar market, they should concentrate on satisfying the need of the customers and on how to create more employments in the sector.

    He, therefore, urged the Council to develop policies that will create more jobs by allowing local players come into the field. This, he said, will make the market expand and rub off positively on the nation’s economy.

    On the issue of smuggling, which has been a pain in investors’ neck, Cobham said the blame might not be put on the doorstep of Nigeria Customs Service (NCS). According to him, it could be coming out from illegal routes, because when one product is banned, it does not take the normal routes to come in.

    Other industry experts, who expressed optimism that Nigeria could still achieve the set targets in the sugar master plan, pointed out that there need to develop value chain for sugar as a commodity right from production to the market.

    They noted that the value chain begins with farmers, who must be provided with all the necessary inputs including the variety of sugarcane to plant to be able to deliver the quality of sugar required, and the right quantity per hectare.

    Apart from bringing the farmers extension into it, there is also need to encourage not just large scale sugarcane plantation, but also Small and Medium Enterprises (SME’s) to provide their own support to the sugar master plan.

    Experts also canvass full involvement of members of host communities as farmers who will be involved in the sugar value chain instead of allowing them become spanner in the works for investors.

    The consensus is that sugarcane out grower farmers should be encouraged and supported through the provision of credit facilities, procurement of necessary inputs and development of basic infrastructure.

    Will government summon the political will to address the issues agitating the minds of investors and stakeholders in the sugar sector, particularly, by reining in smugglers and host communitie’ hostilities? Will investors replicate their successes in other sectors in the sugar sector, despite the daunting challenges?

    While answers to these remain a matter of conjecture, what is, however, clear is that the sugar industry has the potential to help diversify the economy, generate significant foreign exchange and also create employment opportunities.

     

     

     

     

     

     

     

  • Cement self-sufficiency: BUA’s $1b investment to the rescue

    Cement self-sufficiency: BUA’s $1b investment to the rescue

    Nigeria’s road to self–sufficiency in cement has been long and tortuous. But her chances of achieving the target may have been brightened by the investment of $1 billion in Obu Cement Plant in Edo State by the BUA Group. Asst Editor OKWY IROEGBU-CHIKEZIE writes that the massive investment could change the economic landscape of the state and the country.

    With the investment of $1 billion in its cement plant in Okpella, Edo State, which, arguably, boasts Nigeria’s finest limestone depository, the BUA Group may have set the stage for the transformation of the state economy and, by extension, the economy.

    For one, the newly-inaugurated cement plant, which has the capacity to produce three million metric tonnes of cement yearly, is seen as a big boost and a massive intervention to address the domestic deficit in cement products for housing and construction.

    With the plant’s state-of-the-art setup seamlessly structured to facilitate the export drive, the investment is also seen as a significant boost for the nation’s cement self-sufficiency drive. BUA Group, according to its Chairman/Chief Executive Officer, Abdul Samad Rabiu, is building the second Obu cement line.

    Rabiu, who spoke at the launch of the facility, noted that the cement plant would reposition Nigeria from a cement importer to an exporter, increase production capacity from three million tonnes to 45 million tonnes by 2018.

    He said the cement sub-sector, which accounts for over 90 per cent of Nigeria’s mining sector, has the potential to shore up the $2 billion it injects into the country as foreign exchange (forex).

    Rabiu, however, said infrastructure, particularly stable power as well as policy consistency, was necessary to achieving a significant growth in the sub-sector. He said that the investment could double the sub-sector’s current 30,000 direct employment and over two million indirect jobs.

    “These kinds of investments in important sectors of the economy are not only necessary, they are critical.

    “In order to reverse our import dependency and diversify the economy, large corporations have to engage in game-changing investment in sectors such as agriculture, mining, and infrastructure, while government at all levels ensures an enabling environment for the investments to thrive,” Rabiu said.

    He said the vision of the company was to provide Nigerians with the best quality cement, using the best technology and best hands at the most affordable price. According to him, the choice of Okpella, in Estako East Local Government Area of the state, as the site for the plant, is strategic.

    “This community has the best limestone in the whole of the country,” Rabiu said, adding that the location is very good, being in the mid-west and it is very close to the cement market in the north, with excellent road networks in the south-west and to the east. “So, this place is at a strategic location to adequately distribute cement all over Nigeria,” he added.

    Rabiu also stated that the completion of the second line in the first quarter of 2018, being handled by SINOMA CBMI of China, is expected to take the company’s production capacity to six million metric tonnes per annum.

    He expressed confidence that SINOMA, with their track record and vast expertise in deploying cement plants across the world, would deliver a world-class second line for the Obu Cement Plant. “It will also meet our stringent environmental, safety, quality and technical requirements for our plants and products,” he said.

    The Obu Cement Plant utilises 9,000 tonnes of limestone and clay daily for its large-scale operations, while it produces 32.5, 42.5 and 52.5 grade cement. And the plant is engineered to be the most-environmentally- friendly cement plant in Africa with the most advanced dust emission control systems.

    “Our technology has the latest filtration with capacity of less than 10 milligram per normal cubic meter. We use natural gas, which is a very clean energy for both our kiln as well as the power plant, in addition to having a very green environment,” Rabiu said.

    At the inauguration of the plant and the ground-breaking of the second line, the Vice President, Prof. Yemi Osinbajo, pledged that the Federal Government would remove all human inhibitions to encourage investors.

    Commending BUA management for the achievement, he said the project, which is a wholly Nigerian enterprise, planned and executed by a Nigerian team, is a big boost to the economy, with the opportunities it will provide for skilled and unskilled youths of the state and the country at large.

    The Vice President noted that the plant’s output would guarantee self sufficiency of cement production for the nation, especially when BUA Group is using modern and efficient facilities with local materials. He said the company’s achievement had demonstrated that the Nigerian economic growth plan must be private sector driven.

    Osinbajo assured the private sector that the Federal Government would endeavour to make policies that would remove bottlenecks. “We will continue to create the enabling business environment and will directly assist the private sector to grow, which will in turn grow the Nigerian economy,” he said.

    According to him, the only feasible means to achieve a robust and far-reaching socio-economic development is to enable active involvement of private sector players and investors. Government resources, he said, cannot independently bridge the infrastructural and technological gap without the involvement of private sector resources.

    Osinbajo noted that advanced economies attained significance by the contributions of major entrepreneurs such as the Chairman of BUA Group. He emphasised that it was imperative to build a symbiotic relationship with committed serial entrepreneurs and investors to drive economic growth and development.

    His words: “Nation building is never judged by the number of new projects or fresh ideas that we begin; we are judged by what we complete and sustain. This country will only grow on the talent and resourcefulness of people like yourself who are ready to put their resources out and invest anywhere in the country, employ the local people in that community and add real value to the lives of Nigerians.”

    Edo State Governor Godwin Obaseki commended the management of the company for taking the bold steps in 2015 to initiate the process of establishing the plant. He expressed happiness that the management had made success of the company, including completely turning around the acquired moribund Edo cement factory.

    Obaseki said the vision and mission of the company were in line with the state government’s economic reform agenda, adding that “the State Government is ready to make Edo an industrial haven with friendly tax policies.

    He reassured the group of ensuring the operating environment was comfortable with the promotion of responsible and attractive tax regime. The state, he said, has reformed her land management process in a fashion that makes acquisition of land, security of approvals and building permit feasible without social harassments or uncontrolled communal land administration.

    Obaseki said: “We want to use this opportunity to invite other investors to emulate the BUA Group, come to Edo State and take advantage of the great potential in the state. Edo State is rich in limestone and other solid minerals, besides its status as an oil producing state. Government is resolute about economic diversification especially into areas where we have competitive and comparative advantage.”

    The governor also informed that his administration has created the enabling business environment for potential investors to invest in an industrial park, located in Ologbo, in Ikpoba Okha Local Government Area of Edo State, where the gas transmission line and proximity to power is expected to boost economic activities and create investments in the state.

    “We are currently designing an export processing zone with the initiative of investing in the Gelegele Port to boost production and agriculture, which is the major thrust of both the Federal and Edo State Governments’ economic diversification programme,” Obaseki added.

     

    How the BUA journey began

    The acquisition of a two million tonnes floating cement terminal labelled BUA Cement 1 in 2008 marked the company’s entry into the Nigerian integrated cement manufacturing. It was the first time the industry experienced a technology driven bulk-bagging of cement on a vessel.

    It acquired majority stake in the publicly listed Cement Company of Northern Nigeria PLC (CCNN), as well as in Edo Cement Company Limited in the same year before investing in the construction of a Greenfield three million tonnes plant in Obu.

    On the acquisition of CCNN, Rabiu said: “BUA’s investment in the cement line in Sokoto is the single largest private sector led investment in the North-Western part of Nigeria.

    “This is particularly important because Sokoto cement was the largest employer of labour in Sokoto State after the State Government, and the 60-year-old company founded by the Sardauna of Sokoto needed that investment to keep those jobs.”

    The effectiveness and efficiency of the plant in its first year of operation, which was over 90 per cent in an industry where efficiency averaged 60 per cent, led BUA to commence the construction of a second cement plant line of three million tonnes.