The Nation Newspaper

Category: Issues

  • Where has concession led the ports?

    Where has concession led the ports?

    In 2006, the Federal Government concessioned the ports to improve their performance and efficiency. Have things changed since then? To stakeholders, the Nigerian Ports Authority (NPA) management has stopped paying lip service to its vision of making the ports Africa’s hub. Maritime Correspondent OLUWAKEMI DAUDA reports.

    Before their 2006 concession, the ports were inefficient, resulting in long turnaround time for ships and increased container dwell time.

    In today’s global commerce, seaports play important roles. They are major gateways for international trade and instrument for measuring nations’economic health.

    A top Nigerian Ports Authority (NPA) official said: “The ports have considerable influence on the volume and conditions of trade as well as the capacity for economic development of nations still developing.

    “In our country, greater percentage of international trade is routed through the sea, and given our huge population, it is believed that our economy accounts for over 70 per cent of all seaborne trade in the West African sub-region. Hence, the country’s ports are increasingly challenged to meet the pressure mounted from movement of ships and cargo in and out of the ports.

    “The Federal Government embarked on the concession of the ports basically to solve the protracted problems of inefficiency, corruption, mismanagement and huge debts that characterised the ports, then.

    “The rationale behind the concession includes the $34 million indebtedness of the NPA, the redundancy of 24 out of 83 managers as well as its poor management structure. Emphatically, concession of the ports refers to lease of port terminals and re-organisation of stevedoring companies. About 110 applications were received in December 2003 and out of 94 pre-qualified concessionaires, only 20 were granted to operate seaport terminals for 10 to 25 years.”

     

    Why ports were concessioned

     

    The Federal Government took the decision to concession the ports to address the problems of inefficiency, corruption, mismanagement, and huge debts.

    The rationale behind the concession included the $34 million indebtedness of the NPA, the alleged redundancy of 24 out of 83 top managers of the agency, as well as its poor management structure.  Apart from that, the following factors were also responsible for the concession:

    • Turnaround time for ships was too long and usually calculated in weeks, sometimes months, depending on the cargo being loaded or discharged;
    • Cargo-handling plants and equipment owned by the NPA were few and mostly unserviceable, leading to shipping companies hiring these machines from private sector sources after having paid NPA;
    • Dwell time for goods in ports was prolonged due to poor port management and that led to port congestion;
    • Corruption soared high among labour contractors and various service providers at the port;
    • Nigerian seaports were rated as some of the costliest in the world, as a result of the compounded problems;
    • Many port premises and quay aprons had fallen to disuse and failed road sections inside the ports made movement of goods within port grounds cumbersome and very slow;
    • Following the seaport congestion, complaints of untraceable or missing cargoes were being regularly lodged against the NPA, all to no avail and
    • Security inside Nigerian seaports was compromised by the activities of miscreants as theft and pilferage became the order of the day.

    In December 2003, NPA sources said about 110 applications were received and out of 94 pre-qualified concessionaires, only 20 were granted approval to operate the terminals for between 10 to 25 years.

    NPA, stakeholders said, is spearheading a new cause of making Nigeria the hub of international trade in West Africa. Experts also said this is a bold step in the right direction, as Nigeria is home to Africa’s biggest oil market and situated strategically in the Gulf of Guinea.

    To keep to its promise of boosting efficiency, the management of the NPA acquired about six 60-tonne  buller- pull tug boats with state-of-the-art, computerised engines, to meet the increasing demands of critical stakeholders, within the Lagos Pilotage District.

    Its Managing Director, Mallam Habib Abdullahi acquired the tug boats, one of them christened UROMI  had twin fire fighting pumps, with a reach of above 300 meters and the flow is over 600 cubic meters per hour of water and foam, making it the strongest equipment in its category in the country.

     

    Revenue profile

     

    What has changed at the ports since their concession in 2006? A lot, says a senior official of the Federal Ministry of Finance.

    The NPA management, the official said, has been running the ports efficiently.

    The NPA, the official said, generated $140 million in 2005 before the concession and over $450 million from the Lagos Ports in 2014.

    The official told The Nation that the government has been earning more income since the concession.

    The government, he said, concessioned the ports to generate more revenue and allow for greater flexibility, efficiency and better services to importers and other port users by resolving some of the major challenges confronting ports operations.

    The turnaround time in 2005, at the Lagos Port Complex and Tin-Can Port, he said, was 10.0; while vessel waiting time was 3.0.

    In 2014, the official pointed out that the turnaround and vessel waiting time had reduced to 4.0 and 1.3.

    Gains of concession

     

    The cost of port services is competitive, turnaround time has improved, percentage of berth occupancy rate improved and infrastructure have improved significantly. Also, the security around the seaports has improved.

    The official, however, lamented the poor access roads to the Lagos ports, urging President Muhammadu Buhari and the Minister of Transport to address the perennial gridlock in Apapa.

    A senior official of the NPA, who also craved anonymity told The Nation, that the  management was working to ensure that the ports become “the leader in Africa, to deliver efficient port service in a safe, secure and customer-friendly environment. Our core value includes efficiency, safety, security, customer friendly and new innovations.”

    Nigerians, according to him, have forgotten that before the concession, the “turnaround time for ship was too long and usually calculated in weeks, sometimes months, depending on the cargo being loaded or discharged. Cargo-handling plants and equipment owned by the NPA were few and mostly unserviceable, leading to shipping companies hiring these machines from private sector sources after having paid for it’’.

    Dwell time for goods in ports, he said, was prolonged due to poor port management. “There was congestion in the port; corruption was high among contractors and various service providers at the port; the ports were rated as one of the costliest seaports in the world, as a result of the compounded problems.

    “Many port premises and quay aprons had fallen to disuse and failed road sections inside the ports made movement of goods within port grounds cumbersome and very slow. As a result of the congestion, complaints of untraceable or missing cargoes were being regularly leveled against the NPA,” he said, adding that the security inside the ports was said to have been compromised by the activities of camp-boys, wharf-rats and other miscreants operating inside the ports.

    The Association of Nigerian Licensed Customs Agents (ANLCA) President, Prince Olayiwola Shittu, said with the huge equipment at the ports and the introduction of standard in the type of vehicles that can enter the ports, “the NPA has brought efficiency to the ports. The management of the NPA led by Mallam Habib Abdullahi is leaving no stone unturned since assuming office.

     

    Simplifying trade process

     

    One way the management of the NPA is easing the importation and exportation processes for business environment is the strategic adoption and institution of electronic transactions.

    The authority has introduced an online payment platform called the Electronic Ship Entry Notice better known as “e-SEN” for shipping lines and agents to ease business transactions and help reduce ship dwell time.

    At the launch of the e-SEN, Abdullahi said the online payment platform has cut off unnecessary delay associated with ship arrivals and their dwell time at the ports, as well as ensure a quicker cargo clearance system.

    He noted that the digitalisation of the financial aspects of the operations of the authority had brought about a 15.4 per cent increase in cargo throughput.

    “Before e-SEN, it was done manually, filled with challenges associated with delay in verification of data and a lot of inconveniences leading to loss of man-hour in business,” Abdullahi said.

    Shipping companies in Nigeria have also described the e-SEN as a major step by the  management of the NPA in checking corrupt tendencies at the seaports.

    The electronic devise replaces the obsolete manual system which is said to be corruption-laden.

    “With this innovation, you save a lot of money and time, while eliminating corruption at the same time,” said Mr Val Usifor, chairman of the Shipping Association of Nigeria, who also described the digital move by NPA as “a quantum leap” in the  management’s efforts to increase efficiency in service delivery and fight corruption in the ports’ system.

    Experts also said the e-SEN has led to the biggest vessel that ever called at any West African port, Maersk Line’s WAFMAX vessel, arrive the Onne Port with a tonnage of 4,500 20ft equivalent units (TEUs) container.

    “This is going to make transportation of goods more economically viable. Before now, there were 2,500 containers on one ship, but there will be 4,500 TEUs,’ Managing Director, Maersk Line Nigeria Limited and head of the company’s Central and West Africa Cluster, Mr Jan Thorhauge, said after the berthing of WAFMAX at Onne.

    “It will now be much more cost efficient. In practice, it would mean that Nigerian export products would become more competitive. China is a very big sourcing area for Nigeria as almost 50 per cent of all containerised imports into Nigeria come from China. So, this is a direct link between China and Nigeria. It goes first to Lagos and then to Onne,” Thorhauge said.

  • Issuing bonds, revamping economy

    Issuing bonds, revamping economy

    The oil price crash hit Nigeria hard. The country’s revenue fell, affecting the funding of critical infrastructure. The Debt Management Office (DMO) has risen to the challenge, issuing bonds to fund such projects in the 2016 budget. Will local investors take a cue from DMO? COLLINS NWEZE writes.

    For Nigeria, the worst era seems over. That was last January when crude oil price touched nearly $25 per barrel, with little hope that it would rebound. But the black gold has inched up slightly, touching $41 per barrel last March 30.But, there is still a decline on large chunk of government revenues. Low crude oil prices meant that the government must borrow to realise its spending plans.

    In 2005, Nigeria struck a deal with Paris Club lenders to write off over half of the country’s $30 billion debt. Since then,  the government’s debt has crept back up, but it remains relatively low as a percentage of its Gross Domestic Product (GDP).

    Oil revenues from oil have dropped, and the only way to fund over N1.84 trillion deficit in the N6.06 trillion 2016 budget is through the issuance of the Federal Government of Nigeria (FGN) Bonds as being done by the Debt Management Office (DMO).

    The DMO last month, sold N100 billion FGN bonds through three bond offerings: re-openings of 15.54 per cent FGN February 2020, three-year, 11 month-bond; 12.50 per cent FGN January 2026 nine-year, 10 months bond and a new 20-year bond, 12.4 per cent FGN March 2036. The stop rates were 11.334 per cent; 12.090 per cent and 12.4 per cent.

    The DMO Director-General, Dr. Abraham Nwankwo explained that a bond is a loan and the investor or holder of the bond is the lender. “When you purchase a bond, you are lending money to a government, local government council, state government, federal agency or a corporation, known as the issuer. The government uses it to fund budget deficit, for instance, or to build roads, electric power stations, finance factories, among others. When you purchase a bond, in return the issuer promises to pay you a specified rate of interest during the life of the bond and to repay the face value of the bond (the principal) when it ‘matures’,” he explained.

    The debt office said when investors buy FGN bonds, they are lending funds to the federal government for a specified period of time. “The FGN bond is considered as the safest of all the investments because it is backed by the ‘full faith and credit’ of the government. They have no default risk, meaning that it is virtually certain your interest and principal will be paid as and when due. The income you earn is exempted from state and local taxes,” it said.

    It added that the government-sponsored enterprise bonds help support project relevant to public policies, such as helping certain groups, such as farmers, homeowners, students, etc to raise money for financing specific projects. These bonds do not carry the full-faith and-credit of the government. The investors are likely to hold them in high regard because they have been issued by a government agency.

    However, corporate bonds are debt obligation issued by private or public corporations. The corporations use the funds for building facilities, purchase of equipment to expand the business, among others. “When investors purchase corporate bond, the corporation promises to return your money, or principal at maturity date, but they are being paid interest semi – annually,” he said.

    He continued: “FGN bond fosters economic development by promoting the use of long-term funds for long-term investment in the economy. It serves as an efficient way of mobilising domestic financial resources for productive investment in a non-inflationary manner. It also allows self reliance of the country by reducing over reliance on short-term borrowing from the Central Bank Nigeria (CBN) & commercial banks while providing a basic infrastructure for the development of the financial system and the overall economy,” the DMO said.

    Analysts and economists have continued to speak on the impact of buying FGN Bonds on the economy.  Currencies Analyst, Ecobank Nigeria, Olakunle Ezun, said there is need for Nigerians to key into the government bond for infrastructure project by investing heavily in local bonds. He explained that the DMO works closely with the Federal Government to manage the national debts, adding that the government is regarded as the issuers of the bonds, while the buyers are seen as investors.

    Ezun told The Nation that the FGN Bonds have the full credit of the Federal Government, and that the bond issuance option is far better than printing money to meet developmental needs of government. “It is not advisable for government to print money to meet developmental needs. And it is advisable that the citizens invest in FGN bonds, which are safe, profitable and deepens the local bond market,” he said.

    For him, although funds from the domestic bond market are more expensive than the international bond market, investing in the local bond market is in the best interest of the economy.

    The FGN Bonds, he added, help the government funds its deficits in a non-inflationary manner while providing benchmark yield-curve for pricing other securities/bonds. It also engenders rational management of government’s fiscal and monetary operations.

    Chief Executive Officer, Nextnomics Advisory, Dr. Temitope Oshikoya, said the government needs to borrow N900 billion through local bond issuance to fund the budget. He said the DMO would be involved in the exercise, adding that the practice where banks end up buying up the bonds instead of lending their deposits to customers is not the best for the economy.

    “It will be good to have more people invest in the local bond market. Banks are expected to lend to the private sector instead of investing so much in the local bonds,” he said.

    Oshikoya explained that FGN Bonds serve as risk-free investment with tax-free income. The bonds provide relatively high and stable returns while the principal element (collected at maturity) can be used as collateral for securing credit facilities from banks. Also, bond holders, who want cash, can trade the bonds on the floor of Nigeria Stock Exchange (NSE) for immediate cash before maturity even as it qualifies as liquid assets for banks from two years to maturity.

    He said if the debts are well spent, they help to boost liquidity in the economy and investment in key sectors, such as Agriculture, Mining among others.

     

    2016 Budget

     

    A large part of the budget focuses on funding infrastructure, which entails the provision of tangible assets such as housing, power (electricity), transport, education, communication and technology, on which other intangibles can be built on. It also seeks to protect the poor with a social safety net including scholarships and food provision in schools.

    The budget has revenue projection of about N3.86 trillion, with oil related revenues expected to contribute about N820 billion or 21 per cent, while tax collection and public expenditure reforms in Ministries Departments and Agencies (MDAs) will account for the rest.

    The budget is clearly consistent and is part of the three-year Medium Term Expenditure Framework (MTEF). It seeks to stir Nigeria off the path of oil dependence. It hopes to achieve this through a focus on non-oil revenues by broadening the tax base and improving the effectiveness of our revenue collecting agencies. However, the renewed drive to boost non-oil revenues may not be sufficient to cover the gap from low oil revenues.

    The budget has a deficit financing that requires an additional N1.84 trillion for capital expenditure, which must be funded through borrowing from local and international markets through the supervision of the debt office.

    Nwankwo said Nigeria’s low debt to Gross Domestic Product (GDP) ratio means the country can borrow more to fund budget, infrastructure and other essential projects that will stimulate the economy and create jobs for the citizenry.

    The DMO is expected to source the additional N1.84 trillion for capital expenditure, N984 billion of which will come from local investors  and N900 billion from international investors.

    In a report titled: ‘Budget 2016: Changed budget, Changed people, Changed leaders’, Managing Director, Financial Derivatives Company Limited, Bismark Rewane, said the spending and revenue estimate is based on the Keynesian model of counter-cyclical spending to stimulate growth.

    Rewane said significant spending on infrastructure and security would complement reforms in agriculture and solid minerals.

    Infrastructure needs

    The Africa Infrastructure Country Diagnostic (AICD) report for 2011 estimated that Nigeria requires sustained spending of $14.2 billion per annum over the next decade in order to address the infrastructure challenge.

    The above scenario, clearly shows that as a result of the huge funding requirement for present and future infrastructural development and its attendant impact on survival and growth of businesses in Nigeria, traditional funding methods can no longer suffice as the traditional fund providers, various levels of government, do not have such resources at their disposal. Therefore, debts may simply be the solution to bridging the infrastructure funding gap.

     

    Bond issuance option

     

    The DMO captures the benefits of using debts to fund projects more succinctly. “If you want to build a railway line from Lagos to Aba, there are two options. Firstly, you can save the money for 10 years, before starting the project. The second option is to borrow and build the railway, and within 10 years, generate enough revenue to offset the debt,” DMO’s head, Policy Strategy and Risk Management, Joe Ugolala said.

    The second option, according to him, is more plausible as it captures the inherent benefits of borrowing to build infrastructure that is in the interest of the economy. He explained that for one to borrow, there must be that inherent capacity to repay, whether the debt came from internal or external sources.

    He explained that the Federal Government has the capacity to borrow from outside to fund the budget, and support specific projects including infrastructure. He said there was so much demand for infrastructure because of its immense benefits to the economy.

    Speaking on external and domestic borrowing guidelines for the Federal and state governments and their agencies, he explained that the National Assembly has a role to play in government’s borrowing plan.

    Firstly, the National Assembly is to approve the borrowing programme for every succeeding year and approval of overall limits, for the amounts of consolidated debts of the Federal, State and Local Governments, to be set by the President on the advice of the Minister.

     

    Other borrowing guidelines

     

    The National Assembly is expected to grant prior authorisation in the appropriation or other Act or Law for the purpose for which the borrowing is to be utilised. “The Federal Government may borrow from the capital market, subject to National Assembly’s approval. Government at all tiers shall only borrow for capital expenditure and human development on concessional terms,” the debt guidelines said.

    Any government of its agencies can only obtain external loans through the Federal Government and such loans must be supported by Federal Government guarantee. “No state, local government or federal agency shall, on its own, borrow externally. State governments and their agencies wishing to obtain external loans shall obtain Federal Government’s approval-in-principle, from the Federal Ministry of Finance,” it said.

    However, the borrowing proposal must be submitted to the Federal Ministry of Finance and the DMO for consideration, and must state the purpose for which the borrowing is intended and its link to the development agenda of the government.

    It must also state the cost-benefit analysis showing the economic and social benefits to which the intended borrowing is to be applied; cash-flow statements of the Ministries, Departments and Agencies (MDAs), to ascertain their viability and sustainability. There must also be copies of the state’s Executive Council’s approval and the resolution of the State House of Assembly.

     

  • Assessing Olaoluwa’s stewardship at BoI

    Assessing Olaoluwa’s stewardship at BoI

    After 21 months in the saddle, the stewardship of the former Managing Director of Bank of Industry (BoI), Mr. Rasheed Olaoluwa, has come under scrutiny. Although the verdict of most players who appraised his performance is that the former BoI boss was on course. Others feel that he could have done more to position the bank to drive industrial development. Assistant Editor OKWY IROEGBU-CHIKEZIE examines the tenure of the former head of Africa’s largest Development Finance Institution (DFI).

    He may not have finished his tenure as the Managing Director (MD) of Bank of Industry (BoI), having been appointed in 2014. But within the 21 months Mr. Rasheed Olaoluwa held sway as head of Africa’s largest Development Finance Institution (DFI), his performance has come under intense scrutiny by players and operators in various sectors of the economy.

    Would history be kind to Olaoluwa for re-jigging the bank’s board to reflect its real sector intervention agenda and unveil new products while also boosting operational efficiency?

    Perhaps, more importantly, has the bank under his charge delivered on its mandate of driving Nigeria’s industrial development? To what extent has BoI promoted, nurtured, supported and monitored Small and Medium Enterprises (SMEs), which have been acknowledged as economy’s growth engine?

    How far did he go in bridging the financing gap for SMEs and helping them write bankable proposals to enable them obtain loans from commercial banks at single digit interest?

    These are some of the critical questions that formed the basis of measuring or appraising the bank’s performance under Olaoluwa’s 21-month stint at the foremost DFI. Many industry experts and key stakeholders, who spoke with The Nation, say that despite the relatively short time he was in charge at the bank, the former BoI boss was able to bring his wealth of experience in the engineering, accounting and banking sectors to bear on his job of pushing the bank to its enviable position among other African DFIs.

    Some of them also pointed out that given the avalanche of new and innovative financing options that have come the way of businesses especially SMEs in the last 21 months, as well as the democratisation of access to capital and spirited efforts at scouting for consultants to help SMEs write bankable proposal, Olaoluwa acquitted himself well.

    Yet, there are others who aver  that BoI under his leadership may have successfully changed the nation’s financial intermediation landscape with new products.

    For instance, the Chief Executive Officer (CEO) of Spectra Foods Limited, an indigenous manufacturing firm, Mr. Duro Kuteyi, described Olaoluwa as a professional to the core. He said the former BoI MD rode on a good structure he met on ground and utilised it judiciously. Hear him: “Before he came, there was a structure; if there is a good structure on ground, one appears to be a superstar, but if the structure is bad, no matter what you do, it will be bad and you can’t finish well. We should congratulate those who put the structure in place.”

    Kuteyi gave reasons to justify his belief that Olaoluwa left marks in the sands of time after piloting the affairs of the bank. He pointed out, for instance, that the former BoI chief was instrumental to the tremendous support members of the National Youth Service Corp (NYSC), graduates and entrepreneurs now enjoy in the form of soft loans with single digit interest rate.

    Kuteyi also told The Nation that the signing of a service agreement with 122 Business Development Service Providers (BDSPs) to collaborate with BoI to identify credible SMEs that require finance was a game changer. According to him, the intervention enhanced SME’s efficiency.

    The BDSPs, according to him,  have also been helping SMEs develop bankable business plans and proposals to facilitate their access to finance including providing post-finance services such as mentorship, handholding, financial advice and inculcation of best practices among others.

    Experts say that poor packaging of loan requests and non-bankable business plans are responsible for the low level of financial support to the SME sector. But as Kuteyi observed, “BDSPs have made it easier for SMEs to better package their products.”

    However, assisting SMEs package their products and facilitating their access to loans were not the only interventions that gladdened Kuteyi and indeed, other stakeholders’ hearts. Apart from the fact that BoI under Olaoluwa brought down the rate of non-performing loans from 18 per cent to about four per cent, the bank also substantially improved its operational efficiency with an upgrade of its system and introduction of mobile applications.

    Specifically, BoI repositioned its systems, processes and services by riding on the back of robust technologies and products. This was in the hope of taking advantage of the new digital and mobile world to offer its customers the benefits of speed, mobility and convenience that come with it. For instance, BoI in partnership with Kinesis Consulting Limited developed an SME Accounting Application (SAAPP), which allows users keep proper records of transactions as well as generate requisite financial statements.

    SAAPP, The Nation learnt, is a user friendly, simplified and menu-driven accounting tool that does not require formal accounting knowledge by the entrepreneur. With the software, SME customers will be empowered with business information on their mobile phones. Because of its unique features and benefits, the application enjoys the buy-in of operators and stakeholders.

    For instance, SAAPP allows BoI SME customers to easily generate basic financial statements such as balance sheets, which report on the SME’s assets, liabilities and ownership equity; profit and loss accounts, which report on the SME’s operation in terms of income (sales), expenses and profit or loss; cash flows, such as SME’s operating, investing and financing.

    Interestingly, one of the key features of SAAPP is the integrity of the financial statements generated on it. Once financial statements have been prepared, they cannot be altered at will. Consequently, it is the same statements that will be produced for submission to the tax authorities, statutory government agencies and financial institutions.

    The App also contains a link that enables the SME mail the financial statements directly to BoI. The App is programmed for installation on a maximum of three devices per business entity and is available at a pocket-friendly price of N20, 000.

    Beyond BoI’s shot in the arm of SMEs, observers also say that the bank under the former MD ignited a revolution in the industrial sector through effective management of several intervention funds that targeted one segment of the industrial sector or the other.

    Some of them include the N100 billion Cotton Textile and Garment (CTG) Fund, for the revitalisation of the CTG industry along the entire value chain; N10 billion Rice Intervention Fund, to ensure Nigeria attains self sufficiency in rice production; and Africa Development Bank (AFDB) $500 million Line of Credit, for the development of export-oriented Small and Medium Enterprises (SMEs).

    Others are: Federal Ministry of Women Affairs and Social Development (FMWASD) N90 million Business Development Fund, to provide soft loans to women entrepreneurs; Central Bank of Nigeria (CBN) N220 billion Intervention Fund, for Micro, Small and Medium Scale Enterprises (MSMEs); National Automotive Council’s N16.91 billion Fund, for the development of the automobile industry sub-sector; and N2 billion Sugar Development Council Fund, to ensure Nigeria attains self-sufficiency in sugar production by 2020.

    By riding on the back of such intervention funds to drive Nigeria’s industrialisation, Olaoluwa was hoping to bridge the developmental gap that separated developing economies like Nigeria from the developed countries.

    Under his watch, BoI also surpassed its benchmark in profit making. For instance, on the day of the announcement of his removal from office, the bank announced over 100 per cent turnover in its profit earnings for the December 31, 2015 financial year, representing a profit after tax of N12 billion.

    The bank, which hinged its improved profitability on operational efficiency during the financial year, also disbursed loans worth N83.5 billion to 776 enterprises (47 large enterprises and 729 (SMEs) in the year.

    A breakdown of the bank’s earnings for the year showed that it recorded an unaudited Profit Before Tax (PBT) of N50.4billion for the year ended December 31, 2015, representing an operating profit of N12 billion up by 100 per cent from N6 billion achieved in 2014.

    The bank explained that the loans to large enterprises went to companies in Nigeria’s real sectors such as agro-processing, food processing, solid minerals, gas value-chain, engineering and technology and light manu-facturing.

    According to the bank, the loans for small and medium enterprises were disbursed to companies in the various SME clusters such as fruit juice, cassava processing, fish farming, bakery, furniture, among others, adding that the loans resulted in the creation of over 90, 000 jobs in 2015.

    “The bank’s operating results are underpinned by strong growth in the bank’s balance sheet, improvement in the bank’s non-performing loan ratio from 18 per cent in May 2014 to four per cent in December 2015, and efficient cost management, which saw the growth in operating expenses limited to only 12 per cent in 2015″,  a statement from the bank said.

    Speaking on the result, Olaoluwa said: “I feel very proud of what we achieved in 2015.We made significant developmental impact through the disbursement of over N83 billion to nearly 1000 enterprises.

    ‘’We inaugurated two of the six rural solar micro grid projects we financed. We introduced many products and programmes to support the SME ecosystem.

    “We obtained our ISO 9001:2008 Quality Management System Certification. We also secured our first ever international rating from Fitch Ratings (BB-) and Moody’s (Ba3), moving the bank closer to global best practices. We are grateful to all our development stakeholders for their continuing support especially the Central Bank of Nigeria and our 200 BDSPs.”

    However, some stakeholders are quick to point out some areas where they believe the former BoI boss could have done better. For instance, an SME operator, who declined to be mentioned, accused the bank’s management under Olaoluwa of being selective in giving loans to operators. According to him, it easier for a camel to pass through the eye of a needle than for a small business operator who does not have link with a top member of the bank’s board to obtain loan from the bank for business. He said the process of getting loan from the bank was more rigorous under his tenure.

  • Tackling cyber space security breaches

    Tackling cyber space security breaches

    Cyber space breaches are increasing at a faster rate than the country can keep up with.  OLATUNDE ODEBIYI looks at some of the issues in the Cyber Crime Act and how its implementation can bring sanity to the internet community.

    Over the years, the cyber space has transformed the way people think, communicate, travel, run businesses,  run the economy and even get services. But like every good thing, there is the other side, which is cyber crime. While some unsuspecting persons have died, others have lost their life savings to cyber crooks.

    Former President Olusegun Obasanjo set up the National Cyber security Initiative (NCI) in 2003. Former President Goodluck Jonathan, at the twilight of his administration, also passed the Cyber Crime Act 2015 to combat cyber crimes.

    To criminals, it is all a means of livelihood, but cyber crime is a dent on the country’s image and a source of  embarrassment to the nation.

     

    Faces of cyber crimes

    • Hackers: They make use of the weaknesses and loop holes in operating systems to destroy data and steal important information from victim’s computer.
    • Cyber-stealing: It is the use of computers and communication systems to steal information in electronic format.
    • Viruses and worms are major threat to normal users and companies. Viruses are computer programs that are designed to damage computers, while worm usually exploits loop holes in soft ware’s or the operating system.
    • Spamming: It involves mass amounts of email being sent in order to promote and advertise products and websites. Cyber harassment is electronically and intentionally carrying out threatening acts against individuals.
    • Website Cloning is the recent trend in cyber crime, which involves fake ‘copy-cat’ web sites that take advantage of consumers that are unfamiliar with the Internet or who do not know the exact web address of the legitimate company that they wish to visit.
    • Cyber laundering is an electronic transfer of illegally obtained monies with the goal of hiding its source and possibly its destination.

     

    Goals of cyber security

    Cybersecurity would enable people to reduce the vulnerability of their Information Communication Technology (ICT) systems and networks. It would help individuals and institutions to develop and nurture a culture of cyber security. It would also enable people work collaboratively with public, private and international entities to secure cyberspace and thereby help people to understand the trends in IT/cybercrime and develop effective solutions.

     

    Effects of Cyber Crime Act

    An Internet Security Expert/Chairman, Education and Manpower Development Committee, Nigeria Computer Society (NCS), Mr. Aderogba Adeoye, said the Cyber Crime Act has not helped to combat cyber crime to the extent that human resources to drive it and capacity are almost not in the system.

    Adeoye, who is also the Executive Secretary, Information Technology Systems and Security Professionals (ITSSP), said the government should put structures in place to drive the Act.

    He said Cyber crime is in the domain of information technology and related communication services, but the Act is being domiciled in an improper place.

    “Cyber means online; cyber crime is the criminality within the online space. Cyber crime is a serious security threat to the nation, which deals with somebody that interfere with e-processes, banking activities, e-mail, theft of identity, theft of data and misbehavior within the online space,” he said.

    He said human resource and technical knowhow are required. “We need to build capacity in the area of cyber crime so that we can run with the Act. The Act is ok as at now; at least we are starting from somewhere. Every law over time will be reviewed. The law requires a lot of human capacity and resources in the various organs and institutions that are involved in the information technology domain.

    “The Police, Armed Forces and Judiciary are doing their own part but, what of the IT professionals. The Nigeria government said you can only be IT expert if you are known to CPN, but is CPN doing what they are supposed to do. If they did not register what they are suppose to register, who summons them or whose over sight is that. Also in the usage of IT services which is given to Nigerian Information Technology Development Association (NITDA); are they collaborating with CPN and NCS. These are the major bodies known to the law of Nigeria; What are they doing to increase our expertise in cyber crime or cyber crime act and its related issues? ‘’ he asked.

    He said within NCS there is the Information Security Group, among other groups. “What are they saying about Cyber Crime Act. The Cyber Crime Act is there, but there are other pre issues before cyber crime. We have electronic evidence which makes computer related reports and issues to be admissible in court. Now that we have Cyber Crime, have the stakeholders subject it to analysis.

    “How much do the Judicial officers know, where are our computer experts, where are the Lawyers that have some prerequisite knowledge about Cyber Crime. Has there been effort to train these people. Is our training to generally create human resources?

    “Cyber crime is not civil crime, it is a criminal matter and those to prosecute criminal matters are the police. Has there been any collaborative work between the police and the State prosecutor, judicial officers and the judge; do the judges have prerequisite knowledge about computer related issues and the Act; these are things that need to have deliberate effort to develop  human capacity along that line.”

    He said there was the need to educate and train people more.

    “In government we must have proper structure in place to develop those who will run Cyber Act issues.

    “Today, the Cyber Crime Act has a lot of work to do because CPC should be discussing with NCS; they should form a working group because everybody is now on e-service. In Nigeria, most of the services that has to do with financial transactions are being run on e-platform; e-transaction, e-payment, e-book, e-money. When problems come on that line, what do we do? We should not be doing all these services and allow nonentities to take it over,” he said.

     

    Views about Cyber

    Crime Act

    Chairman,Teledom Group, an indigenous ICT firm, Dr. Emmanuel Ekuwem, said the Act is a good starting point, though it is not yet perfect. He described the Act as a guide and movement from where we are to where we should be.

    He said the Act is good, though it would  require amendments in future.

    Ekuwen also noted that there was need to specify ICT infrastructure as typical national infrastructure, saying: “Until we realise as a nation that the ease and speed with which information, knowledge or data is accessed and translated into productivity is what gives the citizen, state and the nation a competitive advantage in any field of human endeavour.”

    He said if there is a reliable broadband plan that connects those in the rural and urban areas,  expertise in all spheres, health, banking and academics, will be linked.

    “Our Cyber Security Act must expressively specify that ICT infrastructure constitute an important and critical infrastructure of a nation,” he said.

    Ekuwem said if cyber security is not given the appropriate attention, it will lead to disaster. He said if hackers were allowed into the customer data base of the bank , for instance, it would lead to a disaster which a nation may never be able to recover from because everybody will inflate their deposit in the bank. “You can also imagine what would happen to the credit of customers if the customer data base of the operators of the telecommunications companies are hacked into. Many people will also inflate their credit, claiming they have credit they never loaded. There are lots of consequences leaving our cyber space unprotected,” he said.

    He noted that there are lots of security agencies working to ensure physical security but no one is there to secure the cyber space.

    “All agencies must apply to the cyber space, because that is what the cyber security law of a nation is all about. The law is imperfect like all laws but we must give it some support, encourage it and inpute must be made as well as subsequent versions of amendment of the law.

    “As we grow, gradually moving into broad band, a lot of information is flowing up and down, so also must our cyber space be protected.The public should know that cyber security law is important as all the laws that have being put in place to regulate and govern the behavior that has been put in place in the cyber space,’’  he said.

     

    Effects of the Act

    Ekuwem said the Act has reduced cyber crime.

    He said: “In the absence of the law, there is no infraction, but when people get to know that there is an infraction when you invade somebody’s  privacy by having an unauthorised access into his cyber space, then the awareness has contributed in the existence of the Act.

    “If we will follow due process in the world space then it is of a necessity to follow procedure into the cyber space; we should avoid unauthorised access in the cyber space just as we do not allow unauthorised access in the world space because you know that you will be breaking the law.”

    He said people should to know that they are not to play around with other people’s or company’s password.

     

    The way forward

    Ekuwem said: “It is our duty as ICT practitioners to make sure that hackers don’t invade our privacy. The law is a deterrent as people get to know that those laws are there. It is also as deterrent as its enforcement. Who enforces and regulates the Act is very important and this is an issue that is not very clearly stated. Is it Economic and Financial Crimes Commission (EFCC)? The Independent Corrupt Practices and other related offences Commission (ICPC), Nigerian Communications Commission (NCC), or Nigerian Information Technology Development Association (NITDA).”

    He said the Act must be followed by enforcement and penalty. “There should be a cyber security agency that handles the Cyber Crime Act so that when a crime is committed in the cyber space that agency apprehends and there must be penalty for the infraction of the law, which must be very high.

    “There must be an institution to regulate and monitor the cyber space, to enforce the law so enacted, prosecute offenders, culprits and there must be jailing and punishment,” he said.

    He asked: “Who is that government institution that enforces, regulates, monitors and apprehends, punishes and prosecutes infractions to the cyber security act; there is none to take that responsibility.

    “There should be a specified government institution to do this, if not all these regulatory bodies will expect the other to do it and at the end of the day, the job does not get done.’’

     

    Education/awareness

    Adeoye said the only prevention is continuous education. “We have to continuously enlighten our people on the need to take some pre cautionary measures. We have to secure the platform we are running as government, private entities, and business organisations as well as individuals.

    “Data privacy is a big issue, exposure of the junior ones to the Internet is a big issue but, the greatest of it all is identity management. Government must ensure the effectiveness of the institutions in charge of the cyber crime act. Some people will complain of funding but, funding is not the main issue, but harnessing technical expertise for effective performance of specified assignment,” he said.

     

    Effects of cyber crimes

    Ekuwen said Cyber crimes are destructive. “Hackers can impersonate you by sending emails you are not aware of once they hack into your email password and you may never detect that someone is sniffing.  Cyber crime can also affect the medical report. If a hacker hacks into doctors’ report, the hacker that wants to kill a patient can prescribe what ought not to have been prescribed and sends the mail by impersonating  within the cyber space of the doctor; the patient will be dead.

    He said until Nigeria fully understands the dire economic, financial, social, health, academic and social implications, to mention a few, then we will sit up.

     

    How to keep safe online

    President, Nigeria Internet Registration Association (NIRA), Sunday Afolayan, said cyber security is a discipline, not just a switch that you fix and the internet is secured.

    He said a lot of compromises happen that were not technical but social, adding that internet security is not just one activity; rather, it is a system of activates that assures security.

    “There is need for education, equipment and most importantly for people to know that there is need for self discipline to ensure that you are safe online,” he said.

  • Tackling cyber space security breaches

    Tackling cyber space security breaches

    Cyber space breaches are increasing at a faster rate than the country can keep up with.  OLATUNDE ODEBIYI looks at some of the issues in the Cyber Crime Act and how its implementation can bring sanity to the internet community.

    Over the years, the cyber space has transformed the way people think, communicate, travel, run businesses,  run the economy and even get services. But like every good thing, there is the other side, which is cyber crime. While some unsuspecting persons have died, others have lost their life savings to cyber crooks.

    Former President Olusegun Obasanjo set up the National Cyber security Initiative (NCI) in 2003. Former President Goodluck Jonathan, at the twilight of his administration, also passed the Cyber Crime Act 2015 to combat cyber crimes.

    To criminals, it is all a means of livelihood, but cyber crime is a dent on the country’s image and a source of  embarrassment to the nation.

     

    Faces of cyber crimes

    • Hackers: They make use of the weaknesses and loop holes in operating systems to destroy data and steal important information from victim’s computer.
    • Cyber-stealing: It is the use of computers and communication systems to steal information in electronic format.
    • Viruses and worms are major threat to normal users and companies. Viruses are computer programs that are designed to damage computers, while worm usually exploits loop holes in soft ware’s or the operating system.
    • Spamming: It involves mass amounts of email being sent in order to promote and advertise products and websites. Cyber harassment is electronically and intentionally carrying out threatening acts against individuals.
    • Website Cloning is the recent trend in cyber crime, which involves fake ‘copy-cat’ web sites that take advantage of consumers that are unfamiliar with the Internet or who do not know the exact web address of the legitimate company that they wish to visit.
    • Cyber laundering is an electronic transfer of illegally obtained monies with the goal of hiding its source and possibly its destination.

     

    Goals of cyber security

    Cybersecurity would enable people to reduce the vulnerability of their Information Communication Technology (ICT) systems and networks. It would help individuals and institutions to develop and nurture a culture of cyber security. It would also enable people work collaboratively with public, private and international entities to secure cyberspace and thereby help people to understand the trends in IT/cybercrime and develop effective solutions.

     

    Effects of Cyber Crime Act

    An Internet Security Expert/Chairman, Education and Manpower Development Committee, Nigeria Computer Society (NCS), Mr. Aderogba Adeoye, said the Cyber Crime Act has not helped to combat cyber crime to the extent that human resources to drive it and capacity are almost not in the system.

    Adeoye, who is also the Executive Secretary, Information Technology Systems and Security Professionals (ITSSP), said the government should put structures in place to drive the Act.

    He said Cyber crime is in the domain of information technology and related communication services, but the Act is being domiciled in an improper place.

    “Cyber means online; cyber crime is the criminality within the online space. Cyber crime is a serious security threat to the nation, which deals with somebody that interfere with e-processes, banking activities, e-mail, theft of identity, theft of data and misbehavior within the online space,” he said.

    He said human resource and technical knowhow are required. “We need to build capacity in the area of cyber crime so that we can run with the Act. The Act is ok as at now; at least we are starting from somewhere. Every law over time will be reviewed. The law requires a lot of human capacity and resources in the various organs and institutions that are involved in the information technology domain.

    “The Police, Armed Forces and Judiciary are doing their own part but, what of the IT professionals. The Nigeria government said you can only be IT expert if you are known to CPN, but is CPN doing what they are supposed to do. If they did not register what they are suppose to register, who summons them or whose over sight is that. Also in the usage of IT services which is given to Nigerian Information Technology Development Association (NITDA); are they collaborating with CPN and NCS. These are the major bodies known to the law of Nigeria; What are they doing to increase our expertise in cyber crime or cyber crime act and its related issues? ‘’ he asked.

    He said within NCS there is the Information Security Group, among other groups. “What are they saying about Cyber Crime Act. The Cyber Crime Act is there, but there are other pre issues before cyber crime. We have electronic evidence which makes computer related reports and issues to be admissible in court. Now that we have Cyber Crime, have the stakeholders subject it to analysis.

    “How much do the Judicial officers know, where are our computer experts, where are the Lawyers that have some prerequisite knowledge about Cyber Crime. Has there been effort to train these people. Is our training to generally create human resources?

    “Cyber crime is not civil crime, it is a criminal matter and those to prosecute criminal matters are the police. Has there been any collaborative work between the police and the State prosecutor, judicial officers and the judge; do the judges have prerequisite knowledge about computer related issues and the Act; these are things that need to have deliberate effort to develop  human capacity along that line.”

    He said there was the need to educate and train people more.

    “In government we must have proper structure in place to develop those who will run Cyber Act issues.

    “Today, the Cyber Crime Act has a lot of work to do because CPC should be discussing with NCS; they should form a working group because everybody is now on e-service. In Nigeria, most of the services that has to do with financial transactions are being run on e-platform; e-transaction, e-payment, e-book, e-money. When problems come on that line, what do we do? We should not be doing all these services and allow nonentities to take it over,” he said.

     

    Views about Cyber

    Crime Act

    Chairman,Teledom Group, an indigenous ICT firm, Dr. Emmanuel Ekuwem, said the Act is a good starting point, though it is not yet perfect. He described the Act as a guide and movement from where we are to where we should be.

    He said the Act is good, though it would  require amendments in future.

    Ekuwen also noted that there was need to specify ICT infrastructure as typical national infrastructure, saying: “Until we realise as a nation that the ease and speed with which information, knowledge or data is accessed and translated into productivity is what gives the citizen, state and the nation a competitive advantage in any field of human endeavour.”

    He said if there is a reliable broadband plan that connects those in the rural and urban areas,  expertise in all spheres, health, banking and academics, will be linked.

    “Our Cyber Security Act must expressively specify that ICT infrastructure constitute an important and critical infrastructure of a nation,” he said.

    Ekuwem said if cyber security is not given the appropriate attention, it will lead to disaster. He said if hackers were allowed into the customer data base of the bank , for instance, it would lead to a disaster which a nation may never be able to recover from because everybody will inflate their deposit in the bank. “You can also imagine what would happen to the credit of customers if the customer data base of the operators of the telecommunications companies are hacked into. Many people will also inflate their credit, claiming they have credit they never loaded. There are lots of consequences leaving our cyber space unprotected,” he said.

    He noted that there are lots of security agencies working to ensure physical security but no one is there to secure the cyber space.

    “All agencies must apply to the cyber space, because that is what the cyber security law of a nation is all about. The law is imperfect like all laws but we must give it some support, encourage it and inpute must be made as well as subsequent versions of amendment of the law.

    “As we grow, gradually moving into broad band, a lot of information is flowing up and down, so also must our cyber space be protected.The public should know that cyber security law is important as all the laws that have being put in place to regulate and govern the behavior that has been put in place in the cyber space,’’  he said.

     

    Effects of the Act

    Ekuwem said the Act has reduced cyber crime.

    He said: “In the absence of the law, there is no infraction, but when people get to know that there is an infraction when you invade somebody’s  privacy by having an unauthorised access into his cyber space, then the awareness has contributed in the existence of the Act.

    “If we will follow due process in the world space then it is of a necessity to follow procedure into the cyber space; we should avoid unauthorised access in the cyber space just as we do not allow unauthorised access in the world space because you know that you will be breaking the law.”

    He said people should to know that they are not to play around with other people’s or company’s password.

     

     

    The way forward

    Ekuwem said: “It is our duty as ICT practitioners to make sure that hackers don’t invade our privacy. The law is a deterrent as people get to know that those laws are there. It is also as deterrent as its enforcement. Who enforces and regulates the Act is very important and this is an issue that is not very clearly stated. Is it Economic and Financial Crimes Commission (EFCC)? The Independent Corrupt Practices and other related offences Commission (ICPC), Nigerian Communications Commission (NCC), or Nigerian Information Technology Development Association (NITDA).”

    He said the Act must be followed by enforcement and penalty. “There should be a cyber security agency that handles the Cyber Crime Act so that when a crime is committed in the cyber space that agency apprehends and there must be penalty for the infraction of the law, which must be very high.

    “There must be an institution to regulate and monitor the cyber space, to enforce the law so enacted, prosecute offenders, culprits and there must be jailing and punishment,” he said.

    He asked: “Who is that government institution that enforces, regulates, monitors and apprehends, punishes and prosecutes infractions to the cyber security act; there is none to take that responsibility.

    “There should be a specified government institution to do this, if not all these regulatory bodies will expect the other to do it and at the end of the day, the job does not get done.’’

     

    Education/awareness

    Adeoye said the only prevention is continuous education. “We have to continuously enlighten our people on the need to take some pre cautionary measures. We have to secure the platform we are running as government, private entities, and business organisations as well as individuals.

    “Data privacy is a big issue, exposure of the junior ones to the Internet is a big issue but, the greatest of it all is identity management. Government must ensure the effectiveness of the institutions in charge of the cyber crime act. Some people will complain of funding but, funding is not the main issue, but harnessing technical expertise for effective performance of specified assignment,” he said.

     

    Effects of cyber crimes

    Ekuwen said Cyber crimes are destructive. “Hackers can impersonate you by sending emails you are not aware of once they hack into your email password and you may never detect that someone is sniffing.  Cyber crime can also affect the medical report. If a hacker hacks into doctors’ report, the hacker that wants to kill a patient can prescribe what ought not to have been prescribed and sends the mail by impersonating  within the cyber space of the doctor; the patient will be dead.

    He said until Nigeria fully understands the dire economic, financial, social, health, academic and social implications, to mention a few, then we will sit up.

     

    How to keep safe online

    President, Nigeria Internet Registration Association (NIRA), Sunday Afolayan, said cyber security is a discipline, not just a switch that you fix and the internet is secured.

    He said a lot of compromises happen that were not technical but social, adding that internet security is not just one activity; rather, it is a system of activates that assures security.

    “There is need for education, equipment and most importantly for people to know that there is need for self discipline to ensure that you are safe online,” he said.

  • Economic crisis: Sack fever grips workers

    Economic crisis: Sack fever grips workers

    The falling oil price, dwindling naira and stifling economic policies have triggered job loss in virtually every sector of the economy. TOBA AGBOOLA reports.

    Nigerian workers are in for a  hard time. This is because of massive job loss currently sweeping across different sectors of the economy. The sack gale, triggered by the ripple effects of crashing oil prices in the international market and stifling economic policies has already hit the banking and financial services sector, telecoms, hospitality, oil and gas, universities, media and publishing, manufacturing and civil service, among other sectors.

    For instance, The Nation’s recent check at the Manufacturers Association of Nigeria (MAN) showed that over 500, 000 jobs had been lost in the sector since July 2015. Also, there is panic in the oil industry in Nigeria as oil companies – multinationals and indigenous, are expected to start making open their annual reports soon. Already, those who have declared their 2015 results and forecast for 2016 are said to have reduced their workforce in 2016 work plan.

    Royal Dutch Shell last month said in its report that this year it would sack employees globally, including those in their services in Nigeria. The oil giant specifically said it would cut 10, 000 jobs in an effort to further reduce costs amid a severe slump in oil prices. Similarly, United States multinational energy corporation, Chevron, had stated in October last year that it might cut up to 7, 000 jobs.

    Despite confirming that ExxonMobil Nigeria laid off workers few months ago, the Manager, Public and Government Affairs, Mobil Oil Plc, the downstream arm of the multinational oil firm, Mr. Akin Fatunke, said: “The same thing is most likely going to happen. As I speak with you, about 104 workers had been laid off in the upstream. I won’t use the word sack, as they are smiling and very happy because they were paid handsomely and they are still our friends.” He said this in a chat with newsmen at an energy workshop in Lagos.

    The President, National Union of Civil Engineering Construction, Furniture and Wood Workers (NUCECFWW), Mr. Amechi Asugwuni, described the level of job losses in the industry as worrisome. He said since July 2015, close to 70, 000 workers had been laid off by construction companies, and there was nothing to give hope for any reprieve in 2016. He said more workers are expected to be laid off this year.

    The Fast Moving Consumable Goods sector (FMCG) is not spared either. Workers in the sector, which have been left vulnerable following crisis in the exchange rate of the naira, are jittery over possible lay-offs. This is because most FCMG manufacturers rely more on imported materials in order to meet their production and this will have serious effects on their businesses.

    An analyst at Meristem Securities Limited, Mr. Saheed Bashir, who spoke on the current situation said: “We imagine that most of these firms will struggle to survive daunting pressure on costs occasioned by the naira volatility and the pass-through impact of naira depreciation.

    “Brewers and flour millers in Africa’s largest economy import more than 50 per cent of their raw materials and other inputs. Even other household and personal product firms such as Nestle, PZ, Unilever and Cadbury, which had diversified and gone into sourcing local raw materials, are not exempted from the impact of the falling naira.” .

    The situation is not better in the banking sector where some workers were laid off late last year. More are still expected to go this year. Already, some of the banks are said to have started outsourcing a number of job functions to other companies in order to save cost.

    Thousands of workers employed by hotels and tourism firms across the country may also lose their jobs following the worsening economic downturn caused by the foreign exchange crisis and sharp rise in the cost of power generation.

    With hundreds of thousands of workers in the hotel and tourism business, the hospitality sector is one of the highest employers of labour in Nigeria. However, the Managing Director/Chief Executive Officer, Blueseasons Hotels & Suites Limited, Mr. Michael Anyanwu, said most of these jobs now hang in the balance.

    Anyanwu, who spoke to newsmen in Lagos,  noted that the huge amount of money spent on diesel and private power generation could be saved to sustain the workforce if government acts fast to solve the electricity crisis.

    He said: “Scarcity of dollars has impacted negatively on the industry. Foreigners can’t come and do businesses in the country as a result of dollar scarcity as they are not sure of capital/dividends repatriation. Also, the exchange rate of the dollar to the naira is not favourable to importers anymore.”

    Anyanwu further explained that since his hotel, located in Aguda Surulere area of Lagos, opened for business this year, he has been running on private power generators at an average cost of N850,000 per month excluding maintenance. He expressed regrets that despite the huge cost he incurs on generating power, he still pays huge amount of money for grid electricity monthly even as power supply has dropped sharply in the area.

    He expressed fears that if the electricity tariff increase is implemented, the huge additional cost would bring more burden on operators in the industry, which requires 24-hour power supply.

    Anyanwu urged government to work hard to encourage exports to improve its dollar earnings and grow foreign reserves. He stressed that as foreign reserves grow, naira value will appreciate against the dollar and other foreign currencies. “Government has a lot to do to improve the economy. One of the things government must do to strengthen the naira is to explore non-oil revenue.

    “Government should begin to tap solid minerals deposits to earn more revenue. It is anticipated that government can earn additional $20 billion yearly from mining, which will help to improve our dwindling external reserves.”

    The hotelier also wants government to relax some of its monetary policies on foreign exchange management. According to him, most of the things Nigerians consume are imported.

    “Part of our predicament is that we are an import dependent nation; we cannot afford to shut down our import windows overnight. In fact, our government should begin to realise that to a reasonable extent there is nothing like backward integration,” he added.

    The President of the Federation of Construction Industry (FOCI), Mr. Solomon Ogunbusola, said the industry was at a crossroad because various construction firms were owed over N600 billion for projects already executed. According to him, this development led to massive lay-off of workers because the construction companies have stopped work.

    Ogunbusola added that more workers in the construction industry may lose their jobs. The Director-General, Lagos Chamber of Commerce and Industry (LCCI), Mr Muda Yusuf, confirmed this when he predicted that industries and companies will further downsize due to current economic crisis occasioned by undulating oil price and the persistent weakness of the naira against the dollar.

    While noting that this has become a serious problem to the economy, Yusuf said unless urgent steps were taken to provide new jobs, the nation’s unemployment rate may accentuate this year. He said unemployment remained one of the greatest problems of the country, warning that it could worsen if the growing trend is unchecked.

    The LCCI chief pointed out that the recent trend shows a gradual increase in joblessness, urging the present administration to rev up programmes and policies capable of providing new jobs to graduates. He said if this is not done, the rate of unemployment and crime would go up.

    Yusuf also said the restriction placed on 41 intermediate items by the Central Bank of Nigeria (CBN) could lead to high unemployment and corruption. According to him, some of the items were critical inputs to many manufacturing firms, as well as other sectors of the economy. He said placing such restrictions on those items will promote job loss and corruption.

    “The issue is that there is a list of 41 items excluded from access to Foreign Exchange (forex). Many of the products on the list of the 41 products are intermediate goods, which are critical inputs for many manufacturing firms, as well as other critical sectors of the economy. The exclusion has led to job losses as many factories could not access foreign exchange to import their raw materials,” he stated.

    Yusuf pointed out  that the exclusion was because the list is prone to multiple definitions and discretionary interpretations by agencies and institutions responsible for implementation. He added that there is need to adjust the exchange rate close to the equilibrium for liquidity and stability to return to the market.

    Nigeria Employers’ Consultative Association (NECA), Director General Mr. Segun Oshinowo said more workers will be laid off this year if government agencies continue to impose high taxes and fines on entrepreneurs. He said entrepreneurs are forced to sack workers because they operated in a difficult environment and they were striving to keep their businesses going.

    Oshinowo added that other impediments like costs of borrowing, poor infrastructure, absence of reliable power supply and multiple taxation were huge burden on employers. According to him, Nigerians should prepare for the worse because of the continuous fall in the price of oil and the naira. He said this is a sacrifice every Nigerian must make.

    However, the situation has not gone down well with organised labour. Labour has continued to agitate and warn that it would resist any large scale job cuts by Federal and state governments, as well as private sector employers.

    While expressing concern over the impending global sack in Chevron and Shell,  labour unions in the oil industry have called on the Federal Government to stop companies from extending the planned sack to Nigeria.

    The workers under their umbrella union, Nigeria Union of Petroleum and Natural Gas Workers (NUPENG) described the planned sack as alarming. In a statement recently by its President, Igwe Achese, NUPENG warned that it may be forced to embark on industrial action if the Federal Government fails to stop the companies from sending oil workers to the unemployment market.

    The Acting Secretary-General, Petroleum and Natural Gas Senior Staff Association (PENGASSAN), Mr. Lumumba Okugbawa, also warned that it would resist a further sack of its members in the Nigerian National Petroleum Corporation (NNPC).

    Okugbawa said although the association believed in reforming the oil and gas sector, it was averse to any reforms that would jeopardise the welfare of its members.

    He said the restructuring, which has heightened tension in workplaces and the labour market, would be resisted if it negatively affects the association’s members.

    According to him, the planned sack was not in tandem with the “change” that the government promised Nigerians, especially in the area of job creation. He said the plan to sack half of the current NNPC employees would further compound the unemployment situation in the country.

  • Why PFAs shun investments in foreign securities

    Why PFAs shun investments in foreign securities

    The Contributory Pension Scheme (CPS) has yielded N5.3trillion, but Pension Fund Administrators (PFAs) are shying away from investing contributors’ and retirees’ funds in foreign capital and money market instruments. Instead, pension funds in Retirement Saving Accounts (RSA) of active contributors and retirees are being invested in domestic shares and money market securities. OMOBOLA TOLU-KUSIMO writes on the reasons and implications of this development.

    For long, Nigeria’s Pension Fund Administrators (PFAs) have given foreign shares and money market securities a cold bath. They have restricted themselves from investing pension funds in Retirement Saving Accounts (RSA) of active contributors and retirees beyond the nation’s shores in foreign ordinary shares and money market securities. What they have actually done was to invest the N5.14 trillion funds accumulated under the Contributory Pension Scheme (CPS) in the domestic capital and money market instruments.

    This,according to The Nation’s findings, has been the case since the enactment of the Pension Reform Act (PRA) 2004. Although, the PRA 2014, which repealed the (PRA) 2004, allowed foreign investment, the National Pension Commission (PenCom) is yet to give PFAs the nod to invest the funds in foreign capital and money market instruments because of perceived lack of capacity by the PFAs and the need to encourage the use of the funds to solve Nigeria’s local problems, especially building of infrastructure.

    Besides, the Central Bank of Nigeria (CBN) Foreign Exchange (forex) policy, it was  learnt, has also frustrated move by the pension managers to invest in foreign assets. This is because access to forex to procure these foreign assets has been prohibited following the CBN’s June 23, 2015 circular excluding some imported goods and services from the forex market.

    Under the CBN circular, Eurobonds, foreign currency bonds and shares were number 40 on the prohibition list. But some experts, who spoke with The Nation, said by refusing to invest retirees and workers’ fund in foreign assets, the PFAs’ may have inadvertently denied contributors the opportunity of getting more returns on their investments.

    They pointed out, for instance, that investment in foreign assets is aimed at improving diversification, given the possibility of higher returns and meeting pension benefit payments in foreign currency. To them, it therefore, means that the pension managers are not maximising returns for contributors and retirees.

    A senior official at PenCom, who does not want his name mentioned, also said the situation has implications on retiree’s savings and investment. He pointed out that the primary objective of the Commission’s supervisory philosophy is to ensure safety of the pension assets and fair return on investment.

    He, however, noted that: “To allow foreign investment would require safe custody of the assets offshore and clear understanding of the foreign assets and investment climate. We need to build these capacities particularly the custody aspect of the assets.”

    The PenCOM official described as correct the position of some experts who said PFAs have continued to invest the bulk of pension funds in Federal Government securities and money market instruments relative to equities, leading to having investment portfolios that are too risk averse.

    “This is correct given the high volatility of the Nigerian stock market and the encouraging returns from the FGN securities and other fixed assets. This, however, was exclusively the investment decisions of the PFAs,” he said.

    But the PFAs appear hamstrung, despite the fact that the regulation allows them to invest the funds offshore. For instance, a Stanbic IBTC official, Mr. Melvin Awolowo, said going by the regulation of investment for pension fund assets, PFAs in Nigeria are allowed to invest in foreign denominated securities such as global depository receipts/notes and Eurobonds of Nigerian entities as well as private equity.

    “We believe that some PFAs in line with their investment strategy have invested in these foreign assets in the past,” he recalled. He, however, lamented that in recent times, access to foreign exchange to procure these assets has been prohibited since the CBN policy that excluded some imported goods and services from the Nigerian forex market. He said Eurobonds, foreign currency bonds and shares were number 40 on the CBN prohibition list.

    Awolowo said the implication of this is that PFAs, who plan to increase their stake in foreign assets, can no longer buy the foreign currency needed through official channels to pay for their investment. In other words, an investment in this asset class has been limited and it is no surprise that there is no investment in foreign securities.

    While confirming that it is true that PFAs are not investing retirees and contributors’ fund in foreign securities, the Managing Director, Premium Pension Limited, Mr. Wilson Ideva, noted that it is because everything PFAs are doing comes under regulation and the regulation does not allow them to place money market outside Nigeria.

    He stressed that this can only be done when the regulation permits them. “We know where we are coming from. It was a situation where pension was seen as a big problem hence, the need for regulation to be tough to ensure that we do not go outside the bounds. So, for now, the guideline does not allow us. So, we can’t do it,” he said.

    On maximising returns for contributors, Ideva said people need to understand that the country needs the funds more than the outside. “We have huge infrastructure gap. We have roads, rail, and education among other areas that we need to bridge the gap. Everywhere you go you will see that the country is crying for funding. We need to use the pension assets to develop Nigeria first instead of taking the funds to people, who are already developed and help to drive their cost of funds,” he added.

    Beyond PFAs’ perceived lack of capacity and patriotic sentiment that appeared to have encouraged the use of the funds to bridge Nigeria’s wide infrastructure gap, CBN’s forex policy is also a pain in the neck of PFAs.

    Apparently taking a swipe at the forex policy, which he believes has implications for investment of pension fund, an Actuarial Scientist and Chartered Insurer, Dr. Pius Apere, admonished the regulator, PenCom, to exercise the requirements of Section 87 (2) of PRA 2014 to protect pensioners’ exposed future loss by the forex policy.

    He noted that Section 87 (2) of the Act provides that a PFA may invest the pension funds in units of any investment outside Nigeria within the categories of investments set out in Section 86. Section 85 of PRA 2014 provides that the safety and maintenance of fair returns on the amount invested are the main investment objectives of the PFAs operating under the CPS. The regulator, PenCom issues from time to time, regulations and guidelines on investment of pension funds and assets in order to achieve the investment objectives.

    Sections 86 and 87(1) of PRA 2014 specifies the types of financial assets and instruments pension funds can be invested in, either in Nigeria or outside by PFAs, while Sections 88 and 89 of the same Act place restrictions on assets and or securities pension funds cannot be invested in.

    Subject to the subsisting CBN forex rules, PenCOM may seek approval of portfolio limits for investment of pension fund or assets outside Nigeria from the appropriate authorities.

    Meanwhile, PenCom summary as at end of October 2015 showed that only Closed Pension Fund Administrator (CPFA) Funds was invested in foreign ordinary shares and foreign money market securities, while it showed the concentrated investment of the funds in Treasury  Bills and Federal Government Bonds. The funds are largely invested in equities and bonds including state government Securities, Corporate Debt Securities, Supra-National Bonds and Local Money Market Securities.

    The CPFA Funds are mainly Defined Benefits final salary pension schemes. Section 51 of PRA 2014 requires that new employees of sponsor companies with CPFAs shall join the CPS and open RSAs. Thus, CPFA Funds are closed to new entrants after the enactment of PRA 2014, which means that membership of CPFA Funds, is likely to decline over time.

    For instance, in October last year, 13.97 per cent amounting to N719, 240m of the Total Pension Fund Assets. N5, 149,652m was invested in CPFA Funds. Out of the total CPFA Funds, 9.78 per cent was invested in both foreign ordinary shares and money market securities totalling N70, 313.58m, while 9.93 per cent, 45.35 per cent and 17.12 per cent were invested in ordinary shares, FGN securities and Real Estate Properties in the domestic market, respectively.

    In the latest report of last October, total assets under the CPS rose to N5.14t. The summary noted that 56.28 per cent of the money totalling N2.8t, was invested in Federal Government of Nigeria bonds, while 10.27 per cent or N528.76b was invested in treasury bills. A total of N514.28b, which is about 9.9 per cent of the total pension assets, was invested in domestic ordinary shares within the period under review.

    According to the figures, 10.41 per cent or N535.90b was invested in local money market securities, while 4.08 per cent totalling N209.87b, was invested in real estate properties. Similarly, N162.03b or 3.15 per cent and 3.05 per cent or N156.877b of the growing funds was invested in state government securities and corporate debt securities, respectively.

    The operators invested about 0.42 per cent each, amounting to N21.5b and N21.8b in open/close end funds and cash and other assets, while 0.34 per cent or N17.3b and 0.22 per cent or N11.55 billion were invested in private equity funds and supra-natural bonds, respectively.

    Apere, who is also Deputy Managing Director of Linkage Assurance Company Plc, said the basic investment principles of pension schemes are to minimise the risk of failing to meet the liabilities of pension schemes, having considered the nature, term, currency and certainty of the liabilities, and also to maximise the investment return within an acceptable level of risk.

    He said based on this, every PFA needs to invest the employees’ contributions prudently, having considered the individual circumstances in terms of risk profile. He reiterated that the CBN’s forex policy has effect on only the CPFA funds because of the investment in overseas financial instruments mainly ordinary share purchase.

    The policy’s impact on the industry, according to him, include but not limited to exposure to currency risk unless it is hedged for a fee, resulting in volatile returns from overseas investments due to the devaluation of the naira. There is also the risk of inability to invest new contributions from existing employees and or funds injected by sponsors to bridge funding gaps as determined by the actuarial valuation of the schemes in overseas assets in order to meet future pension liability payments in foreign currency. This is because of the extra cost to be incurred in order to obtain foreign currency outside Nigeria’s forex market.

    Apere said the impact also include sales of foreign assets of pension schemes to meet expected pension liability payments in domestic currency and to realise higher returns because of the devaluation of the naira.

    “The CBN forex policy has also created uncertainties in the domestic capital market, which would lead to volatility of market value of domestic equities and hence, have a second order effect on pension fund investment,” he added.

  • Stakeholders differ over airports’ management model

    Stakeholders differ over airports’ management model

    Aviation experts and stakeholders are sharply divided over what model the government should adopt to make the airports more efficient and service driven. Some are pushing for outright sale through privatisation; others favour concession, which will allow the government some level of control. Aviation Correspondent KELVIN OSA- OKUNBOR examines the raging controversy. 

    Should Nigeria’s over 24 airport terminals be privatised or concessioned? This is the question agitating the minds of experts and stakeholders in the aviation sector. While they are unanimous in their position that the huge cost of building and running airports without commensurate returns had become a pain in the neck and needed to be stopped, they are however, divided over the best model to be adopted to infuse the culture of efficient service delivery in the airports.

    At present, only the Murtala Muhammed Airport Terminal Two (MMA2), Lagos, is being run by the private firm of Bi-Courtney Aviation Services Limited. Other airport terminals are owned and operated by the Federal Government through the Federal Aviation Authority (FAAN). About eight of the airport terminals are built and run by state governments. The states are: Akwa-Ibom, Delta, Bauchi, Katsina, Gombe, Taraba, Jigawa, and Kebbi.

    But the management of these state-owned airport terminals has come under public scrutiny. Not a few experts and stakeholders insist that the running of the terminals by government, Federal or state, has left sour taste in the mouth of airport users most of who enjoy everything but cost-effective and efficient service delivery. The thinking is that going by global trends, state management of airport terminals is no longer the fad; many countries across the globe have either embraced concession or privatisation.

    However, experts and stakeholders are sharply divided over which management model to adopt. Proponents of privatisation point out, for instance, that the Federal Government got its fingers burnt when it concessioned MMA 2. According to them, the concessioning of MMM 2 pitched the Federal Government against Bi-Courtney, the concessionaire, over issues around tenure and scope of the concession agreement.

    Those rooting for privatisation were encouraged by Federal Government’s announcement last October that it was considering possible privatisation of airport terminals. The Director-General of Bureau of Public Enterprises (BPE), Mr. Benjamin Dikki, had said in Abuja that the privatisation of Nigerian airports would begin  soon. “We are planning to commence the privatisation of airports; the airports will be more efficient if the private sector is running them,” he said.

    In opting for privatisation of the airports, the Head, Research, Zenith Travels, Mr. Olumide Ohunayo, said government should consider the clustering option whereby a major airport will be taken along with other unviable airports within the zone.

    This, he said, will reduce FAAN’s liability while they concentrate on regulating, monitoring and securing the airports. “Clustering takes the airport in totality rather than the cherry picking option,” the aviation expert said.

    To support his position, he said the Argentines took their 30 airports in totality using funds from the viable one to support the unviable ones, while the Indians divided their airports into green field and brown field before privatising. “This is why airports have often been sold as a package – good and bad, small and large, domestic and international,” he stated.

    Mr. Ohunayo however, pointed out that in achieving the objective, government should as a first step invite reputable international airport management companies, who will achieve improvements in capacity, efficiency and safety of airport terminals.

    For Chairman, Bi- Courtney Aviation Services Limited, Dr Wale Babalakin, concession model is the way to go. He, however, said Nigerian airports managed by FAAN require 30 months restructuring to prepare them for eventual concession. He said the 30 months timeline would be used to rework the existing system and make them attractive for private sector investment.

    Babalakin also canvassed pairing of airports nationwide across four regional structures to make them viable. He advised government to divide the airports into four zones, comprising Lagos, Abuja, Kano and Port Harcourt before offering them to interested concessionaires. He added that each zone should then be made responsible for the growth of all airports within its jurisdiction.

    Hear him: “I heard some people say that only Lagos airport is viable. I don’t agree. If you want to challenge my position give us Abuja Airport to run. If you think it is not viable, we will take it. I want to assure you that to make them viable requires somebody sitting down and thinking of how to make them viable. I expect that whoever takes them over would realise that you must create activities around the airport that would attract those who want to fly to and from the airport.”

    The Chief Executive Officer Maevis Limited, Mr. Tunde Fagbemi, agrees on the need to restructure  existing airports to make them more effective and viable. He said experience in other climes have proven that the private sector is better positioned to manage air transport infrastructure like airport terminals.

    He said the case of Nigerian airports where public institutions no longer have the ideas to turn airport terminals around is enough for government to allow the private sector players to take over. He said public private partnership (PPP) model of managing airport terminals has brought about marked improvement in the system.

    Fagbemi and other experts, who spoke with The Nation, noted, for instance, that since 1987 when the United Kingdom (UK) privatised the British Airport Authority (BAA) through PPP, the camp of those in favour of privatisation has increased globally. For instance, since the UK embraced the option, more than 20 countries are said to have completed the sale or lease of airport facilities so far.

    The countries include Argentina, Australia, Austria, Bahamas, Bolivia, Cambodia, Canada, Chile, China, Colombia, Denmark, Dominican Republic, Germany, and Hungary. Others are Italy, Japan, Malaysia, Mexico, New Zealand, Singapore, South Africa and Switzerland.

    The Chief Executive Officer of Belujane Konzults, Mr. Chris Aligbe, as well as aviation security consultant, Group Captain John Ojikutu (rtd), called for the setting up of airport management companies as alternatives to concession or outright privatisation.

    According to Aligbe, pairing some airports for effective management by the proposed management companies will ensure better services and development for some terminals hitherto described as unviable. The airport authority, he said, is saddled with too much task that it may not be able to focus on providing the required services, and at the same time run the terminals profitably.

    The management companies, Aligbe added, would focus on enhanced non-aeronautical sources of revenue for the airports, while FAAN would focus on operational and technical areas.

    “There is an urgent need to fix the entire airports in Nigeria to make them viable. One of the ways of achieving this is for government to install the relevant air navigation equipment to enable airlines fly into them even at nights. This is one of the ways to better run the airports if the facilities are in top gear,” he said.

    Aligbe, who noted that there was need for a right model on how to run the airports, said the government’s decision to acquire more airports including the 24 it is currently managing is wrong. “This is not the best approach. What government needs to do is stop the central management of the airports,” he argued, insisting that the central management system cannot bring about efficiency in the airports.

    He emphasised that if Nigeria must have good airports, she must concession them. He was however quick to add that the concession must be done in a way that government will take concession revenues and royalties from where it will reorganize the system.

    “Government should consider setting up a holding company which will oversee her interest in the concessioned airports and to ensure the implementation of the terms of the concessions. There are various strategies to airport concession. The airports need to be paired for income generation and development. For instance, you take Benin and Lagos as one. You take Kano and Maiduguri and other airports,” he suggested.

    However, the former Managing Director of Nigerian Airports Authority, Mohammed Sani Baba, an engineer, disagreed with the privatisation model for the airports. He argued that airports are strategic air transport infrastructures that were not built to generate profit. He said while the Federal Government should manage only international airport terminals, state governments should manage the other terminals.

     

  • Stakeholders differ over airports’ management model

    Stakeholders differ over airports’ management model

    Aviation experts and stakeholders are sharply divided over what model the government should adopt to make the airports more efficient and service driven. Some are pushing for outright sale through privatisation; others favour concession, which will allow the government some level of control. Aviation Correspondent KELVIN OSA- OKUNBOR examines the raging controversy. 

    Should Nigeria’s over 24 airport terminals be privatised or concessioned? This is the question agitating the minds of experts and stakeholders in the aviation sector. While they are unanimous in their position that the huge cost of building and running airports without commensurate returns had become a pain in the neck and needed to be stopped, they are however, divided over the best model to be adopted to infuse the culture of efficient service delivery in the airports.

    At present, only the Murtala Muhammed Airport Terminal Two (MMA2), Lagos, is being run by the private firm of Bi-Courtney Aviation Services Limited. Other airport terminals are owned and operated by the Federal Government through the Federal Aviation Authority (FAAN). About eight of the airport terminals are built and run by state governments. The states are: Akwa-Ibom, Delta, Bauchi, Katsina, Gombe, Taraba, Jigawa, and Kebbi.

    But the management of these state-owned airport terminals has come under public scrutiny. Not a few experts and stakeholders insist that the running of the terminals by government, Federal or state, has left sour taste in the mouth of airport users most of who enjoy everything but cost-effective and efficient service delivery. The thinking is that going by global trends, state management of airport terminals is no longer the fad; many countries across the globe have either embraced concession or privatisation.

    However, experts and stakeholders are sharply divided over which management model to adopt. Proponents of privatisation point out, for instance, that the Federal Government got its fingers burnt when it concessioned MMA 2. According to them, the concessioning of MMM 2 pitched the Federal Government against Bi-Courtney, the concessionaire, over issues around tenure and scope of the concession agreement.

    Those rooting for privatisation were encouraged by Federal Government’s announcement last October that it was considering possible privatisation of airport terminals. The Director-General of Bureau of Public Enterprises (BPE), Mr. Benjamin Dikki, had said in Abuja that the privatisation of Nigerian airports would begin  soon. “We are planning to commence the privatisation of airports; the airports will be more efficient if the private sector is running them,” he said.

    In opting for privatisation of the airports, the Head, Research, Zenith Travels, Mr. Olumide Ohunayo, said government should consider the clustering option whereby a major airport will be taken along with other unviable airports within the zone.

    This, he said, will reduce FAAN’s liability while they concentrate on regulating, monitoring and securing the airports. “Clustering takes the airport in totality rather than the cherry picking option,” the aviation expert said.

    To support his position, he said the Argentines took their 30 airports in totality using funds from the viable one to support the unviable ones, while the Indians divided their airports into green field and brown field before privatising. “This is why airports have often been sold as a package – good and bad, small and large, domestic and international,” he stated.

    Mr. Ohunayo however, pointed out that in achieving the objective, government should as a first step invite reputable international airport management companies, who will achieve improvements in capacity, efficiency and safety of airport terminals.

    For Chairman, Bi- Courtney Aviation Services Limited, Dr Wale Babalakin, concession model is the way to go. He, however, said Nigerian airports managed by FAAN require 30 months restructuring to prepare them for eventual concession. He said the 30 months timeline would be used to rework the existing system and make them attractive for private sector investment.

    Babalakin also canvassed pairing of airports nationwide across four regional structures to make them viable. He advised government to divide the airports into four zones, comprising Lagos, Abuja, Kano and Port Harcourt before offering them to interested concessionaires. He added that each zone should then be made responsible for the growth of all airports within its jurisdiction.

    Hear him: “I heard some people say that only Lagos airport is viable. I don’t agree. If you want to challenge my position give us Abuja Airport to run. If you think it is not viable, we will take it. I want to assure you that to make them viable requires somebody sitting down and thinking of how to make them viable. I expect that whoever takes them over would realise that you must create activities around the airport that would attract those who want to fly to and from the airport.”

    The Chief Executive Officer Maevis Limited, Mr. Tunde Fagbemi, agrees on the need to restructure  existing airports to make them more effective and viable. He said experience in other climes have proven that the private sector is better positioned to manage air transport infrastructure like airport terminals.

    He said the case of Nigerian airports where public institutions no longer have the ideas to turn airport terminals around is enough for government to allow the private sector players to take over. He said public private partnership (PPP) model of managing airport terminals has brought about marked improvement in the system.

    Fagbemi and other experts, who spoke with The Nation, noted, for instance, that since 1987 when the United Kingdom (UK) privatised the British Airport Authority (BAA) through PPP, the camp of those in favour of privatisation has increased globally. For instance, since the UK embraced the option, more than 20 countries are said to have completed the sale or lease of airport facilities so far.

    The countries include Argentina, Australia, Austria, Bahamas, Bolivia, Cambodia, Canada, Chile, China, Colombia, Denmark, Dominican Republic, Germany, and Hungary. Others are Italy, Japan, Malaysia, Mexico, New Zealand, Singapore, South Africa and Switzerland.

    The Chief Executive Officer of Belujane Konzults, Mr. Chris Aligbe, as well as aviation security consultant, Group Captain John Ojikutu (rtd), called for the setting up of airport management companies as alternatives to concession or outright privatisation.

    According to Aligbe, pairing some airports for effective management by the proposed management companies will ensure better services and development for some terminals hitherto described as unviable. The airport authority, he said, is saddled with too much task that it may not be able to focus on providing the required services, and at the same time run the terminals profitably.

    The management companies, Aligbe added, would focus on enhanced non-aeronautical sources of revenue for the airports, while FAAN would focus on operational and technical areas.

    “There is an urgent need to fix the entire airports in Nigeria to make them viable. One of the ways of achieving this is for government to install the relevant air navigation equipment to enable airlines fly into them even at nights. This is one of the ways to better run the airports if the facilities are in top gear,” he said.

    Aligbe, who noted that there was need for a right model on how to run the airports, said the government’s decision to acquire more airports including the 24 it is currently managing is wrong. “This is not the best approach. What government needs to do is stop the central management of the airports,” he argued, insisting that the central management system cannot bring about efficiency in the airports.

    He emphasised that if Nigeria must have good airports, she must concession them. He was however quick to add that the concession must be done in a way that government will take concession revenues and royalties from where it will reorganize the system.

    “Government should consider setting up a holding company which will oversee her interest in the concessioned airports and to ensure the implementation of the terms of the concessions. There are various strategies to airport concession. The airports need to be paired for income generation and development. For instance, you take Benin and Lagos as one. You take Kano and Maiduguri and other airports,” he suggested.

    However, the former Managing Director of Nigerian Airports Authority, Mohammed Sani Baba, an engineer, disagreed with the privatisation model for the airports. He argued that airports are strategic air transport infrastructures that were not built to generate profit. He said while the Federal Government should manage only international airport terminals, state governments should manage the other terminals.

     

  • Showdown looms over minimum wage

    Showdown looms over minimum wage

    Citing sharp decline in national revenue triggered by fall in oil prices, some governors have threatened to stop paying the N18, 000 minimum wage or retrench workers. But organised labour has dismissed the threat as a joke. To labour, it is a ploy to frustrate negotiation for upward review of the national minimum wage as required by law. Already, labour is mobilising its affiliates for a showdown, should the governors make good their threat. Assistant Editor CHIKODI OKEREOCHA reports.

    Governor Adams Oshiomhole of Edo State is known for his fierce rejection of injustice and an outstanding resolve to stand up to it. He demonstrated this attribute during his days in the labour movement where he was former President of Nigeria Labour Congress (NLC). So, when the comrade governor, as Oshiomhole is popularly called, recently announced his readiness to lead a protest to force some state governors to back down on their threat to reduce the N18, 000 monthly minimum wage or embark on massive retrenchment of workers, not a few Nigerians took him serious.

    To Nigerians, especially workers, Oshiomhole’s readiness to personally lead the battle against his governor colleagues whom he said have the capacity to pay the N18, 000 minimum wage, it was clear signal that indeed, a major showdown is imminent. The labour leader hinted this much when he said: “it is clear from all indicators that 2016 is likely to be very tough with the continued decline in revenue and rising expectation on the part of our people and with many state governments, local governments, and perhaps, even some federal agencies defaulting in the payment of salaries and allowances. The level of strike activities in the economy is going to be very high…”

    He spoke penultimate week in Benin, the Edo State capital, during a meeting with traditional rulers from Edo Central Senatorial district. In an apparent reference to the governors’ threat to lay off workers, he said the level of unemployment in the country is already unacceptably high, warning that “it could get even higher if we are not careful.” While pointing out that Edo State has been trying to ensure it sustains the tradition of meeting her wage obligation because the consequences of not doing so are huge, he reiterated the fact that the welfare of the people remains the main business of state governors hence they should be able to pay the N18,000 minimum wage.

    Sometime last year, some state governors touched the raw nerves of workers when they announced that they would no longer pay the N18, 000 minimum wage in view of the sharp decline in revenue caused by falling oil prices. The governors, under the aegis of Nigeria Governors’ Forum (NGF), had after their meeting in Abuja, stated that the N18, 000 minimum wage was imposed on them when oil sold for $126 as against the price of $41 per barrel. This was the price at the time the governors pushed the argument. Oil price hit an all time low of $32.66 per barrel last week, the lowest since 2002.

    The NGF’s statement, conveyed by its Chairman, Governor Abdul’aziz Yari of Zamfara State, said: “The situation is no longer the same compared to when we were asked to pay N18, 000 minimum wage, when oil price was $126 per barrel and continued paying N18, 000 minimum wage when the oil is $41, and the source of government expenditure is oil, and we have not seen prospects in the oil industry in the near future.” He said the way out of the situation was the diversification of the economy with attention to agriculture and mining.

    Governor Abiola Ajimobi of Oyo State was more direct when he stated that there was no way the country could continue with a situation where expenditure was more than income. He inadvertently drew the battle line between the governors and labour when he said, “We are faced with a situation where we either have to reduce cost through salary reduction or downsize. All these we don’t want to do but prefer to have a roundtable with the President, ministers and economists to look for means of getting out of this problem.”

     

    Labour threatens fire and brimstone

     

    However, if Ajimobi and his colleagues expected to get labour’s understanding, they were wrong. Labour would hear nothing of either reducing cost through salary reduction or downsizing. And by the time the labour movement comprising the Nigeria Labour Congress (NLC) and its various affiliates started taking turns to condemn and call the governors’ bluff, it became clear that the options dangled before them failed to hit the right chord.

    For instance, as far as NLC President Comrade Ayuba Wabba is concerned, the governors’ threat was mere ploy to frustrate the demand for an upward review of the N18, 000 minimum wage. Wabba has at various fora, stated that the five- year period stipulated for the review of the minimum wage had lapsed, hence NLC is working in collaboration with the Trade Union Congress (TUC) to arrive at a new minimum wage to be presented to government.

    For instance, at a recent courtesy call by the NLC to Senate President Bukola Saraki, in Abuja, Wabba said NLC will submit a new minimum wage to the National Assembly (NASS), as N18, 000 minimum wage is no longer reasonable because of the current economic reality. He recalled that the last time the Minimum Wage Act was propagated by NASS was in 2011 and is due for evaluation.

    Wabba’s words: “The five-year circle during which the National Minimum Wage is due for review is here. The devaluation of the naira from N150 to $1 to about 242 to $1 today underscores the grim situation for salary earners in the country, against the fact that our economy is import driven.

    “The devaluation in simple economic terms means that the purchasing power of the ordinary Nigerian wage earner is grossly devalued. As a result, Congress will soon submit a New Minimum Wage demand, which we hope will be negotiated by the tripartite negotiating team.”

    The National Minimum Wage Act was signed into law by former President Goodluck Jonathan in 2011 after both houses of the National Assembly passed it into law, with a proviso for it to be reviewed upwards after five years. Wabba said NLC hopes that when the end product of negotiation for a review is brought before NASS for legislation, it will be treated with dispatch.

    The NLC President vowed to make the states ungovernable for any governor that tinker with the current minimum wage. “We will ensure that any governor that tries to reduce the N18, 000 minimum wage will not have rest in his domain until the right thing is done. Reducing the minimum wage is something that cannot be defended,” he threatened.

    Although, Wabba admitted the challenges in the economy, he said this does not mean that only the workers should suffer the consequence. He pointed out that if political office holders still collect the same salaries nationwide, there is no justification for anybody to think of tinkering with the minimum wage.

    But as workers await the presentation of a new minimum wage by NLC, the immediate past National President of National Union of Electricity Employees (NUEE), Comrade Mansur Muhammed Musa, suggested an upward adjustment of the minimum wage from N18, 000 to at least, N54, 000.

    He told The Nation that without such upward review, workers will continue toiling until they visit their graves and that is not what labour is all about. “There should be dignity in labour. So, N18, 000 minimum wage is out of the question. We should come together and demand for N54, 000 minimum wage,” he insisted.

    Comrade Musa described the governors’ threat as huge joke. “They (governors) have told us they cannot pay the minimum wage, but they have not told Nigerians whether they cannot also pay the maximum wage, because we know they are taking the maximum wage, he said, asking, “is it only the minimum wage of N18, 000 that they are giving to workers that they cannot pay?”

    The NUEE chief insisted that there are areas of wastages in the country that needed to be curtailed to free up resources to pay workers a new minimum wage of N54, 000. Hear him: “If we can reduce these areas of wastages we won’t have problems. Go to any of the Government Houses, nobody drives a golf car; they are all driving jeeps. Look at the convoy of governors when they are going from one place to another; look at the cost of fuel for their vehicles, personnel, and other allowances; you can go on and on and on.”

    Comrade Musa has an ally in the Secretary-General of Association of Senior Civil Servants of Nigeria (ASCSN), Comrade Bashir Lawal. The ASCSN scribe in a statement made available to The Nation wondered why governors who have not deemed it fit to reduce their humongous salaries and allowances are bent on jettisoning the N18, 000 monthly minimum wage.

    “Given the current high cost of living, the N18, 000 monthly minimum wage cannot even last the average worker one week yet, the governors are bent on reducing it. This is very unfortunate,” he said, alleging that “governors allocate to themselves, on the average, one billion naira monthly as security vote and spend nothing less than N18, 000 daily to feed one of their animal pets or buy recharge cards for one of their children, or worse still for one of their numerous girl friends.”

    Lawal stressed that if state governments could reduce wastages, tackle corruption, and moderate their greed, there would be enough money to pay enhanced minimum wage and carry out meaningful development in their states.

    He also pointed out that there is no state in the country that does not have natural resources, but instead of harnessing them they (governors) prefer to wait for monthly handouts and of late, bailouts from Abuja to administer their states.

    Comrade Lawal therefore, advised governors who are tired of governance because of fall in revenue allocation to resign and allow more serious minded individuals who are prepared to harness resources of the states for the benefit of the people including workers, come in.

     

    How crashing oil prices put

    governors, labour on war path

     

    In fairness to the governors, things have not been looking up for the economy. Since June 2014 when crude oil prices started tumbling, the Federal Government’s finances, and by extension, State Governments’ have been under tremendous pressure. Oil prices, which averaged $112 per barrel by June 2014, have continued to crash, with Brent hitting an all time low of $32.89 per barrel, last week.

    The International Monetary Fund (IMF), which predicted that crude oil prices may slump to as low as $20 per barrel this year further raised the blood pressure of Nigerian authorities especially the governors. This is so considering the fact that crude oil revenue accounts for about 90 per cent of Nigeria’s foreign exchange earnings.

    With the 2016 budget benchmark oil price of $38 per barrel, it means that if IMF’s prediction comes true, Nigeria’s economy will be in for more turbulence, as there won’t be any buffer for the budget. It also means, by extension, that state governors will be left with no choice than to make good their threat to either stop paying the N18, 000 minimum wage or lay off workers.

     

    Fed govt’s position

     

    The Federal Government through the Minister of Labour and Employment, Senator Chris Ngige has said the review of salaries of workers at the moment is not on the table because of the country’s economic challenges. He said other tiers of government that have more money could pay higher wages.

    Ngige, who spoke when the leadership of NLC visited him recently, however, said the minimum wage was an issue that was not contestable since it was a product of legislation backed by an Act of NASS.

    The minister said the NLC leadership was quite aware that the governors were playing politics with the issue, stressing that anybody that wants a review of the Minimum Wage Act should approach NASS or ask the President to send an Executive Bill.

     

     

     

    The coming weeks and months would determine whether the governors are merely playing politics with the minimum wage controversy or responding to the sustained pressure on their finances caused by the prevailing economic realities. But whichever way it goes, labour appears poised to force down the hands of the governors if they make good their threat.