The Nation Newspaper

Category: Issues

  • X-raying concrete alternative in road building

    X-raying concrete alternative in road building

    In 2014, Nigeria was estimated to have lost N300 billion to bitumen importation. Now, with biting foreign exchange scarcity, dwindling revenue and prevailing economic recession, experts have called for the use of concrete to build roads rather than bitumen, MUYIWA LUCAS reports.

    The figures and presentations were quite revealing. Turn by turn, officials of cement manufacturer, Lafarge Africa, took time to make presentations to members of the House of Representatives Committee on Roads. The presentation, which held earlier in the year, was led by Larfage Africa Technical Services Engineer, Bukola Adebisi, who  painted a sorry state of the  asphalt roads and the drain it constituted on government revenue.

    “Flexible pavement in the form of asphalt paved road makes up more than 99.9 per cent of all paved roads in Nigeria today. With the massive investment in the cost of maintenance, repair and reconstruction of these road a shift to a more sustainable alternative is inevitable,” Adebisi noted.

    In 2015, the budget for the Federal Ministry of Works was N100 billion, but a meagre N11 billion was approved for the ministry, which represented 11 per cent of the budget. The then Minster of Works, Mike Onolememen, said Nigeria needed a yearly investment of minimum of N600 billion to meet the Vision 20:2020 targets for roads and road infrastructural development, and to increase the paved road from 65,000km to 200,000km by 2020. This cost was exclusive of the maintenance cost for  existing and the planned road construction, because in the same period (2015), there was zero allocation to the Federal Emergency Road Management Authority (FERMA).

    The upward and downward movements in global oil prices in the last one decade  has also made the cost of bitumen, which is the binder in asphalt, rise considerably, thereby pushing the cost boundary between rigid and flexible pavement ever closer.

    Compounding this problem was the oil refining challenges Nigeria has been experiencing over the last one decade, the deficit of which import has been used to shore-up.

    Since the backward integration policy of the Olusegun Obasanjo administration in 2002, the cement industry has witnessed tremendous growth in installed capacity,  production, consumption and export.

    For instance, the growth in the cement industry in the last one decade has seen the installed capacity move up to 4.025millin metric tons (MMT) and with the second production line of Lafarge Africa Plc at Mfamosing in Cross River State, coming on-stream last August, the total national installed capacity has increased to 4.275MMT.

    This development, experts contended, was enough reason the country should consider the cement alternative in road construction. Their argument was that with a massive cement production capacity locally, the comparative cost advantage factor will eventually set in, thus making it economical over asphalt road.

    Currently, the average cost of paving a metre square of road at 50mm for asphalt is put at N5, 493. 07 compared with a 150-mm thick concrete, which is said to be at three per cent differential.

    To drive home this point, Lafarge Africa Plc is involved in the construction of two roads at Cross River and Gombe states. The construction of a 20-kilometre (km) road linking the Oban road (Calabar-Cameroon link road) at Mfamosing to Odukpani on Katsina Ala road (Calabar – Katsina Ala). The first portion of the road which  is 10km, has been paved with concrete as part of what will eventually be the Phase I of rigid pavement construction. This will see the remaining 10km being paved with concrete subsequently in the Phase II of the project.  Also, the firm commenced the construction of an eight kilometre Maiganga concrete pavement road in Gombe State.

    “We are not only advocating the usage of concrete in the construction of pavement for roads, but adopting the same because of the sustainability and much lower maintenance,” Adebisi said.

    He  added that rigid pavement is no longer an alternative, but the way to go in sustainable road development, that will see real values in terms of increase in the volume of paved road with less need for huge annual budgetary allocation for road maintenance cost.

    During a tour of the project, the Project Manager, United Cement Company Limited (UNICEM), Mark Aibangbee, said  the choice of the concrete was to showcase that it has a better advantage and more durable and cost effective on the long run than asphalt road.

    According to him, the huge foreign exchange required, and its  scarcity, makes it unrealistic and economically suicidal to continue with road pavement construction. For  Aibangbee, if the use of concrete in road construction is widely embraced, it will lead to further development in the local cement industry and in turn boost the economy.

    Adebisi said Nigeria has to take a cue from other developed countries that have succeeded in road construction process. “About 60 per cent of the United States interstate road system was concrete, according to the United State Federal Highway Administration (FHWA). This is due to the anticipation of heavy traffic load, which concrete is better at withstanding. Because of its rigid nature, it can withstand heavy loading without noticeable deformation unlike asphalt which with continuous deformation ends up with ruts and eventually pot holes that requires constant maintenance.”

    Adebisi listed the advantages of concrete roads to include longer life with less need for maintenance and repair.

    Concrete was not susceptible to deformation with daily temperature cycle variation which leads to rut under heavy vehicular loading, thereby making it port-hole proof, hence needs minimal maintenance over the pavement life cycle which is three time that of comparable flexible pavement.

    Costs less for road users also: Concrete roads provide a better rolling resistance for heavy trucks due to non-deflection under loading because of the pavement rigidity thereby reducing energy consumption by as much as 20 per cent. Better long time performance also means fewer interruption and lower cost.

    Resistant to oil and lubricant damage: Unlike flexible pavement that is susceptible to structural bond damage due to oil and lubricant which, always results into scaling and eventually pot holes, concrete pavement is resistant to oil and lubricant damages and a host of other chemicals that might easily cause extensive damages to flexible pavement.

    Reflects more light: In comparison with asphalt, the light reflective index of concrete is far higher with increases in the reach of vehicular headlamp in distance covered, and better surrounding visual awareness, this resulted in reducing cost and accident as a result of visual impairment occasioned by poor lighting;

    Recyclable and 100 per cent re-usable: Concrete is the most recycled construction material in the world, according to the Construction Materials Recycling Association. Concrete is 100 per cent recyclable and reusable, and can be used as aggregate in new concrete pavements, base materials for new roadways, or for other uses, including erosion control and flood prevention;

    100 per cent local supplies: Concrete pavements are typically produced from abundant supplies of locally available resources, such as rock, sand, cement, and water. Modern concrete also incorporates waste materials, such as slag, which comes from iron manufacturing, and fly ash, a byproduct of energy production.

    In a 99-year comparative cost life cycle cost analysis done by the American Concrete Pavement Association (ACPA), despite a 15 per cent difference in initial investment on concrete pavement in comparison with asphalted road. By the end of ninety years analysis the cost differential is over 230 per cent more for the asphalted pavement.

    Indeed, several other stakeholders have called for the full adoption of this option for road construction. For instance, President of the Nigeria Institution of Estate Surveyors and Valuers (NIESV),  Patunola Ajayi, said statistics based on recent studies reveal that Nigeria was losing about N80 billion yearly due to the deplorable condition of roads across the country.

    He regretted that all roads that connect the country’s major cities were bad and deteriorating daily. The seaport and commercial centres to interland, he said, were in bad condition due to neglect.

    “Those still existing are in terrible shape of disrepair and when efforts are made to repair them, substandard materials are used and after three months roads return to their appalling shape without anybody raising an eyebrow,” he said.

    Dangote Cement Chairman, Aliko Dangote, also agreed with the concrete alternative, admonishing the Federal Government to urgently consider the use of concrete roads in the country.

    “It is cheaper to do a concrete road that will last 50 years than to do a bitumen road.

    “It will also help in eliminating corruption because if you go and build a bitumen road, it will have to be adequately maintained unlike a concrete road that is very durable. Aside from being very cheap, concrete roads are more durable and  maintenance cost is near zero,” he advised.

     

  • Troubled times for domestic carriers

    Troubled times for domestic carriers

    These are not the best of times for the aviation sector. Many domestic carriers are under severe pressure due to the harsh operating environment caused by huge debt overhead, multiple aeronautical charges and prohibitive taxes, among others. Experts are calling for an urgent intervention to stave off the impending collapse of the sector, hit by series of flight cancellations and other problems. KELVIN OSA OKUNBOR reports.

    The domestic airline sub-sector is troubled. The temporary suspension of flight operations by three carriers has sparked fears over the fate of the sector. For those schooled in the dynamics of aviation, the development clearly indicates that all is not well with the sector, and that urgent interventions are needed to stave off its impending collapse.

    Some of them who spoke with The Nation said, for instance, that the situation is so bad that some aircraft lessors, who loaned their airplanes to indigenous operators, have moved to repossess their equipment over failure to adhere to the repayment plan. They blamed this carriers’ faulty business plans, wrong operational models, incompetent management and harsh business and policy environment, among others.

    The Chairman of Air Peace, Mr. Allen Onyema, said aircraft lessors were afraid to lease their airplanes to Nigerian investors because of the high rate of payment default. He added that lack of integrity, poor financial planning, and misapplication/diversion of funds injected into domestic carriers by government in the past are also responsible for the declining fortunes of domestic carriers ­— some of which recently announced temporary cancellation of flights.

    The local aviation sector has been hit by a spate of flight cancellations in recent times. The development, which unleashed hardship on passengers and various stakeholders, including banks, leasing companies and prospective investors, has raised concerns over the health of the sector. The thinking is that unless some interventions are made, the situation may result to total collapse of the sector and loss of jobs.

    AlthoughArik and First Nation Airways have resumed flight operations, Nigeria’s oldest carrier, Aero, is yet to do so. This is coming on the heels of the collapse of several domestic airlines that have suspended operations in the last decade. Some of them are Okada Air, Albarka Airlines, Oriental Airlines, Savannah Airlines, and Freedom Air Services.

    Others are: Skyline Airlines, DASAB Airlines, Capital Airlines, Spaceworld International Airlines, EAS Airlines, NICON Airways, Capital Airlines, Bellview Airlines, ADC Airlines, Sosoliso Airlines, Fresh Air, Afrijet Airlines, Slok Air, Air Nigeria, Associated Aviation, Discovery Air and IRS Airlines.

     

    No cause for alarm, says NCAA

    Bad as the situation is, the Nigerian Civil Aviation Authority (NCAA) says there is no cause for worry, as the affected airlines are merely complying with statutory regulations to ensure that they have the required technical expertise to operate without compromising safety, while also making profit.

    NCAA’s Director General Captain Mukthar Usman said the agency was speeding up its technical, safety and economic oversight duties on airlines, and that domestic carriers were not folding up, but complying with statutory regulations to ensure safety of operations. “Domestic airlines are not folding up, but merely suspending their operations temporarily,” he said.

     

    ‘Carriers’ problems are

    self-inflicted’

    To some industry operators and experts, the crisis threatening to bring domestic carriers to their knees could have been avoided if they were more circumspect in the running of their businesses. For instance, Onyema said operators failed to take a critical look at corporate governance issues; they also failed to lay a solid foundation that did not depend on revenue accruing from ticket sales, which would be spent on one major offshore aircraft maintenance check.

    The Chief Executive Officer of Centurion Securities, Group Captain John Ojikutu (rtd), however, observed that the problems of domestic carriers go beyond insufficient funds. While noting that domestic airlines failed to merge, he said “It is better to voluntarily collapse the airlines into manageable numbers for effective and efficient operations than to allow them go into extinction.”

    Captain Ojikutu also identified inadequate skilled manpower, poor financial management and ineffective oversight from the NCAA as other factors threatening the industry’s survival.

     

    Calls for intervention intensify

    To avoid the collapse of more airlines, experts say that there is need for government’s intervention by way of tax reduction. They also called for reduction of levies and charges to reduce the huge burden on airlines.

    The Executive Chairman of Airline Operators of Nigeria (AON), the umbrella body of domestic carriers, Captain Nogie Meggison, said government must come to the aid of struggling carriers, warning that many of them may close shop if government does not intervene urgently.

    “Government has to urgently come to the aid of domestic airlines. This could be done by reducing the multiple charges paid to the agencies. The charges are too many,” Meggison said, adding that aviation agencies give phantom bills to airlines. “How do they expect the struggling carriers to survive?” he asked.

    “There are better ways of doing things. Instead of forcing the airlines out of business by denying them access to fly or employing arm-twisting tactics, the agencies should be working closely with the airlines to reduce costs and make their operations more efficient.”

    Yoked by high aircraft

    maintenance cost

    Apart from multiple charges, the high cost of C-Check has forced some carriers to abandon their airplanes in countries of repairs. The Chief Executive Officer of Aero Contractors, Capt. Fola Akinkuotu, said this constituted a major part of airlines’ operating costs, which puts a huge strain on their finances.

    According to regulatory provisions, airlines are expected to carry out various types of maintenance checks on their aircraft – A, B, C and D checks and others. A C-check costs about $1 million.

    Akinkuotu said airlines could make significant savings if the maintenance facilities were available in-country. He said many airlines whose aircraft were flown to places like Ethiopia, Morocco, Egypt and others for maintenance did not return due to inability to pay for the  maintenance.

    This must be why Mbanuzuo called on government to come up with a deliberate policy to encourage airlines to set up aircraft maintenance facilities in Nigeria.

     

    Operators urged on use of

    right airplanes

    The Managing Director of FMC Aviation, Mr. Hubert Odika, said using the right equipment could guarantee carriers’ sustainability. He also said fleet harmonisation would assist airlines to reduce cost of maintenance.

    The former Operations Manager of Chanchangi Airlines, Mohammed Tukur, agreed with Odika. He noted that the use of turbo propeller airplanes, for instance, was more economical for domestic operations in Nigeria. He said with the increasing cost of aviation fuel and other charges, using the right aircraft was imperative to sustain profitability.

    An airline pilot and President of Nigerian Aviation Safety Initiative (NASI), Captain Dung Pam, observed that most airline operators entered the business without robust plans, warning that more airlines could go under if operators failed to do the right thing by not underestimating the financial and human resources required to sustain their businesses.

    Mergers to the rescue

    Onyema said operators needed to forge closer ties to salvage the industry. “Owners of these airlines should be blamed because they have failed to come together to articulate a position that would be helpful to them, the flying public, and the government. Instead, they allow unhealthy rivalry to becloud their sense of judgment. That is what is happening,” he charged.

    He argued that if domestic carriers could come together and articulate their position to the government, the industry would be better for it. Describing the strategy as “a win-win situation,” he said it would help the government generate revenue, while also ensuring that the flying public have seamless travelling experiences.

    To Onyema and, indeed, other operators the options have become necessary to ward off the impending collapse of the sector. At a recent meeting with the Senate Committee on Aviation, the Managing Director of Arik Air, Mr. Chris Ndulue, said domestic carriers were dying slowly.

    He, therefore, called on the government to intervene to save the carriers from collapse. Ndulue, who spoke in an interview in Abuja, warned that unless urgent steps were taken, many domestic carriers might close shop soon.

    “The economic situation today is suffocating,” Ndulue told the Senate Committee on Aviation, adding that challenges such as the high interest rate of 24 per cent on bank loans, worsening exchange rate and multiple charges from various regulatory agencies, among others, are militating against the sustenance of aviation business in Nigeria.

    “If you have to borrow money and pay 24 per cent interest, and you don’t make a margin of 24 per cent, it means you will find it very difficult to pay back the debt. This is part of the fundamentals we need to address,” he said.

    According to Ndulue: “There are a lot of economic indicators that have made business more difficult, which are now manifesting in the inability of airlines to continue to operate.” He said airlines were operating in an industry that had very little profit margin.

    Pointing out that there hasn’t been a bailout targeted at salvaging the airlines or addressing their finances, he said this was where the committee could assist operators by interfacing on their behalf with the Federal Government.

    “The economic situation has moved from bad to worse. I think the intervention needs to take place to avoid total collapse of the industry,” Ndulue said, warning that “two airlines have closed shop; there could be more airlines doing the same if the trend continues.”

     

  • The politics of aviation fuel scarcity

    The politics of aviation fuel scarcity

    For weeks, things have been tough for airlines, because of the scarcity of aviation fuel otherwise known as Jet A-one.  Despite all efforts, the problem remains unsolved. KELVIN OSA-OKUNBOR reports that the on-going collaboration among airlines, regulators and fuel marketers may end the impasse.

    These are not the best of times for stakeholders in the aviation sector. From domestic airline operators to passengers, even to regulators, the scarcity of aviation fuel, otherwise known as Jet A-One, has become a nightmare.

    The problem, which has been lingering in the last few months, has been hurting operators who bear the burden of huge financial losses caused by disruption in flight operations. It has also left bitter taste in the mouths of passengers, who agonise daily over occasional delays and flight cancellations.

    By extension, the spate of near-air rage by aggrieved passengers demanding to know the status of their flights, for which airlines are unable to provide response, has continued to pose a serious challenge to the industry regulator Nigeria Civil Aviation Authority (NCAA).

    The scarcity of aviation fuel, which hit the industry, has pit many passengers against airline personnel at airports nationwide, even as allegations of sabotage are raging among fuel marketers and the affected airlines. This has put NCAA under tremendous pressure, as it battles to difuse the tension generated by passengers’ legion of complaints.

    Investigations,  however, revealed that aviation fuel is not only unavailable; the fluctuation in the price of the product in the last few months was also an issue that underscored the hiccups in its supply chain. This partly explains why the scarcity appears to have defied previous attempts to resolve it.

    Two former ministers of aviation, Princess Stella Oduah and Chief Osita Chidoka, are said to have set up Ministerial Committees to resolve the crisis. But the move may have failed to yield results, as the problem continued to put the stakeholders in the industry under pressure.

    Already, many airlines, including Arik Air, have scaled down their operations on some routes because of the scarcity. While absolving themselves of blame for the problem, the affected airlines also said that marketers might be grappling with infrastructure challenge.

    However, some players, who spoke with The Nation, put the blame for the scarcity at fuel marketers’ doorstep. For instance, an aviation security expert, Group Captain John Ojikutu, accused fuel marketers of creating the scarcity to increase the price of the product.

    As far as Ojikutu is concerned, airlines and marketers have questions to answer. He said: “Yes, the airlines are shouting. Are the marketers shouting? Are they concerned? What exactly is the problem? Is it a problem of scarcity or one of cost?

    “If it is a problem of cost, is it that of the marketers or that of airlines? Cost in what form? Is it that it is high or because the marketers are not getting foreign exchange?”

    He said there was something the government should look into. “It is a cabal. This is why the NCAA should be involved in providing aviation fuel,” he said.

    According to Ojikutu, the NCAA must be involved in the importation, distribution and marketing of the product. ‘’It should find out why the airlines are not getting fuel. That is why I said there is a problem somewhere, because only the airlines are shouting; the marketers are not,” the expert said.

    Worried by the effects of the scarcity on their operations, Airline Operators of Nigeria (AON), the umbrella body of domestic carriers, called on the Federal Government to step in. Its Chairman, Captain Nogie Meggison, urged the government to, urgently, address the acute shortage of aviation fuel.

    Meggison said the call became imperative because of the consistent unavailability of the product in the past few weeks. He lamented, for instance, that the problem has led to 50 per cent delays or cancellation of flights.

    He said: “We have been forced to cry out over this perennial problem because it continues to put us in difficult situation to go the extra mile to fulfil our obligations to our customers in spite of the inconveniences that go with it. However, we are at the mercy of oil marketers and many times our hands are tied such that we are left with no other option than to cancel flights.”

    The AON chief alleged that apart from the shortage of Jet A-1, marketers have been increasing the price to unbearable levels.  “Till April this year, I bought Jet A1 Fuel for N105 a litre. About a month ago, the price jumped to N145. Two weeks later, it rose to about N200 a litre. Today, the price has skyrocketed above N200 a litre. This has greatly increased our operational cost,” he said.

    Ojukuta said considering that cost of fuel accounts for about 40 per cent of operational costs of most airlines, the astronomical rise in price of the fuel by over 100 per cent had equally increased operational costs. In the light of this, he said, operators’ feasibility studies and financial projections were threatened, thereby putting the airlines in financial difficulty.

    The AON chair lamented that in spite of  these, operators could not increase ticket prices in order not to discourage customers that have been seriously stretched due to the economic hard time facing them. He said the economic downturn has reduced the disposable income of many airline customers.

    He said: “For most of them (customers) now the alternative means of travel is by road; our major competitor. It should be put on record however, that road transport uses Premium Motor Spirit (PMS) also known as petrol, which is highly supported or assisted by the Federal Government with exchange rate of N285 and available to marketers.

    “On the other hand, airlines don’t have such foreign exchange support or availability from government with regards to helping to make Jet Fuel available to airlines or at an affordable price.”

    He, however, said operators earlier this year met the Minister of State, Aviation, Hadi Sirika, to seek a solution to the problem. The minister, according to him, assured the delegation of his assistance.

    While operators await the government’s intervention on the matter, they have also called for the  reviving of  the Aviation Turbine Fuel (ATF) at Warri Refinery and the pipeline -hydrant system of supplying aviation fuel to the Murtala Muhammed Airport (MMA), Lagos.

    The operators said apart from reviving the Warri Refinery, the Atlas Cove and Mosimi pipelines -hydrant system earlier used for supplying aviation fuel to the airport should also be fixed.

    It was learnt that before the pipelines were shut in 1996, aviation fuel hydrant at the Murtala Muhammed Airport was used to supply fuel to aircraft through the pipeline from Atlas Cove and Mosimi.

    Meggison said the Nigeria National Petroleum Corporation (NNPC) should look into the possibility of reviving the pipelines, which must have become rusty, having been abandoned for 18 years. “We need NNPC to revive this pipeline so that airlines can get cheaper and cleaner aviation fuel,” he said.

    He pointed out that one of the causes of high cost of aviation fuel is the cumbersome chain of distribution and supply it has to pass through before getting to airline operators.

    Pumping fuel using pipeline and hydrant, the AON boss said, is safer and more cost effective compared to using tankers and fuel bowsers. He added that airports do not use tankers for fuel distribution these days.

     

    Fed Govt’s intervenes

    Bad as the situation is, stakeholders, especially operators may soon heave a sigh of relief. This is because the Federal Government said it is engaging stakeholders in the aviation fuel supply chain to ensure availability of the product.

    Speaking through the NCAA, the government said it was engaging fuel marketers to clear hurdles in the supply of the product, which had ripple effects on airline operations for weeks.

    The regulatory authority said it was aware of the prevailing scarcity of Jet A1, which has inevitably led to flight cancellations and delays by the airlines, adding that it has also taken cognisance of efforts being made by the airlines to ensure that passengers were ferried without any hitches.

    Last month, Arik Air said it was grappling with flight schedule disruptions caused by severe scarcity of aviation fuel across the country.

    Its spokesman, Adebanji Ola, said since the beginning of this year, Nigeria has been grappling with inadequate supply of aviation fuel leading in most cases to shortages of the product and consequently the disruption of flight operations.

    Ola said: “The airline operates an average of 120 daily flights, requiring about 500, 000 litres of fuel daily. Due to the large number of domestic and international flights, it is the most impacted by the inability of oil marketers to meet its daily fuel requirements on a timely and consistent basis. This has forced the airline to postpone flights while waiting for the fuel marketers to source and deliver the product.

    “On many occasions, despite all efforts in engaging the marketers, fuel could not be sourced, and flights may eventually be cancelled, causing not only revenue loss for the airline but also inconveniencing passengers.”

    He, however, identified marketers’ supply and infrastructural challenges as some of the key factors responsible for the epileptic supply of aviation fuel. He explained: “At the root of the fuel supply crisis is low stock due to the inability of marketers to source for foreign exchange to import more Jet A1 fuel into the country.

    “There is also distribution challenge, as the discharging of vessels bringing Jet A1 and other petroleum products are done in the same jetty. Loading various trucks for distribution to cities like Kano or Abuja takes considerable effort and time.

    The situation in the north is even more difficult since the product takes longer to be delivered due to the trucking distance. Oil marketers have also resorted to trucking of aviation fuel to the airports because hydrants are not consistently available at the airports.”

    Ola said while the Federal Government and oil marketers were working hard to address the supply and distribution challenges, operators had appealed to customers to bear with them, as they might experience flight delays and cancelations because of the prevailing scarcity of aviation fuel across the country.

    It remains to be seen how the deal with oil marketers will resolve the problem. But until that happens, it remains complaints galore for various stakeholders in the aviation sector.

  • To the future with hope

    To the future with hope

    Nigeria’s high unemployment rate, especially among the youth, appears to have defied solution. However, many youths are not giving up; they are taking their destinies in their hands, exploiting opportunities in the thriving Information and Communications Technology (ICT) sector. OLATUNDE ODEBIYI reports on the youths’exploits in the sector .

    He probably never envisaged that his choice of an obscure corner in the  busy Computer Village in Ikeja, Lagos, would pay off. But the trader, who preferred to be identified by his first name, Paul, has carved a niche for himself in the sale of mobile phone accessories, including phone pouch, chargers, screen protector and ear piece.

    Since venturing into the business about four years ago, Paul has never looked back. Although he declined to say how much he makes from the business, the fact that the business, which he plied using a table space has expanded to the extent of engaging apprentices is an indication that he could not have made a better decision.

    Another dealer in accessories, Mr. Uche Barnabas, also counts himself lucky for heeding his friends advice to relocate to the Computer Village, which is arguably, Africa’s biggest Information and Communications Technology (ICT). Barnabas was originally in the business of selling Peugeot spares parts in Abule Egba area of Lagos. That was eight years ago before he heard about the thriving ICT market from his friend.

    Barnabas wasted no time in moving his business to the computer market. But unlike Paul who had to pay for the small space he uses, Barnabas brought innovation and ingenuity into the business by selling all kinds of phone and laptop accessories such as phone charger, laptop charger, memory cards, ear piece, flash drive and hard drive right from the boot of his car.

    The wares are neatly arranged in a show glass. Proceeds from the business, he said, have been sustaining his family made of his wife and four children. He told The Nation that he makes about N5, 000 daily, which translates to about N150, 000 monthly. This is an amount most salary earners can only dream of.

    Encouraged by his remarkable success and the ICT sector’s positive growth prospects, Barnabas told The Nation that in the near future, he hoped to import his stock from China, assuring that he would sell only original accessories to satisfy his growing customers.

    Similarly, Suntex Computer Limited, a firm which deals in new and used mobile phones, laptops, games as well as accessories, has been waxing stronger 10 years after it was established. Its founder, who pleaded anonymity, said the business which started off with his selling of phone accessories in a show glass, today boasts five other shops.

    It’s the same story for Olatunji Akinyemi who sells United Kingdom (UK)-used mobile phones. A school dropout, Akinyemi could not continue his education at Olabisi Onabanjo University in Ogun State due to lack of tuition fees. He is doing the business with his sister and raising money to further his education at Yaba College of Technology.

    While admitting that business has been good, Akinyemi said his dream is to become a an ICT business mogul in the mould of Facebook Founder Mark Zuckerberg and Microsoft Founder Bill gates.

    Many youths are turning to the ICT sector to beat the unemployment scourge. According to a Professor of Science, Technology and Society, Patience Akpan-Obong of the Arizona State University, United States, the ICT industry has done a lot to increase the level of employment in the country.

    She said various segments of the sector have generated income for Nigerians, including those in the business of selling mobile devices, accessories and recharge cards among others. The don added that government can create more jobs from the ICT sector by investing in the manufacturing of ICT components and development of human capacity.

    Akpan-Obong said the government can also invest in the manufacturing of mobile devices and its accessories; hardware, software and applications. She lamented that Nigeria is still importing chargers and mobile devices when it has the capacity, man power and resources to make ICT components.

    “If Nigeria has a factory that manufactures mobile devices and its accessories, it would generate a lot of employment for both people working in the factory and service providers,” she said, adding that the country needs to believe in and develop her human capacity.

    According to Akpan-Obong, “We need to look at the human resources we have in the country and exploit it to develop both the ICT sector and generate employment. Government should look into hiring Nigerian ICT professionals to develop the sector.

    “We should not always rely on foreigners because Nigerians have the capacity and we must take our own people seriously by giving them contracts, consultancy and jobs.”

     Rising unemployment driving uptake of ICT jobs

    The paradigm shift to the ICT sector, observers say, is driven largely by Nigeria’s unenviable employment, particularly among the youths. The rising unemployment rate is said to have forced a strategic rethink by many youths in favour of self- employment instead of searching for non-existent white collar jobs.

    According to the National Bureau of Statistics (NBS), unemployment rate rose to 12.1 per cent in the first quarter of the year, from 10.4 per cent in the fourth quarter of last year. It was the highest since December 2009.

    The Bureau, in its latest unemployment watch report, said between last December and March this year, the population of unemployed Nigerians increased by 518,000 to over 1.45 million. NBS said the unemployed Nigerians were those who were looking for work, but could not find work.

    The West African Institute for Financial and Economic Management (WAIFEM) Director-General, Prof Akpan Ekpo, noted that Nigeria’s unemployment rate has been rising alongside the increased incidence of poverty. He described the country’s rising unemployment as “a looming time bomb and a national crisis”.

    Indeed, the rising violent crimes and the widespread insecurity across the country, many people believe, is traced to the rising unemployment in the last couple of years. Today, kidnapping, advance fee fraud, otherwise called ‘419’, armed robbery, prostitution, cultism, drug and child trafficking, among others, have become daily occurrences.

    A new and scary dimension has since been added to these social ills, following the upsurge in violent campaigns by terrorist groups, particularly the dreaded Boko Haram insurgents. Many youths, for lack of paid employments, have become ready recruits into terrorist organisations, a development that confirms fears that the country is, indeed, sitting on a keg of gunpowder.

    Indeed, the worsening unemployment in the country, especially among youths, which experts put at 54 per cent, poses great danger to the economic, social and political stability of the country. This has prompted calls by stakeholders in various sectors of the economy for the adoption of appropriate policies to fix the problem.

    Some of them who spoke with The Nation said this could be done through the creation of an enabling environment for the private sector, especially the Small and Medium Enterprises (SMEs), to retain jobs and create new ones.

    For instance, the Lagos Chamber of Commerce and Industry (LCCI) recently added its voice to the call to halt the unemployment scourge. Although the Council acknowledged the various initiatives of the government, such as the Youth Enterprise for Innovation (YouWin) programme, it believes that given the magnitude of the problem, a more fundamental and sustainable strategy was necessary.

    The LCCI proposed, among other policy options, support for SMEs to retain jobs and create new ones; critical areas of support to include funding and capacity building; the government should accord higher priority to investments in infrastructure to reduce the high infrastructure deficit and moderate the cost of doing business in the economy.

    Despite the robust, far-reaching recommendations, the government’s perceived failure to implement some of these may have forced youths to look inward. And for many of them, the burgeoning ICT sector hold promises hence the rush to take advantage of the opportunities therein.

  • NAICOM goes tough on corporate governance defaulters

    NAICOM goes tough on corporate governance defaulters

    The enforcement of the Code of Corporate Governance in the insurance industry by the National Insurance Commission (NAICOM) has forced a major shake-up in the boardrooms of many insurance companies. Already, many chief executives and non-executive directors, who failed to comply with the regulator’s directive to quit after nine years on the boards, are being booted out. This has signalled a new dawn in the industry. OMOBOLA TOLU-KUSIMO reports.

    For chief executives and non-executive directors of insurance companies, the fear of breaching the industry’s Code of Corporate Governance is the beginning of wisdom.

    As at last March, over 200 non-executive directors who breached the code were said to have been booted out in the wake of the enforcement of the code by the National Insurance Commission (NAICOM).

    The Nation learnt that over 70 per cent of the  directors of insurance firms who fail to comply with the regulator’s April 30 directive to quit after nine years on the board risk being forced out in the exercise, which experts say promises a new dawn for the risk-bearing industry.

    To enthrone a regime of corporate discipline and sanity in the insurance industry, the industry regulator, NAICOM commenced the enforcement of the Code of Corporate Governance as stipulated in Section 5.04 (vii) of the 2009 Corporate Governance Code of the Commission.

    NAICOM read the riot act to operators at the ‘2nd Insurers Committee meeting’ in February this year, issuing a directive to 59 existing insurance companies that all non-executive directors who have served up to nine years on their board should quit, effective April 30, 2016.

    Before the directive, many non-executive directors on the board of insurance companies, including some chief executives were said to have held the positions for about two decades, despite being public quoted companies and in contravention to the code of good corporate governance.

    It was learnt that though the level of compliance with the code by directors of insurance firms grew, following the second Insurers Committee Meeting where the Commissioner for Insurance, Mohammed Kari, informed the chief executives of  NAICOM’s intention to come down hard on defaulters, many of them still got on the wrong side of the law.

     

    Heads roll

    NAICOM’s sledge hammer has since fallen on former Head of State, General Yakubu Gowon, who, until the Commission’s enforcement of the code, was Chairman of Industrial and General Insurance (IGI) for 24 years.

    The Commission’s decision to go full swing in the enforcement of the code also swept away other non-executive directors of the company, including the founding director-general, Nigerian Stock Exchange (NSE), Apostle Hayford Alile and Mrs. Olubunmi Olowude, wife of the late Executive Vice Chairman of IGI, Mr. Remi Olowude.

    They have all relinquished their positions in the company in compliance with the Code of Corporate Governance directive.

    In his speech at the company’s last year’s Annual General Meeting (AGM), Gowon said their retirement came on the heels of NAICOM’s directive requiring non-executive directors who have served up to nine years on the board of insurance companies to go. He said with the new composition of its board, IGI became one of the first underwriters to fully comply with NAICOM’s directive.

    The enforcement of the code also forced out the Chairman of Guinea Insurance Plc, Sir Emeka Offor and four directors of the company, namely, Fred Udechukwu, Eze  Smart Nze, Prof. E. L. C. Nnabuife and Mr. Emeka Agusiobo.

    Consolidated Hallmark Insurance Plc was not spared either. Six of its non-executive directors exited the board. The Chairman, Ugo Ralph Ekezie, at the company’s 21st AGM announced that changes had occurred in the composition of the board as six non-executive directors have retired.

    His words: “These changes are in full compliance with various regulatory provisions, particularly the 2009 NAICOM code of good corporate governance. To immediately fill the vacuum created by the retirement of six non-executive directors, including me, the following highly experienced professionals from diverse disciplines have been appointed, and are to join the board.

    “They are Obinna Ekezie Obidegwu, Chief Andrew Odigwe, Mr. Joel B. Avhurvi, Mrs. Adebola Odukale and Prine Onuorah. A new Company-Secretary/Legal Adviser, Mrs. Rukewe Falana has also been appointed to replace Messrs Foundation Chambers. The company has appointed an Executive Director, Finance Systems and Investment with effect from April 1, 2016. He is Mr. Babatunde Daramola.”

    On the company’s future outlook, Ekezie said the directors had passed on the baton  to a new team of capable hands who would take the company to greater heights. “Our desire is to continue to provide the necessary support to the new members of the board to enable them succeed,” he said.

    Also, the Chairman of NEM Insurance Plc, Chief Adewale Teluwo and other non-executive directors, including Sesan Adekunle, Mrs. Olayinka Titilope Aletor and Fidelis Ayebae exited from the board of the company.

    Also, pioneer Chairman of Sovereign Trust Insurance Plc, Ephraim F. Faloughi, and other directors retired on April 7, this year, after two decades of meritorious service to the organisation.

    Managing Director, STI, Olaotan Soyinka in a statement, said the underwriting firm would be unveiling the new Chairman of the Board of Directors and other directors of the newly constituted Board.

    However, some firms complied before the deadline for the enforcement of the code by NAICOM. They are Niger Insurance Plc and Standard Alliance Plc, among others. Some companies like Mutual Benefits Plc, LASACO Assurance, Staco Insurance Plc and many more are however, about to implement the directive.

     

    NAICOM explains position

    The Commission said it introduced the enhanced corporate governance and guidelines in 2009 when it issued the Code of Good Corporate Governance in the industry. It said it regularly reviews its policy guidelines to operators in line with changing business environment.

    Kari said corporate governance is, particularly, important in the sector to ensure that some financial failures, frauds and questionable business practices do not affect investor confidence, while also ensuring global competitiveness. The country is in the era of change and the insurance sector cannot be left behind, he said. “Under the present dispensation and a rapidly dynamic environment, the industry certainly cannot continue to apply the same methods and approach of conducting its business and expect a different result,” Kari added.

    He, however, said the Commission was not unmindful of the challenges in the industry, which required the efforts of stakeholders to navigate to safety.

    For NAICOM Director of Inspectorate, Barineka Thompson, the face of regulation in the industry is changing. He said with the changing face, insurers are required to have a robust risk management culture and practice, an effective internal control mechanism, good governance system and transparent reporting systems and disclosures.

    “They are also required to have an efficient IT and processes platforms for improved operational efficiency and low cost operations.

    ‘’NAICOM will adopt appropriate supervisory tools to be much more willing to intervene in management/board governance matters and use predictive analysis tools to monitor forward solvency positions,” he added.

    Thompson further pointed out that the  transformation agenda is offering the industry the opportunity to readjust its governance, operational structures and leverage on the interest and support provided in the policy direction of the Commission.

    “It is expected that companies will begin to review their strategic business and operating models, overhaul product portfolios and distribution strategy, enhance ICT capability and other elements that can stimulate the growth of their overall business,” he said.

    Thompson also noted that NAICOM will remain focused on the issues relevant to the protection of policy holders, growth of the insurance sector and promote financial stability.

    He said insurers must keep pace with evolving regulations, which are becoming more stringent, affecting everything from capital requirements, to commission rates and customer care.

     

    Operators react

    Immediate past President, Nigeria Insurers Association (NIA), Mr. Gus Wiggle, said that with the full implementation of the corporate governance code, there would be improved enforcement of the ‘No premium No cover’ policy.

    He also said there would be better adherence to the prudential guidelines, full compliance with the International Financial Reporting Standard (IFRS) and improved anti-money laundering mechanisms coupled with the administrative acumen and ingenuity of insurance chief executives.

    Wiggle expressed optimism that with the enforcement of the code, the insurance industry will continue to be the preferred investment destination from renowned players in the world insurance market.

    He said on its part, the association would continue to support NAICOM in its desire to build a strong and virile market that would be a point of positive reference in the African insurance space.

    The Managing Director, Niger Insurance Plc, could not agree less with Wiggle. While describing the exercise as “a welcome development,” he said it will put the industry at par with the global insurance market.

    For Consolidated Hallmark Insurance Plc Managing Director,, Eddie Efekoha, the new dawn that is gradually coming the way of insurance business in the country, following the implementation of the code was fallout of the change of guard at the top echelon of the industry regulator last year.

    He said since the coming on board of Kari as new Commissioner for Insurance, he has moved swiftly to continue with the reforms started by his predecessor.”The implementation of the 2009 code of good corporate governance led to the retirement of the six directors of our company, he said.

    Efekoha added: “This development cut across the country as over 200 non-executive directors retired in March, 2016.”

    In Nigeria, corporate governance became an issue of public discourse after the collapse in the banking sector in the early 2000s. Consequently, industry regulators evolved corporate governance codes to prevent another round of corporate failure.

    According to experts, corporate governance is of great importance for public limited liability companies because they raise capital from the stock market and individual and institutional investors hold vast portfolios of shares and other investments in public companies.

     

  • Manufacturing in a depressed economy

    Manufacturing in a depressed economy

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

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

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

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

    For instance, while Nigeria’s real sector contribution to GDP stands at 9.5 per cent, those of United States of America (US) and China stand at 35.6 per cent and 49.5 per cent. “Manufacturing cost in Nigeria is twice that of Ghana, four times that of South Africa and Europe, and nine times that of China and Malaysia,” the industrialist said.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

    “When this is done, the problem of excess liquidity would have been addressed to warrant decline in inflation rate. With inflation rate trending low, interest rate will fall sustainably. And external reserves could be conserved and built up sustainably. There will be no need for devaluation of the naira,” Boyo explained.

    The industrialist insisted that the crisis of excess liquidity has done incalculable damage to the economy, because there is a strong nexus between the crisis of liquidity, rising inflation, exchange rate depreciation, weakening purchasing power and worsening poverty. He said CBN must stop its obnoxious payment policy if manufacturers must breathe a sigh of relief.

    Also lamenting the negative impacts of CBN’s monetary policies on the manufacturing sector, Jacobs said the sector performed abysmally low in the second quarter of last year in terms of output and contribution to the GDP.

    Citing figures from the National Bureau of Statistics (NBS), for instance, he said manufacturing real output grew by 3.82 per cent in the second quarter of last year, from 14.01 per cent of the corresponding period of 2014. This, according to him, indicates a 17.83 percentage point decline over the period.

    Also, the manufacturing sector’s contribution to nominal GDP in the second quarter of last year fell to 9.29 per cent as against 9.77 per cent of the corresponding period of 2014; indicating 0.48 percentage point decline over the period. He lamented that all manufacturing indices have crashed, as capacity utilisation, production value and manufacturing investment have been declining.

    Similarly, the Chairman, MAN, Apapa branch, Mr. Babatunde Odunayo, lamented that manufacturers were merely surviving following the implementation of certain fiscal and monetary policies.

    “The sector is struggling to survive the very difficult monetary policy regime. Some manufacturing outfits have shut their operations; others are waiting for favourable policies to come up,” he said, at a seminar organised by the branch in Lagos, last week.

    Before the June 15, 2016 flexible, market-driven Foreign Exchange (forex) regime announced by the CBN, more than 200 out of the over 2,000 manufacturing firms in the country were on the verge of closing shop due to the lack of raw materials to continue production, according to Jacobs.

    While about 100 operators in the general goods sector indicated readiness to close shop when they run out of raw materials, 120 operators in the pharmaceutical manufacturing sector were said to be down to two months’ supply of raw materials after which they may be unable to restock. Also, in the food and beverage sector, only few of the 80 operators remained in business.

    In June, last year, CBN’s monetary policy that barred importers of 41 items that can be sourced locally from having access to its official forex window threw manufacturers into confusion. Those who needed the raw materials and products restricted from the forex market as their primary products in the manufacturing process were adversely affected.

    This was, perhaps, why most real sector operators, especially manufacturers, perceived the new market-driven forex regime as a welcome development. Their hope was that the policy will drive down the exchange rate of the naira to the dollar, spur economic growth and development, and encourage more Diaspora remittances, among others.

    For instance, the National President, Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), Chief Bassey Edem, described the new forex regime as “a welcome development,” saying that it will further drive down the exchange rate of the naira to the dollar. It will also open the floodgate for influx of remittances by Nigerians abroad that have lots of dollars

    He, however, told The Nation that consistency is key to the success of the policy. He however said at a meeting CBN had with members of the Organised Private Sector (OPS).

    The CBN Governor Godwin Emefiele promised operators that the policy would not be dropped midway or reversed. He also said the CBN at the meeting informed the OPS that it would not back down on the import prohibition list unless OPS members show proof that any of the items on the list cannot be produced locally.

    In removing the 41 items from access to its forex window, CBN’s good intention was not in doubt. For one, the apex bank believes that those items could easily be produced in Nigeria rather than spend the country’s reserves on importing them. The CBN also said the policy was aimed at encouraging local production of the items.

    Because of the import-dependence of the economy, the slide in oil prices in the international market, which started mid-2014, caused an unprecedented slide in the value of the naira, a development that necessitated the need for a policy intervention to defend the value of the naira and protect the nation’s foreign reserves in the midst of dwindling revenue from oil.

    The CBN always uses the foreign reserves to defend the naira, but the reserves have been badly depleted as a result of sharp fall in oil revenue. Industry watchers say CBN policy of defending the naira is failing, and there is need for the apex bank to allow the naira rate to be determined by market forces, which was what the apex bank did by coming out with  the new forex policy.

    However, while many manufacturers have hailed the policy, it remains to be seen how the government intends to address other institutional and infrastructure challenges holding the manufacturing sector down.

  • Dairy giants in marketing war

    Dairy giants in marketing war

    Friesland Campina Wamco, makers of Peak Milk, and Chi Ltd., producers of Hollandia Evaporated Milk, are in a marketing war. The bone of contention is an advert campaign, which each claims it originated. Experts are seeking the regulatory bodies’ intervention to set things right. ADEDEJI ADEMIGBUJI reports.

    For long, stakeholders in the marketing communications industry have held the view that creativity is the bedrock of brand building many professionals in brand management argue that the originality of an idea aids success in advertising. But, in deed and practice, this does not seem true in Nigeria’s advertising and marketing landscape. There are stories of unwholesome and unethical practices bordering on copycat creativity.

     

    How it all started

    A marketing war is raging between Friesland Campina Wamco, makers of Peak Milk and Chi Limited, makers of Hollandia Evaporated Milk. Peak is accusing Chi of copying its advert. But Chi denies the claim, alleging that rather, it is Peak that is the copycat. Peak is alleging that Chi copied a pay-off it used in its Wazobia or Sikini Money Television Commercial (TVC).

    It is claiming that Chi Limited’s brand campaign tagged: HollandiaEvap: Na Correct Wazo was an aberration. Chi’s brand campaign and creative advertising were aimed at putting consumers at the heart of its economy pack size that sells for N50, commonly known as Wazo in local parlance. But as far as Peak is concerned, the campaign mimicked its adverts produced by Insight Communication.

    The Nation learnt that market realities led to the conceptualisation of the campaign to establish HollandiaEvap Milk as the Correct Wazo Milk. Essentially, the commercial depicts everyday people from different walks of life proclaiming HollandiaEvap Milk as the Correct Wazo Milk, relishing in the quality and quantity of the milk as they enjoy different meals that can be had with HollandiaEvap Milk.

    The message of the Correct Wazo TVC coincided with the rise in the cost of living in the country with most Nigerians looking for ways to optimise their spending and get value for their money.

     

    Peak’s case

    But Peak alleged that the commercial was copied in a rush, deploying similar approach – product in use style, similar song and laying emphasis on Waso. According to the firm, this presented what industry experts tagged “a mere pass off” of the creative initiative by Peak Milk.

    “If played to an unsuspecting audience, the 30 seconds material tagged: Hollandia Evap TVC – Na Correct Waso, will elicit more or less similar response: it’s Peak Milk,” an expert, who declined to be mentioned, said.

    According to a source close to Peak, Chi compounded matters by using the Peak Wazobia pack size with a slight erasure of some elements in the product’s look. To him, the Hollandia campaign is capable of confusing consumers of Peak’s single-minded message.

    A seasoned marketing analyst, Mr. Amos Oladele blames handlers of the Hollandia campaign for the fuss, accusing them of not being in novative and original.”

     

    CHI’s defence

    But Chi Limited has refuted Peak’s allegation. A top company official told The Nation that its advert was instead copied by Peak. He said Peak was afraid of the growing threat of Hollandia milk.

    Besides, the Hollandia Evap advert, he said, was approved by APCON and National Agency for Food, Drug Administration and Control (NAFDAC), adding that the Peak’s advert was run online and social media and not on traditional media.

    Quoting a report by A C Nielsen Retail Audit data on Nigeria’s dairy market, the official, who pleaded not to be named, said:

    “Nationally, Hollandia Evaporated Milk has been consistently gaining market share while Peak is consistently losing. If we take a look at the last 12 quarters, Hollandia Evaporated Milk has increased by 7.4 MS points, while Peak Regular has dropped by 7.9 MS points.

    “Hollandia Evaporated Milk is ahead of Peak in terms of market share in Southwest. In Lagos, the commercial capital of Nigeria, Hollandia Evaporated Milk has more than double the market share of Peak.”

     

    AAAN’s position

    Association of Advertising Agencies of Nigeria (AAAN), President Kayode Oluwasona condemned the development, in an interview with an online agency.

    He said: “There may be one or two instances of pass off or copycat, the issue has not gotten to a frightening stage. But there is obvious need to nip it in the bud. We may see the advert being pulled down to save the brand and its owners some embarrassments. In an ideal situation, the client and agency should be able to tell themselves the truth. We have messed up and as such pull down the advert.”

    Oluwasona promised that his association would combat copycat in the advertising business.

    APCON’s stand

    The Registrar of Advertising Practitioners Council of Nigeria (APCON), Alhaji Garba Bello-Kakanrofi, at a marketing conference, expressed worry over rising petitions on copycats. It described the development as “a worrisome trend.”

     

    The dairy market’s competitive landscape

    Over the years, the dairy market has witnessed an upsurge in brands and products jostling for consumers’ interests. The new entrants have, in the course of their struggle for consumers’ attention, been pitched against Peak.

    First to challenge Peak’s market leadership is Promasidor’s Cowbell Milk, which was launched in sachet. That initiative democratised the milk consumption culture. This marketing effort paid off as Cowbell adopted “Our Milk” as a pay off.

    Not one to take competition lightly, Peak innovated the milk in sachet and also in smaller pack sizes both in powder form and evaporated. The response ensured Peak made inroads into the homes of lower middle class consumers too.

    Other brands have continued to challenge Peak’s market leadership. One of such brands is Hollandia from Chi’s stable.

    According to a report by Euromonitor, Promasidor led sales in 2014 and 2015 with a 30 per cent retail value share. The company was the first to introduce smaller packaging of powder milk products, which appealed to price-sensitive consumers and children of school age.

    Over the forecast period, drinking milk products was expected to grow at a two per cent value at constant 2015 prices. The report stated: “It is expected that manufacturers will seek innovative ways of increasing their value share through product varieties and packaging.

    “The increasing popularity of flavoured milk drinks among consumers as a substitute for impulse products like soft drinks will further fuel the growth of the category in the forecast period. Therefore, the forecast growth rate will be slightly stronger than the review period average in value terms at constant 2015 prices.”

    The report noted that Chi led in the sales of yoghurt and sour milk products in 2014 and 2015 with a 34 per cent value share, adding that its Hollandia brand probably has the greatest distribution of yoghurt brands.

    However, the report noted that FrieslandCampina Wamco Nigeria Plc leads the category with a 75 per cent value share both in 2014 and 2015, saying its Peak brand is the most popular condensed/evaporated milk brand in Nigeria and targets consumers across income groups.

    “The company also markets the second ranked brand, Three Crowns, priced at a lower price point, and the company’s nationwide distribution and aggressive marketing strategies also contribute to its successful position,” the reported added.

    As each brand intensifies its push for a larger market share, brand management experts insist that the regulatory authorities should step up their act to ensure healthy competition, especially in brand campaigns that tend to mimic or demarket others.

  • Ambushing the ‘Buy Nigeria Campaign’

    Ambushing the ‘Buy Nigeria Campaign’

    In the Senate is a member championing the ‘Buy Nigerian’ campaign. But when the Senate wanted to buy some vehicles, it patronised those made overseas. The Senate blew N3.9billion on that acquisition. The upper chamber’s action, experts say, may have set the local auto industry and policy backward by at least four years.  Assistant Editor MUYIWA LUCAS reports.

    Before the mid 90s, Kaduna State was more or less the powerhouse  of Nigeria’s the country’s automobile industry. For instance, from the automobile assembly plant of Peugeot Automobile Nigeria (PAN), 225 vehicles came off the lines daily, with over 5, 000 workers in direct employment.

    Equally, several cottage and other composite industries producing the requisite parts for automobile production like Exide Battery in Ibadan, Oyo State, Dunlop and Michellin tyres, tannery firms, amongst others, all enjoyed good business as a result of the manufacturing activities in PAN.

    The successes recorded by local manufacturing firms back then was not only because of a flourishing economy, but also as a result of the government policy then, which favoured consumption of locally made products.

    For instance, it is on record that Peugeot automobile series was the official car for all government officials. This policy ensured that PAN thrived, keeping many people in gainful employment.

    The auto industry where PAN was a dominant player was not the only industry that thrived on the back of a government policy that favoured consumption of locally made products. The textile industry also flourished. Since there was no major importation of fabrics back then, local textile firms had huge patronage to keep them in business.

    For Instance, the Chairman, Adhama Textile Limited, Kano, Alhaji Seidu Adhama, has very fond memories of the glorious days of industries in Kano. Those were the era of machines churning out various products from factories scattered across the ancient city.

    In his firm, which specialised in textile garment manufacturing, there were over 2, 000 workers across three daily shifts earning a living and, by extension, contributing their quota to the growth of both the state and national economy. Again, that was up until the early 1990s.

    However, following the opening up of the economy to foreign goods, the tide changed. The resultant effect of this was the gradual death of local industries who could not compete with the era of unbriddled importation.

    The managing director of Dala Foods, and Vice President, Manufacturers Association of Nigeria (MAN), Alhaji Alli Madugu, corroborated this. He explained that goods, especially from Asia, flooded the Nigerian market and subsequently killed the manufacturing base of the country.

    According to him, because it became more challenging for local manufacturers, importation became the order of the day. Madugu, however, regrets that textile products amongst others so imported, were substandard.

    “Our markets have been flooded with substandard goods from Asia, making manufacturing very difficult. If any manufacturer wants to die of hypertension, then let him try to manufacture products imported from Asia,” Madugu said.

    However, in a bid to halt the trend, not only was a ban placed on the allocation of  foreign exchange (forex) for the importation of 41 items that are otherwise produced locally, the ‘Made-in-Nigeria’ campaign’ was rejuvenated.

    Last month, the Vice President, Prof. Yemi Osinbajo, was emphatic on the importance of patronage of Made- in- Nigeria products by Nigerians, which he noted can contribute to the revival of the cotton, textile and garment industries.

    “Nigerians buying Nigerian products is very important and it goes beyond the symbolism of wearing Nigerian-made dresses. It is important for our economy and well-being,” Prof. Osinbajo said.

    Similarly, the Minister of State for Industry, Trade, and Investment, Hajia Aisha Abubakar, proposed a “Patronise Naija Products Campaign.” A host of legislators like the Senate President Bukola Saraki, Senator Ben Murray Bruce, also championed this cause.

    Bruce, it will be recalled, even went a notch higher, introducing a hashtag #BuyNaijaToGrowtheNaira.

    Saraki reportedly promised that the Public Procurement Act will be amended by the 8th National Assembly to make it mandatory for the government to patronise locally made goods.

    Regretably however, while not a few Nigerians applauded the campaign and were ready to join the train because of its obvious economic benefits, legislators at the upper chamber, the Senate pulled the rug off Nigerians’ feet.

    The buy ‘Made-in-Nigeria’ campaign suffered a major setback following the recent procurement of wholly-imported Toyota Land Cruiser VXR V8 Sports Utility Vehicles (SUVs) valued at N3.9 billion by the Senate, instead of purchasing comparable locally-assembled brands.

    This transaction, The Nation learnt, contravened an official circular from the office of the Secretary to the Government of the Federation mandating all government agencies to  procure Made-in-Nigeria vehicles except if a locally made equivalent isn’t available.

    Expectedly, the Senators’ action has drawn the ire of the Nigerian Automotive Manufacturers Association (NAMA). The asociation described the purchase as “despicable and catastrophic to about 4, 000 jobs and roughly 50 ancillary industries currently engaged by the home-grown Original Equipment Manufacturers (OEMs).”

    For NAMA, the Senate’s action is an impediment to the growth of the local automotive industry, which is said to have taken the industry backward by at least four years.

    According to NAMA chairman, Mr. Tokunbo Aromolaran, the Senate could have saved suffering Nigerians 40 per cent of the eventual outlay and sustain at least 50 medium scale enterprises had it procured vehicles assembled by talented and diligent Nigerian workforce.

    “It was a rude shock to learn of the decision of the Senate to procure imported fully built SUVs when much more affordable locally assembled alternatives were offered,” he said.

    The Plant Head, Stallion NMN, manufacturers of Nissan, Mr. Prakash Karat, said there is a need for a dependable policy that could drive vehicle manufacturing and enhance sales, adding that local plants shouldn’t be struggling to sell their inventory when a larger percentage of the country’s population are youths.

    Renowned columnist and publisher, the cable, Mr. Simon Kolawole, in his piece however argued that promoting “Made-in-Nigeria,”  requires that Nigerian producers rise up to the challenge. He urged local manufacturers to step up their game because if Nigerians find quality in a locally made product, they will not resist it.

    “I have been hearing about “Fly Nigeria”. But a traveller who has enjoyed quality service from British Airways and Virgin Atlantic would find it very difficult to fly Nigerian airlines on international routes. To start with, our airlines don’t keep to time. The service is from poor to average, even if the planes are in good condition. After all, you will get both safety and service from BA and VAA, so why compromise your comfort just for the emotion of “Fly Nigeria”?

    Kolawole said it is not easy for Nigerian products to attain export standards given the numerous obstacles- hostile business environment lacking in infrastructural backbone, financial power and political support, that have kept the local industry retarded and struggling for decades.

    He, therefore, explained that there is a need to implement, not just conceive, pro-Made-in- Nigeria policies that will fertilise the growth of industry like policies on trade, tariffs and taxes to local manufacturers’ advantage. “We need infrastructure and cheap capital. We need border security to curb smuggling so that we don’t gain on the right and lose on the left. Above all, Nigerian companies must dream like Sony to change the poor-quality image of “Made-in-Nigeria”. It is one thing to market a product with sentiments, it is another thing for the consumer to be satisfied and keep asking for more,” he said.

    Stakeholders are, however, of the opinion that to achieve this feat on quality assurance, the Standards Organisation of Nigeria (SON), being the body responsible for controlling quality of products in the Nigerian market, needs to be alive to its responsibility.

    According to them, SON’s continued lamentations of influx of substandard goods into the country can no longer be tolerated as it is a representation of lapses on the organisation’s part. But by and large, the buy made-in-Nigeria policy may just remain a cliché if appropriate steps in this direction does not come from government through strict enforcement of existing policies in this direction.

  • Tortuous road to diversification

    Tortuous road to diversification

    The diversification of the economy has taken the front burner, following oil prices slump. But, to experts, it is all motion without movement on that front. They believe that the government is not backing its plan with action. They warn that unless the government walks the talk, diversification may remain a conjecture. Assistant Editor CHIKODI OKEREOCHA reports.

    THE Minister of Solid Minerals Development, Dr. Kayode Fayemi, has never hidden his intention to see a buoyant and prosperous economy propelled by inflows from the non-oil sector, such as solid minerals, agriculture, manufacturing and tourism, among others.

    At various local and international fora, the minister has spoken glowingly of the bountiful potential in solid minerals and mining and the imperativeness of riding on the sector’s back to diversify the economy. For instance, earlier in the year, Fayemi, at his ministry’s budget defence, said the government planned to generate N250 billion from solid minerals this year.

    The minister also buoyed the hopes of Nigerians when, at last month’s maiden edition of the New Telegraph Economic Summit with the theme: “Nigeria: Beyond the oil economy”, he reiterated the government’s commitment to diversifying the economy, with emphasis on the solid mineral and agriculture sectors.

    Speaking on ‘Digging deeper for new wealth: Opportunities in solid minerals,’ Fayemi said there are abundant mineral resources across the country that if well harnessed will generate enormous wealth for the country, especially with the decline in oil revenue, which made the diversification of the economy’s revenue base imperative.

    However, while diversification has no doubt, become inevitable in view of the need to halt the economy’s fast sliding fortunes caused by the sustained decline in global oil prices, which has put Nigeria’s finances in precarious position, the perceived lack of sense of urgency in driving the process does not inspire much hope, among experts and stakeholders.

    Some experts and analysts, who spoke with The Nation, expressed regrets over what they regard as motion without movement in the economic diversification agenda. They noted, for instance, that the relevant Ministries, Departments and Agencies (MDAs) that should be directly or remotely involved in driving the diversification agenda, have yet to transform their intention to diversify into concrete, practical actions.

    For instance, Obiora Akabogu, a Lagos lawyer and public affairs analyst, said Nigeria has not been moving fast enough in the area of diversification.While describing the slow pace of diversification as “suicidal,” he said the requisite political will to translate policy statements into concrete actions is still lacking.

    As Akabogu pointed out, “there are certain things that could be done through executive fiat to kick-start the diversification process”. The Presidency, he said, “could forward an executive bill to the National Assembly (NASS) for modification or necessary amendment of the nation’s extant mining laws with a view to removing the hindrances to the maximisation of the potentials of the industry”.

    Akabogu was referring to the Petroleum Act 1969, which says that “All minerals belong to the Federal Government.” The 1999 Constitution (as amended) in Item 39 of the Second Schedule also reinforced this position by stating: “All mines and minerals, including oil and gas fields, belong to the Federal Government.”

    Akabogu told The Nation that the import of these provisions of the law is that the exploitation of solid minerals is on the Exclusive Legislative List, which means that only the Federal Government has the sole approving authority for mining licences and the regulation of the industry.

    Although Fayemi said states are now free to explore and exploit their mineral resources, Akabogu and indeed, other analysts and experts, argue that there is need for a review and amendment of the relevant laws to truly open up the industry. “But this does not seem to be a topmost priority to the present administration for now,” Akabogu lamented.

    Insisting that a review and amendment of the relevant mining laws “is not only long overdue, but also a matter of urgent national importance in view of the persistent dwindling oil revenue”, the public affairs analyst said it is about time the authorities woke up to the reality that diversification remains a viable alternative to economic recovery.

    Indeed, the sustained decline in global oil prices, which started mid June 2014, has left Africa’s largest oil producer, gasping for breath. The development, which is unprecedented, has unleashed fiscal and economic consequences of unimaginable dimension.

    Apart from inducing a sharp drop from the Federation Account, which necessitated a huge financial bailout for some state governments, the nation’s foreign reserves have dropped significantly. Even the Federal Government now finds it extremely difficult to meet most of its financial obligations.

    President Muhammadu Buhari recently brought the nation’s grim economic prospects nearer home when he said 27 out of 36 states are broke and unable to pay salaries. The president, who made this known in Abuja a fortnight ago at the second National Executive Committee meeting of the All Progressives Congress (APC), however, said his administration was battling to stabilise the economy.

    The President said: “On the economy, the fall of oil prices after Nigeria has made itself a mono economy is a disaster. I wonder why people could not believe that in Nigeria, about 27 out of the 36 states have difficulties in paying basic salaries of their workers.

    “If from 1999 to at least 2003, oil was above $100 per barrel and an export of about two million barrels per day, how come Nigeria failed to make some arrangements to cushion the effect of a probably volatile oil market?”

    Fayemi seemed to have the answer. Hear him: “… over the past six decades, Nigeria has been a largely mono-resource dependent economy, with crude oil now contributing over 90 per cent of our export earnings. As a prodigal generation, we wasted years of oil boom after oil boom, failing to leverage what should otherwise be a blessing, neither improving the standard of life and living of Nigerians nor saving for rainy days.

    “The resource trap was sustained over the years till the dramatic reversal of our fortunes in recent times, with falling oil prices in the global market and prevailing challenges relating to the oil and gas industry now making it imperative on us to pursue the diversification of our economy’s revenue base.”

    Despite admitting that the past six decades have been largely wasted by successive administrations that failed to leverage on the nation’s vast natural resources to diversify the economy from the oil & gas sector, experts said the government was yet to walk the talk on diversification. “The government is yet to take the bull by the horns as far as diversification is concerned,” Akabogu said.

    He pointed out, for instance, that while Egypt, Kenya, Gambia and South Africa rely almost exclusively on tourism, Ethiopia relies on revenue from aviation, with Ethiopian Airline providing the bulk of the country’s foreign exchange, aside coffee.

    He, however, lamented that despite having the technical know-how and parading natural resources that would make other countries green with envy, Nigeria lacks the right leadership and the enabling environment viz-a-viz favourable government policies to exploit them.

    Partner and Head of Mining, PricewaterhouseCoopers (PwC) Nigeria, a consulting firm, Mr. Cyril Asobu, said despite launching the roadmap for the development of the mining sector since April 2012, it has remained on paper. “It’s time to begin to put these things into action. We have to put some political will around all these. It’s a long term thing, but we have to start now,” he said.

    Asobu spoke at a stakeholders’ forum in Lagos with the theme: ‘Nigeria: Looking beyond oil.’ At the forum organised by the Lagos Chamber of Commerce and Industry (LCCI) with PwC Nigeria, the leader of PwC Nigeria Mining Sector Group said: “Although, Nigeria is not a mining destination, there has to be renewed efforts to sell ourselves.”

    The need for Nigeria to market itself is also not lost on the President, Dangote Industries Limited (DIL), Alhaji Aliko Dangote. This must be why the serial Pan-African investor believes that the current low oil price environment should not be seen as a setback, but an opportunity to galvanise the country into broadening its revenue base through diversification.

    The president of the indigenous multinational, who spoke at the recent Economist Conference in Lagos, said: “This is the right moment to pursue the diversification of the economy, which we have been talking about.”

    He, however, echoed the collective fears of Nigerians over the possibility of successfully pushing the diversification agenda through. Hear him:  “I know that once oil gets back to $80 per barrel, we would relax and go back to the same improper behaviour. But I think this is the right time to change that attitude for good.”

    Dangote said the government must come up with the right policies because “if we don’t do it now, we may not do it ever. While pointing out that low oil prices do not mean doom, as the price of oil fell to $9 between 1998 and 1999, he said what the nation needs to do is to block the leakages and pursue diversification. He also urged Nigerian businesses to take advantage of the opportunities in the West African sub-region. According to him, the sub-region’s population of 320 million is a big market.

    Apart from solid minerals, other sectors identified by experts as holding prospects of putting the economy back on track outside oil include agriculture, petro-chemical, manufacturing, tourism and Information Communications Technology (ICT).

    “Without doubt, we need to pay greater attention to manufacturing, agriculture and agro allied industries, ICT, entertainment, tourism and many other areas in the non-oil sector,” LCCI President, Mrs Nike Akande, said.

    The LCCI president added that a holistic and sustainable economic diversification strategy is desirable and in fact, inevitable at this time. “We need to put an end to the high dependence on oil. Strategic decisions and policies that will put the Nigerian economy on a path of sustainable recovery have become imperative,” she said, at the stakeholders’ forum.

    Sadly, however, experts have continued to bemoan what they describe as government’s lack of political will to translate its intention into practical actions and unleash the potentials in the non-oil sector. For instance, the Chairman, Agric and Agro-Allied Group, LCCI, Mr. Adeola Elliott, said despite the urgent need to diversify the economy, there is still lack of support for agric by the government.

    He said despite the fact that agric is a value chain, with lots of job and wealth creation potential, budgetary allocations to the sector hardly get to the real farmers. He said apart from the need for policy consistency in the sector, the establishment of farm settlements should be given the necessary support in the form of loans and trainings.

    However, the March 23 passage of the N6.06 trillion 2016 budget by the NASS, The Nation learnt, has been a shot in the arm of MDAs particularly those charged with driving the on-going diversification agenda. The hope is that the budget would give impetus to the MDAs to come up with concrete, measurable actions to wean the economy of its over-dependence on oil.

     

  • Metering made difficult

    Metering made difficult

    Citing shortage of meters, electricity distribution companies (DisCos) have not complied with the Federal Government’s directive to give consumers meters. Consumers, who are getting estimated bills, accuse the firms of fleecing them. The DisCos deny the allegation, saying there is a scientific method of preparing estimated bills, AKINOLA AJIBADE reports.

    ADENIYI Ojo, 48, is worried about the monthly electricity bills he receives from the Ikeja Electric (IE), his service provider. Describing it as “outrageous,” Ojo, who lives in Egbeda, Lagos State, lamented that he pays between N12, 000 and N14, 000 monthly as electricity bill for his three-bedroom apartment.

    The electrical/electronics engineer said his grief is worsened by the poor electricity supply that has been a permanent feature in Egbeda and other areas serviced by Ikeja Electric, one of the 11 electricity distribution companies (DisCos) in the country.

    Ojo told The Nation that his fury over being short-changed, which stemmed from the payment of such ‘crazy’bills by consumers could have been avoided if DisCos had complied with Federal Government’s directive to meter all consumers within a specified period.

    He said rather than comply with the 12-month period given to them by the government through the National Electricity Regulatory Commission (NERC) to meter all customers; the DisCos insist on the claim that there are insufficient meters to go round only to continue with estimated billing, which allegedly is meant to fleece their customers.

    It was learnt that to solve the lingering problem of estimated billing, also called “crazy billing” and to monitor power consumption pattern, the National Assembly has ordered the power firms to meter all their customers within 12 months. However, none of the 11 power DisCos has met the deadline. They have continued to bill the customers on estimation, and this has not gone down well with Ojo and, indeed, other electricity consumers across the country.

    Apparently to give credence to his claim that the DisCos’ failure to meter consumers was deliberate and intended to fleece consumers, Ojo said he has tried all he could to get either a pre-paid meter or an analogue meter to reduce his monthly energy bill, but to no avail.

    Ojo said: “In 2012, I applied for a prepaid meter at my business unit in Ponle area of Egbeda, having realised that my monthly electricity bill was becoming too much for me to bear. Due to my inability to get a prepaid meter, I approached the unit to see if I could get an analogue meter. Years after, I have neither got a prepaid meter nor an analogue meter from the DisCo. This means I would continue to pay estimated bills.”

    That is not Ojo’s only reason for feeling cheated. He lamented that he and, indeed, like other customers within the area who don’t have meters, have not only been paying huge bills but also bribe officials of the power firm sometimes to avoid disconnection.

    Ojo is not alone in his frustration. Another customer, Ponle Adeoye, said she has been paying estimated bills since she is unable to get a meter. Adeoye, a lawyer, said estimated billing was a ploy by the power firms to rake in money from hapless customers.

    While condemning the refusal of the power firms to meter consumers instead of reeling out estimated bills, Adeoye said it amounts to inflicting more pains on Nigerians who have been hard hit by daily power outages.

    She said: “To me, the idea of estimated bills is confusing. What are the parameters used by DisCos to determine the cost of electricity, which customers that do not have meters consume?

    “It is quite unfortunate that an average consumer do not know the parameters. All we (consumers) see every month are ‘crazy bills’ that run from N13, 000, N15, 000 and up to N20,000, depending on the DisCo.”

    Similarly, Ade-Owas Ohabunwa decried the state of the power industry viz-a-viz the huge cost of electricity paid by consumers as “unfortunate.” He accused electricity firms of hiding under the pretext of shortage of meters to extort customers through estimated billing. He said the power firms are compounding the problems of electricity users.

    Ohabunwa, who is the Chairman of Amuwo-Odofin Estate, Lagos said many residents in the area do not have meters, adding that they pay huge bills monthly. He said residents of the estate are tired of hearing promises from the management of Ikeja Electric that they would be given meters.

    He said one of his neighbours who lives in a three-bedroom apartment was charged N500,000. “It is sad that the occupant of a three-bedroom apartment was charged N500,000 for some months because she does not have a meter. This was done in the name of estimated billing,” he said, asking: “How can one explain that?

    Describing this as “ridiculous,” Ohabunwa lamented that this is the sad situation Nigerians found themselves even under the private sector ownership. He, however, said some of his members were given meters by the management of Ikeja Electric after staging a peaceful protest two years ago.

     

    Local meter

    manufacturers also hit

     

    Electricity consumers are not the only ones affected by the power supply situation. Local meter manufacturers are also accusing DisCos of refusing to patronise them thereby adding to the problems associated with estimated billing.

    Local meter manufacturers under their umbrella association, Electricity Meters Manufacturing Association of Nigeria (EMMAN) accused DisCos of fleecing their customers by billing them on estimation.

    Its Executive Secretary, Mr. Muhideen Ibrahim, said DisCos are making a lot of money through estimated billing; therefore, they are not eager to source meters locally for their teeming customers.

    He said if DisCOS buy meters in large quantities from local manufacturers, they would meet the demands of their customers. While highlighting the importance of patronising local meter manufacturers, he said DisCos will resolve the problem of estimated billing if they engage us (local meter manufacturers) to produce enough meters but doing so would hurt DisCos’ revenue projections.

    According to him, local meter manufacturers have the capacity to produce enough meters in the country. He said DisCos know this but refused to patronise them because they (DisCos) want to continue to make money through estimated billing.

    Ibrahim said: “It is not that local meter manufacturers do not have the capacity to produce enough meters in Nigeria. The capacity is there, but the problem is that DisCos want to make money through estimated billing. Also, they want to continue to patronise meter producers abroad, where they falsely hope to get better meters.”

    The EMMAN Executive Secretary argued that meters produced by indigenous companies are far better than the ones produced abroad, but the penchant for anything western is making DisCos to shun local meter producers for their foreign counterparts.

    He said the allegation by DisCos that the meters produced in Nigeria are not compatible with their technology was not true, stressing that the claims are false.

    The Chief Executive Officer, MEMCOL Nigeria Limited, Kola Balogun, said consumers who do not have meters are at the mercy of the power firms, which have refused to meter their customers so that they would continue to milk them.

    Balogun said findings have shown that DisCos are charging crazy bills  to improve their earnings.

     

    DisCos react

     

    However, some power companies have defended their services, describing as untrue claims that they deliberately imposed estimated bills on consumers to fleece them to recoup their investments.

    According to the spokesman, Ikeja Electric, Mr. Felix Ofulue, the DisCos neither deliberately deny  customers access to meters nor charge them estimated bills.

    He said there were plans to roll out meters to customers, adding that the Ikeja Electric has started a metering roll out plan through which it  would provide meters to its customers.

    He said: “The plans to provide meters are on-going in Ikeja Electric. We  are doing it on feeder to feeder and  transformer to transformer basis. Customers in areas such as Ikorodu, Abule-Egba, Ikeja, Anthony, and others within Ikeja Electric juridiction are going to  get meters in line with the company’s metering plans.

    Ofulue said some customers are happy paying estimated bills, while others are not.

    He lamented that customers that have been metered bypass the meters in an attempt to defarud the power fim by not paying for electricity consumed.

    The Chief Executive Officer, Eko Electricity Distribution Company (EKEDC), Dr Oladele Amoda, said it was not true that the DisCos  charge customers outrageously because they want to generate revenue.

    He said DisCos use a scientific method to determine how much they charge customers who do not have meters, and are therefore, not doing it arbitrarily. He said his firm considers certain factors before it charges customers that do not have meters.

    Amoda listed some of the factors to include examination of the feeders in a particular area in order to know the volume of supply in a month; check the volume of electricity, which people have consumed over a period of time, usually a month, and thereafter, bill them.

    “The issue of charging estimated bills by power firms was not arbitrary. The DisCos arrive at estimated bills through a scientific method fashioned out by the NERC. In fact, the DisCos are not happy with the issue of collecting estimated bills,” Amoda said.

    He said Eko DidCo, for instance, frowns at estimated billing. “As a matter of fact, the company would like its customers to have meters. That is why we came out with a meter roll out plan through which meters would be given to our customers over a period of time,” he said.

    Amoda, however, said part of the problem is the low capacity of local manufacturers of meters such that they have not been able to meet the needs of power distribution companies.

    He, however, said Eko DisCo has partnered with meter producers abroad to supplement local production, adding that the firm has started to provide smart meters to its customers.