Category: Issues

When the President Tinubu read his inauguration address after being sworn in as president on May 29 in Abuja before local and international dignitaries, one of the promises he made that excited the youth segment of the population and the information communication technology (ICT) community was that of creating one million jobs in the digital ecosystem.

The reason for this excitement is not far-fetched. According to Spectator Index, a news and finance compilation website which posted a 20-country youth unemployment, Nigeria has the second highest number of unemployed youths in the world.

Her astronomical 53 per cent youth unemployment rate makes it second to only South Africa, which has 61 per cent youth-unemployment.

The other countries on the list are Greece, 29 per cent; Spain, 29 percent; Sweden, 23 percent; Italy, 22 per cent; Iran, 19 percent; Turkey, 19 percent; Portugal, 18 percent; France, 17 percent; Belgium, 16 percent; UK, 10.8 percent; Norway, 10 percent; Ireland, 10 per cent; Canada, 9.2 percent; Australia, 7.8 percent; US, 7.5 percent; South Korea, 7.2 percent; Germany, 5.7 per cent; and Japan at 5.2 per cent.

However, to reiterate the president’s commitment to walk his talk, keep his promise, he told the visiting Google execs led by its Global Vice President, Mr. Richard Gingras at the State House, Abuja on Friday that Nigeria had creative and talented young people who are ready and motivated to learn especially at this age of emerging technologies such Artificial Intelligence (AI), stressing that the tech giant has the capabilities and tools that the young people need to excel.

 “We are ready to work with you on your commitment to create one million digital jobs in Nigeria,” President had said in a statement endorsed by his Special Adviser on Special Duties, Communications, and Strategy, Dele Alake.

Google’s commitment aligns with the tech giant’s focus on Africa. According to Google in Africa, Africa is experiencing incredible change, presenting both opportunities and challenges. The continent is home to 19 of the top 20 fastest-growing countries on the globe, and its internet economy has the potential to grow to $180 billion by 2025. By the same year, more than half of Africa’s population will be under the age of 25, creating an even more pressing need to generate economic opportunity.

Google believes that African-led innovation will be key to meeting such needs, and Africa is already a place where innovation begins and spreads to the rest of the world.

Google has long been committed to supporting this innovation and harnessing technology to support growth in Africa. Last year, our CEO Sundar Pichai announced that Google would invest $1 billion in Africa over five years focused on priorities identified in our “Digital Sprinters” report, including secure, affordable and environmentally sustainable digital infrastructure, a vibrant entrepreneurial ecosystem, skilling to help people prepare for the jobs of the future, and technological innovation that unleashes new opportunities. “We’re partnering with policymakers, non-profits, local businesses, creators, and communities across the region to deliver on that commitment and help boost Africa’s digital transformation,” Pichai said.

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Reacting to the promise of Tinubu to create one million jobs from the digital ecosystem, the Association of Licensed Telecoms Operators of Nigeria (ALTON) and Nigeria Computer Society (NCS) said it was possible to achieve the target and even surpass it because the opportunities abound, especially with the crop of innovative youthful population of the country.

ALTON President, Gbenga Adebayo, said: “The opportunities actually exist (to achieve that). If you look at what’s happening in other parts of the world today, the biggest job creator is actually the digital economy. That’s where you have fintechs, virtual trading, virtual markets; you have the likes of Jumia and Konga and the rest of them. These are virtual markets. We have what today is called the home office. People work from home digitally; banking is going digital. If you look at all of that, what the government has to do is to provide the platform for it to thrive. Not that the government will go directly to create digital employment; that’s not what we expect. But the government should give the platform for digital trade to thrive; encourage young entrepreneurs; encourage digital natives to do what they want to do; give them access where they need to fund, give them access, when they need the enabling environment, give it to them.

“You cannot have a digital economy if you don’t have access to data, especially if you don’t have a resilient network. That means we need to look at the infrastructure, particularly energy, remember that telecoms, on account of the activities of government agencies, in an attempt to extract revenue have to stop. Such actions must be seen as criminal actions. For any government agency to go and seize telecom sites in the name of collecting tax, that should be seen as criminal.

 “A lot of things are interwoven but I think to my view, hearing the president speak today, we see some light in his address and we cannot but join well-meaning Nigerians and the international community in wishing our president all the very best.  He has the assurances of our support, we look forward to a new industry; we look forward to a new policy that will foster developments. “Our industry has demonstrated that we can move things forward if we have the enabling environment. Our appeal to government is to help us in removing those things that make telecoms operations difficult because it’s easy for anyone to come and say reduce prices, if you don’t provide incentives that will lead to reduction in prices, if energy prices continue to go high, if companies pay higher to service their forex obligation, security problem is what it is, all these are interwoven and it’s good that the new administration has mentioned them. Even mentioning it in the address is encouraging.”

Like ALTON chairman, the NCS President, Prof Adesina Sodiya, said there are limitless opportunities in the digital space to create jobs. He said the job target of the president is doable, adding however that experts and technocrats should be carried along to ensure its success. 

Prof Sodiya said: “The one million jobs is doable; our youths are eager, many of them are going to commit crimes because they do not have jobs, they do not have enough things to satisfy their quest but the job target is doable. There are so many opportunities in IT. It depends on the interest of the government, it depends on the people that are working with them (the government); it depends on the people that are coming up with these suggestions. If they truly understand how to create jobs on the digital space, the opportunities are there. Because of the development in IT now, there are so many opportunities that are coming up. If you have to go into building websites for small and medium enterprises (SMEs), helping them to promote their businesses, using social media because people are now experts in social media, so there are opportunities, it’s just requires some basic soft skills, skills that you don’t need to go to the university; when you don’t want to be doing some researches; just the ability to learn some things by yourself.

“And if you also want to talk about another level of app development, our people that have made breakthroughs all over the world are bringing a lot of funds into this country, so, the opportunities are there. If you go into the area of data science, being able to make projections, many organisations abroad now are looking for data scientists that will work remotely because data science is about being able to discover knowledge that can make organisations to plan very well and have competitive advantage.”

The NCS president who said he does not doubt the ability of the president to place round pegs in round holes, said the best thing is to come together in order to be able to identify these jobs that could be “created using soft skills, low hanging fruits; there are so many low hanging fruit jobs that the government can create but they also need expertise. They need people that can make it happen to work with them. If a new government is coming on board, so many people will be running to them but I believe that this current president likes to work with experts, technocrats. Let’s believe he’s going to go in that direction.

“Even where people are saying IT is going to take their jobs; robots are going to take their jobs, it’s also creating other opportunities and in our drive for digital transformation, we are really not there yet and that’s why we are not benefitting immensely from what’s going on. There are so many organisations that are still being run manually. And because of that, the ability to use digital for economic development is still challenged.”

“We will expect that in anything that has to do with IT, the president will use core professionals, not people that will pretend because everybody is saying they can do IT now but when the chips are down, when you have to talk about technical things, talk about applying some methodologies, things that before you advise government to do, you must have conducted research to ensure that it’s the best for the nation. So in even taking decisions, be scientific and strategic. That is what we want. Not when you advise the government to take a decision that at the end of day will fail. We don’t want any failed action of this government because it’s going to take us backwards. Analyse the situation very well and know it is the best, even make projected outcomes.  These are the types of analysis we want, not somebody coming to say something into your ears and you say that’s the best. IT doesn’t operate like that. It requires critical thinking because by the time that people know that it’s IT you are deploying and you are failing, it’s really a challenge to us in the sector. And because people believe that when you use IT, you’re expecting perfection. You are expecting something that will be better than something you used to do and when you’re using IT it’s now creating problems. My advice to the government is that they should ensure that they carry along the stakeholders, and put people that are core professionals in these different offices or roles of IT so that we can achieve the desired goals.”

KPMG, a global professional group that provides audit, tax and advisory services in its report, ‘Global Economic Outlook’, said Nigeria’s unemployment rate will rise to 40.6 per cent this year, adding that unemployment in Nigeria will remain a major problem due to limited investment in the economy, low industrialisation and sluggish economic activity.

The report added that the inability of the economy to absorb the over five million young school leavers yearly into the labour market will contribute to the problem. As a result of paucity of cash, the manufacturing sector will not do well. The KPMG’s unemployment forecast aligns with that of the National Bureau of Statistics (NBS) which stated that Nigeria’s unemployment rate rose from 23.1 per cent in 2018 to 33.3 per cent in 2020.

But Google said its first big bet on African infrastructure came in 2005 with the Seacom cable. Seventeen years later, Google’s state-of-the-art Equiano subsea cable has now landed in ports in Togo, Nigeria, Namibia and South Africa. Equiano will significantly increase international bandwidth, leading to a rise in average internet speeds and improved affordability of access — expanding overall internet penetration and helping to create jobs in Nigeria and other parts of Africa. This has the potential to generate economic growth, support innovation, and increase access to services across the continent.

Google for Africa initiative, Google believes that small and medium-sized businesses make up 90per cent of all businesses in Africa. But at a time when digital connectivity is more important than ever to small business resilience, African small businesses are still catching up to their global counterparts in their use of the internet. Google is helping to meet this challenge by connecting startups to resources and job seekers to skills-building opportunities. Through the Google for Startups Black Founders Fund in Africa, Google has invested $7 million in 110 Black-led startups by providing cash awards and hands-on support. “This builds on our existing support through the Google for Startups Accelerator Africa, which has helped more than 90 African startups with equity-free finance, working space and access to expert advisors over the last three years. In addition, we have supported over 5,000 small businesses via the Google Hustle Academy, helping them to increase revenue, position themselves for investment, and build sustainable business models. We’ve also provided digital skills training to more than six million people, and helped train 105,000 African developers through the Google Africa Developer Scholarship. And through the YouTube Black Voices Fund, YouTube has developed an initiative dedicated to equipping and amplifying Black creators and artists with resources to succeed on the platform,” Google said.

Equipping people and businesses with technological tools to meet local needs unlocks innovation. “We’re constantly improving Google products to be more helpful to more people in Africa. For example, leveraging our AI capabilities, we recently added 10 African languages spoken by 165 million people, including Lingala, Bambara, and Oromo, allowing millions more people to access the internet in their own language.

 “Our commitment to innovation in Africa also encompasses our most advanced technologies. The team at our recently expanded AI research centre in Accra, Ghana, is showing how innovation can be used to tackle some of the continent’s — and the world’s — most pressing challenges, from population mapping to natural disaster forecasting. For example, our flood forecasting alerts now include 15 African countries. And in partnership with others in the region, our research center has developed AI-enabled ways to predict where locusts breed, decreasing their ability to destroy crops and helping address one cause of food insecurity.

“To make it easier for African businesses to leverage AI, machine learning and data analysis, we’ve announced our intent to open the first Google Cloud region in Africa. According to AlphaBeta, when complete, the South Africa cloud region will contribute a cumulative $2.1 billion to the country’s GDP and will support the creation of more than 40,000 jobs by 2030. We’re also building full-scale Cloud capability for Africa with dedicated Cloud interconnect sites in Johannesburg, Cape Town, Lagos, and Nairobi,” the tech giant noted.

The battle against spiraling inflation entered a new phase with the Central Bank of Nigeria’s (CBN) decision to adopt inflation targeting framework to price stability. The framework, which is also being implemented by central banks of several African countries, is expected to strengthen Nigerians’ purchasing power, disposable income, drive aggregate demand and stimulate production. The CBN will also conduct in-house modeling and simulations of economic variables to ensure the framework achieves its core mandate of price stability, writes Assistant Business Editor COLLIN NWEZE.

The devastating effects of rising inflation are felt by households and businesses across the nooks and crannies of the country.

That is why price stability is one of the core mandates of the Central Bank of Nigeria (CBN), which has adopted inflation targeting framework.

The framework, which replaces the exchange rate targeting framework, will be implemented with the backing of the people.

To ensure its success, the CBN Monetary Policy Department held its Annual Retreat  in Lagos, where stakeholders pointed the way forward for Nigeria’s journey to price stability.

CBN Director, Monetary Policy Department, Mahmud Hassan, said moving from the exchange rate targeting framework to the inflation targeting framework aligned with the apex bank’s determination to bring inflation upsurge under control  in line with its price stability mandate.

He said inflation uptick has remained a major concern to the CBN and is the time to use monetary policy tools to control it.

Already, the data from the National Bureau of Statistics (NBS) showed that marginal increase in headline inflation was 21.82 per cent in January 2023; 21.91 per cent in February and 22.04 per cent in March.

Also, the money supply (M3), which is a key ingredient in inflation uptick grew by 13.14 per cent (annualised) in February 2023 (year-to-date), below the 2023 provisional annual benchmark of 17.18 per cent.

This was driven by the growth in Net Foreign Assets (NFA), which was attributed to the increase in foreign asset holdings of the CBN and decrease in foreign claims on Other Depository Corporations (ODCs).

Speaking on the theme: Monetary Targeting Policy Framework in Nigeria – An Appraisal of its Continued Relevance to the Price Stability Mandate,  Hasssan said the monetary policy has had to contend with shocks, including the global financial crisis.

The event was attended by Jack Ree of the International Monetary Fund (IMF); Prof Robert Mudida, Director of Research, Central Bank of Kenya (CBK); and Dr. Philip Abradu-Otoo, Director of Research, Bank of Ghana (BoG); and staff members of the Monetary Policy Department of the CBN, among others.

Hassan said the various oil price shocks, Covid-19 pandemic, and most recently, the war between Russia and Ukraine, have resulted in various shocks to the global economy, requiring changing responses to subdue the monetary and fiscal authorities in the advanced and emerging market economies.

To address these shocks, he said the CBN migrated from an exchange rate targeting framework to phased migration and now inflation targeting framework.

He said the CBN has been controlling the growth of money supply to achieve price stability, but over time, the effectiveness of that strategy in achieving price stability in Nigeria had been called into question.

“One of the main challenges has been the difficulty of accurately measuring and controlling the money supply in the face of financial innovation and the growth of non-bank financial institutions. In addition, the relationship between the money supply and inflation has become less predictable in recent years, further complicating the use of monetary targeting as a policy tool,” he said.

Hassan added: “Ultimately, the central bank will need to interrogate the continued relevance of the monetary targeting framework to address the series of new and developing shocks impacting the economy, as well as the advantages the inflation targeting framework may hold for us as a central bank.”

Also, the CBN Deputy Governor, Economic Policy Directorate, Dr. Kingsley Obiora, saideconomies had witnessed harsh economic conditions, which they had to deal with over the past few years.

He said crude oil prices have fluctuated significantly over the past few years, making managing the exchange rate and inflation significantly difficult for monetary policy.

He explained that, at inception, the CBN adopted an exchange rate targeting framework with the Nigerian Pound exchanging at parity with the British Pound Sterling. The policy target under this framework was the maintenance of the viability of the Balance of Payments (BoP) and controlling inflation in the domestic economy.

Obiora said in the economy, rapid technological advancements and competition are changing not only the way we do business, but also the definition of money.

“The rapidly changing macroeconomic environment has meant that the continued reliance on money supply growth as a reliable guide to the trend of price development has become questionable, not just among central bankers but also among academics,” he said.

Obiora said the relationship between money supply growth and the money multiplier has become blurred due to the  instability in the money multiplier, making it difficult to set appropriate targets for money supply growth.

“It has become pertinent against this backdrop for the CBN to consider the pros and cons of a transition to a new monetary policy framework to improve our ability to continue to anchor inflation expectations,” he stated.

Headwinds persist

The increasing headwinds at home and abroad constitute a major reason for the framework. For instance, the Monetary Policy Committee (MPC) met on  March 20 and 21, this year, faced with headwinds, undermining the full recovery of the global economy.

The CBN had, in March, raised the benchmark lending rate to 18 per cent to contain the inflation.

In January, the MPC raised its lending rate from 16.5 per cent to 17.5 per cent in a sustained push to control inflation and ease pressure on the naira.

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CBN Governor, Godwin Emefiele listed the headwinds as the recent bank failures in the United States and Switzerland, amid widespread monetary policy tightening, which introduced a new dimension to the risks confronting the global financial system, as well as, the persisting high, but receding global inflation.

He said the war between Russia and Ukraine and its implications to the smooth functioning of the global supply chain also remained a critical strain on the recovery of global output growth.

He said in the domestic economy, output recovery progressed at a relatively moderate pace, while headline inflation trended upwards, albeit less aggressively, driven mainly by a marginal increase in food inflation.

Growth vs price stability

Data from the National Bureau of Statistics (NBS) showed that last year the Real Gross Domestic Product (GDP) grew by 3.10 per cent.

In the fourth quarter of last year, it grew by 3.52 per cent, compared with 3.98 per cent in the corresponding period of the previous year and 2.25 per cent in the preceding quarter. The economy maintained a positive growth trajectory for nine consecutive quarters, since recession in 2020.

The improved performance was driven by sustained growth in the services and agricultural sectors, a rebound in economic activities associated with economic recovery and continued intervention in growth enhancing sectors by the bank. Staff projections showed that output growth recovery is expected to continue into 2023 and 2024.

Data on the CBN’s interventions in domestic economy showed that between January and February, this year, the apex bank disbursed N12.65 billion to three agricultural projects under the Anchor Borrowers’ Programme (ABP), bringing the cumulative disbursement under the Programme to N1.09 trillion to over 4.6 million smallholder farmers cultivating or rearing 21 agricultural commodities on an approved 6.02 million hectares of farmland.

The bank also released N23.70 billion under the N1 trillion Real Sector Facility to eight new real sector projects in agriculture, manufacturing, and services.Cumulative disbursements under the Real Sector Facility currently stands at N2.43 trillion, disbursed to 462 projects across the country, comprising257                                                                                                                             manufacturing, 95 agriculture, 97 services and 13 mining sector projects.

Under the ‘100 for 100’ Policy on Production and Productivity (PPP), the bank also released N3.01 billion under the Nigerian Electricity Market Stabilisation Facility (NEMSF-2) for capital and operational expenditure of distribution companies (DisCos) aimed at improving their liquidity status and aid their recovery of legacy debt. This brings the cumulative disbursement under the facility to N254.39 billion.

According to Obiora, inflation is not an end, but a means to an end, adding that output should be meaningful to the people.

“We are dealing with not only slow growth, but high inflation. Aggressive monetary policy tightening is happening, but it is having adverse effects on banks at the global arena. The three banks that collapsed in the US are phenomenal. In all of these, the Nigerian financial system is still stable,” he said.

For instance, what started with the collapse of the Silicon Valley Bank on March 10 was followed by strains in other US regional lenders before the failure of Credit Suisse a week or so later and most recently of the US’s First Republic.

According to him, Nigeria has had double digit inflation in the last eight to nine years, raising questions on whether monetary policy is helping to moderate inflations.

He said the time had come to change to a new model that would address inflation fears for the economy.

Emefiele speaks on inflation spike

Emefiele had last year lamented the spate of inflation and the impact of foreign exchange shortage on achieving national development goals.

For him, inflation rate is at an unacceptable level and higher inflation needs to be tackled with tools that can potentially constrain the economy’s fragile output growth and cause stagflation.

Emefiele explained that due to the resumed uptick of inflation rate in February, last year, the MPC raised its policy rate several times adding that the monetary policy tightening measures have led to subdued aggregate demand pressures expected to ease inflation. 

He explained that the combined efforts of the monetary and fiscal authorities to ramp up food supply and tackle age long structural challenges are also expected to moderate inflation expectations and drive down food and core prices in the medium-term. 

Raising fears over monetary policy tightening,  a staff of Finance and Development of World Bank, Marjorie Henriquez, said central banks tightening monetary policy should expect loan defaults within their economies.

In a report entitled: “Early Lessons from Recent Banking Turmoil”, Henriquez advised central banks against monetary policy tightening adding that the central banks should adopt other tools to achieve price stability.

She said the short-term interest rate is the principal instrument in a tightening cycle, and a liquidity injection can be implemented to deal with financial stability problems without jeopardising price stability.

In recent years, central banks have proactively intervened as liquidity providers and learned to do this in a timelier manner than in the past.

Other analysts recommended that a broad-based harmonisation of fiscal and monetary policies towards addressing the identified structural constraints raising inflation figures will significantly help to moderate inflationary pressure in the medium term.

Nigeria’s inefficient or inadequate transportation system, logistics and other trade-related infrastructure for connectivity have impeded her productivity and competitiveness in domestic and global trade. Nigerians find it difficult to access opportunities and markets because they cannot move goods smoothly through the transport network. At a logistics forum in Lagos, recently, experts brainstormed on how to strengthen Nigeria’s logistics and supply chain ecosystem to boost competitiveness and ultimately, drive economic development. DANIEL ESSIET reports.

A Senior Lecturer in Transport, Logistics & Supply Chain, Lagos State University (LASU), Dr. Ogechukwu Ugboma, believes that Nigeria’s logistics sector remains a pillar of her economic future.

  She, therefore, said improving its transportation networks should become one of Nigeria’s top priorities.

Accordingly, one of Ugboma’s preferred routes to strengthening Nigeria’s struggling logistics sector and guaranteeing her economic feature is by investing in more efficient and effective mass transport systems. She also pushed for urban plans to be coordinated and synchronised under one national urban blueprint.

The university don, who spoke at a r logistics forum organised by the African Centre for Supply Chain, in Lagos, stated that what Nigeria needed was an ambitious logistic strategy that would help to integrate the various modes of transportation to aid growth, and for businesses to reap greater benefits.

Ugboma reiterated that inefficient logistics was a key challenge in Nigeria’s economic recovery efforts hence, the need to get rid of bottlenecks and congestions that hamper access to opportunities and markets, as people find it extremely difficult to move goods smoothly through the transport network.

 According to her, supply chain constraints were recognised as a major impediment to domestic and export-led growth, with poor transportation network standing out as one of the most vulnerable segments in the struggling logistics sector. She said with road congestions, there had been pressure on the government to develop new growth areas.

Ugboma said building new roads and highways would not only solve the congestion problem in the towns and suburbs, but also result in quick movements across the country.

Indeed, despite several seaports and airports, Nigeria’s logistics sector’s performance has been constricted by insufficient road development and weak connection with the hinterlands. This has hampered attempts by the government and the private sector to inaugurate a revolutionary export-driven growth strategy for the agro-industrial sector.

However, at the logistics forum in Lagos, Ugboma and other experts and speakers expressed optimism that prospects for Nigeria’s growth were positive, even though  there  were  difficulties to be overcome in the long term.

 For instance, the Director-General, African Centre for Supply Chain, Dr. Obiora Madu, said the starting point is for the government to partner the private sector to tweak the national logistics strategy to set the roadmap for the short, medium and long-terms. This, according to him, would help remove the impediment to North and South connection.

 According to Madu, the nation’s logistics network show gaps, which clearly underscore the need to revamp the logistics infrastructure. He noted that Nigeria’s infrastructure for connectivity and logistics was so poor that people find it difficult to access opportunities and markets.

To improve business competitiveness, he, therefore, recommended the expansion of infrastructure and logistic services; innovation in value added services; and integration of urban transportation to impact on the development of the economy.

Madu said, for instance, that Lagos could tap into the many benefits of infrastructure expansion by leveraging its status as a trading hub, connectivity, good infrastructure, including airport and mega port to build regional presence.

 Speaking about the achievements of the centre, Obiora said: “We have achieved quite a lot across the continent. The African Centre for Supply Chain is in about six countries in Africa. We are growing. The centre assists the industry through research and education. Now in its sixth edition, we have published industry report. By the grace of God, we will continue to publish these reports.

 “In the area of capacity building, we offer a graduate management certificate which has given jobs and promotions to professionals because of the quality of performance. We are currently proposing three projects on the value of logistics in Nigeria. There are actually no reliable statistics and data which managers can use to take decisions.

 “This is the reason we introduced the industry reports, which have been improving with every edition. We also have research projects to determine the value of logistics in Nigeria and its contribution to the Gross Domestic Product (GDP) that will help managers and the government on national planning.

 “The second one is the Lekki Corridor. With the inauguration of the deep seaport, and the Lagos State plan to establish an airport in the axis, there is a need to assess the impact of traffic to the corridor. The other one is on the need for conditioning centres in our airports, so that perishable items can be saved from deterioration.

 “These three we consider very important projects for Nigeria as a nation. We can only do what we can do as a private centre. But we believe that we can work with the government to do  these things. Another thing we have our eyes on are projects around how to improve the positioning of Nigeria on the logistics  performance index which is not good at 110, out of 160.

 “We moved down from 75 to where we are. Everybody agrees that the conditions around our seaports are not favourable at al”

 The  centre’s chief also said it was working hard to ensure the sector helps to boost the economy through innovation, technology and skill development. While insisting that the logistics industry has to prepare itself to meet future demands, he called for support to promote good initiatives to keep it at the forefront in world logistics market.

 Keynote speaker and Director, Customer Supply Chain, Sub-Saharan Africa, Friesland Campina, Mr. Temitope Bamidele, noted that the Russia-Ukraine war was having impact on global supply chain, including Nigeria, driving up the prices of commodities.

 Situations such as the Suez Canal Blockage, which accounted for 12 per cent of global trade, he said, for instance, got 369 ships with 18300 containers stranded, with $10 billion worth of trade delayed per day.

 A strong logistics sector, Bamidele said, was vital to sustained economic growth and critical to recovery by keeping the supply chain moving. According to him, the global logistics and transportation sectors stood the test of time when the pandemic created havoc and triggered most of the sectors to plunge into a grave phase.

Despite the devastation of the pandemic, Bamidele recalled that the positive aspect that has emerged from these sectors were efforts towards the amalgamation of the supply side with the demand aspect trends towards mitigating threats that arise from container shortage, closure of major ports causing port congestion, shortage of truck drivers, and restricted capacity in the air freight market.

For the Managing Director, Multimix Academy, Oluchi Okafor, rapid technological innovations and adaption have become imperative, which is organisations should invest in automating their supply chain processes to remain competitive.

She spoke on the need to attract younger employees into the logistics industry and to retain talent, pointing out that logistics and manufacturing businesses in Nigeria face a serious shortage of manpower for logistics job positions.

Okafor insisted that amid the logistics industry’s development, the sector required more quality and creative human resources. She added that improving logistics services and developing infrastructure were important factors for enhancing the economy’s competitiveness.

 According to her, the academy aims to improve workers’ knowledge and skills so that they can master and effectively apply technological advances of Industry 4.0 and meet enterprises’ human resources demand.

 The government and enterprises, she emphasised, needed to join hands to anticipate trends, opportunities and challenges and to work out solutions so as to improve the quality of logistics manpower as well as general human resources in Nigeria.

 Indeed, the supply chain sector is facing tremendous challenges, with the logistics industry in particular suffering from significant shortages of skilled and qualified workers.

 The United States International Trade Administration put the situation in perspective when it listed huge infrastructure deficit, government’s policies that undermine ease of doing business, poor road network, unstable electricity, entrenched corruption, and multiple taxation as factors limiting the sector from achieving its potential. 

The administration’s study, specifically, said infrastructure was critical to any logistics and supply chain development objective, pointing out that the health of available infrastructure and level of integration directly impact logistics access, cycle-time, reliability, and cost.

 It also said maintaining a competitive logistics and supply chain ecosystem required a constant and strategic upgrade of regional infrastructure. It also demands high-performing government institutions, financing, and industry skills.

 The study said logistics could, therefore, be said to be the main indicator of  advancement expressed in trade facilitation and business competitiveness.

 It added: “Unfortunately, however, there are substantial regional and national deficits in Nigeria’s logistics infrastructure, which hinders its trade competitiveness.”  

Technological distruptions have changed the way tax administration will be conducted around the world for good. Recently, Nigeria hosted members of the Commonwealth Association of Tax Administrators (CATA) to share ideas on how they are addressing disruptions to forge a common and united front against individuals, businesses and jurisdictions that might want to deny them their benefits accruing from the distruptions, writes Assistant Editor Nduka Chiejina

There has been an upsurge in disruptive technological innovations in the business environment. These have triggered peculiar issues that tax authorities around the world have had to grapple with.

The rapid growth of e-commerce globally has raised concerns as to whether tax administrators are equipped to deal with these distruptions, particularly the shift from a physical commercial environment to electronic and information-based one.

Tax Administrators faced the daunting task of protecting their revenue base without hindering either the development and use of new technologies or involving the business community in the emerging e-market place.

This development has forced tax jurisdictions to forge a common alliance among geographical and political soulmates.

Nigeria recently hosted the 42nd Technical Conference of the Commonwealth Association of Tax Administrators (CATA) in Abuja with participants from all over the Commonwealth and beyond.

To assist member countries engage actively in digital economy taxation, the President, CATA, Muhammad Nami, said the association has partnered many regional tax organisations to organise consultative meetings/workshops facilitated by the Organisation for Economic Cooperation and Development (OECD).

Such meetings, Nami, who is Executive Chairman, Nigeria’s Federal Inland Revenue Service (FIRS), said, were held in collaboration with the Pacific Island Tax Administration Association (PITAA), Inter-European Association of Tax Administrations (IOTA), Association of Tax Administrations in Islamic Countries (ATAIC), Caribbean Organisation of Tax Administrators (COTA) and the Study Group on Asia Tax and Research (SGATAR). Other partnership initiatives undertaken with ATAF, WATAF and CIAT under the umbrella of the Network of Tax Organisations (NTO).

Executive Director, CATA, Mr Duncan Oduru, stated: “The stark reality is that a country cannot protect its tax base by itself; hence the need for collaborative approach. Secondly, don’t let somebody else collect your taxes.’’

He noted that CATA is partnering other intra-continental tax organisations to create sustainable solutions to common problems within our context. However, the body, he said, “recognises that countries have unique issues that requires tailored solutions. It is in this spirit, therefore, that CATA finds it fit to work closely with international organisations dealing in the area of tax administration and tax policy”.

Oduru argued that the “majority of Commonwealth countries are emerging economies with tax administrations grappling with varied challenges. The Small Island Developing States (SIDS), for example, have been disproportionately exposed to the myriad of global crises in the recent past’’.

“The traditional sources such as revenue from financial services (hosting international financial centres) are facing additional scrutiny and may as well be an onerous fete under the current dispensation where increased reporting requirements are needed”.

He admitted: “Some countries are struggling to implement some of these standards on transparency-just to shake off the perception of being considered tax havens where unscrupulous individuals and entities run their tax evasion schemes”.

Oduru said several countries had put in place well-intentioned policy instruments like tax incentives to enhance their competitiveness for Foreign Direct Investment (FDI). He, however, warned that some these incentives “may run afoul of the ‘anti-tax competition’ rules currently being formulated under the OECD/Inclusive Framework”.

Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, restated Nigeria’s position on some international tax issues.

Nigeria, she said, “has remained in the fore-front of the global efforts at finding equitable and lasting solutions to international tax issues, including the long-standing issue of imbalance in the allocation of taxing rights between source and resident jurisdictions’’.

She wants attention paid to information asymmetry between multinational enterprises and tax authorities in developing countries; the issue of base erosion and profit shifting (BEPS); and tax challenges of the digitalised economy.

According to Mrs Ahmed, “over the past few years, the Nigerian government has committed huge monetary and human resources to champion the cause of developing countries. It is important for CATA and similar organisations to blend their voices with ours to insist that skewed international tax rules be straightened for the good of all”.

She argued: “The tax administrations of most developing countries are based on manual processes. In these tax administrations, ICT function is limited to provision of hardware and basic software in support capacity.’’

She added: “Automation, large data, artificial intelligence and machine learning capabilities are central to effective tax administration.  Such capabilities will enable tax authorities to do e-invoicing, pre-populate tax returns, carry out automated tax risk profiling, etc.”

Mrs Ahmed told the international community: “The international tax rules are skewed against source countries, particularly developing countries. Painfully, the skewness in the current international tax rules is again influencing the two-pillar solution of the Inclusive Framework.”

Mrs Ahmed lamented that ‘Amount A’ “profit meant for market jurisdictions was progressively being chipped away in favour of jurisdictions where the multinationals are resident”.

Another example of skewness of the ‘Amount A’ rules, she pointed out, “is the requirement for jurisdictions to surrender domestic tax disputes to mandatory and binding ruling of an arbitration panel composed and sitting outside the legal system of the respective jurisdictions”.

She insisted: “Taxation is a matter of domestic law; disputes arising from the interpretation of domestic legislation should only be resolved within those domestic legislations and by people properly schooled to interpret them.”

According to Mrs Ahmed, “the discussion to change the rules must start now; the world must rework the profit allocation rules used for transfer pricing and the sharing of taxing rights by tax treaty partners.  Nigeria is of the view that CATA is that organisation that is best placed to start this dialogue”.

Giving the dynamics of modern taxation especially the taxation of multinationals, Mrs Ahmed  called on tax administrations to “upscale the skills of their employees so that they can effectively and efficiently handle emerging tax issues.  As such, tax officers must be trained and retrained on tax technicalities (including the new international tax rules) and the social effects of taxation”.

Another area of concern to Nigeria in international tax matters is the emerging trend occasioned by the digital era is remote-working (an individual resident in one country working remotely for an entity resident in another country).

According to Mrs Ahmed, “the fire of remote-working was given vent to by the lockdowns of COVID-19. This is raising many questions such as tax residency, employment tax, tax nexus for the company and possibility of other local taxes”.

Mrs Ahmed noted: “The digital era is quite exciting considering the possibilities-exotic products, efficiency, remote-working, etc.  However, in them are embedded the tax challenges e.g. problems associated with identifying, tracking and accessing taxable transactions, income or persons. Extant rules are based on physical presence which render them inapplicable in the digital era”.

She appealed to Commonwealth countries to “cast aside their differences or individual self-interest to develop workable, simple and fair solution. Nigeria is committed to working with other jurisdictions and international bodies to achieve a win-win solution”.

“The ‘Amount A’ proposal being developed by the Inclusive Framework is not achieving consensus because it is founded on win-lose principles.  Only rules that promote a win-win situation can achieve the support of all” she told the audience.

Dr. Mohd Nizom Sairi of CATA stated: “The changes brought about by digitalisation are here to stay. With digitalisation in place, nations will be better able to plug leakages, especially those caused by the informal sectors, the shadow economy as well as the sharing and gig economy.”

The tested methods of yesteryears, he said, “no longer hold water, and we must explore new ways of bringing these informal activities into the tax net, as we seek to be equitable and fair in our implementation of tax laws. We must be seen to be fair to compliant taxpayers by taking action on those who fail to carry out their tax duties. Digitalisation can be one such mode to expedite this notion of building a fair and equitable tax system.”

Taiwo  Oyedele, Africa Tax and Fiscal Policy leader, Pricewaterhousecoopers (PWC), urged tax administrators to “design a clear strategy; connect to stakeholders and come up with taxpayer- centric solutions and data-driven decisions’’.

 

Countries’ experience:

Commissioner, IT and Innovation, Uganda Revenue Authority, Mr. Robert Mutebi, said in his country, 50 per cent of the country’s Gross Domestic Product (GDP) is from the informal sector, which in turn, employs 80 per cent of the economy. A major challenge facing the tax authorities in Uganda, he added, “is bringing them into the tax bracket as Uganda is struggling to raise its tax to GDP ratio”.

He identified key strategic success drivers of digitalisation in the informal sector in Uganda to be automation; mobile device optimisation; customer experience centering; ecosystem, thinking to win the Wallet Share Competition (Ecosystem Engagement). The efficiency of this process is through partnership and Informative Business Data analytics

Director, Large Taxpayer Office, Inland Revenue Board of Malaysia, Mr. Abdul Halim, said the informal sector in Malaysia is 8.3 per cent of the economy, with no official figure of the contribution of the informal sector to the GDP.

The challenges in the informal sector, he said, include activities are not registered with any authority; no physical transaction records and most transactions are done in cash.

Halim outlined how they combat non-compliance through collaboration with external agencies; implementation of e-invoicing; increase in the use of technology and increase in exchange of information.

Commissioner, IT and Digital Transformation, Rwanda Revenue Authority, Mrs. Louise Ingabire Kalisa, said in her country, an “effort was put in place to digitalise government services, including taxation more than two decades ago. This was done in phases of five years.

“They involved high school graduates to teach citizens basic digital skills to increase digital literacy; filing and payment processes have been digitalised since 2011. All taxpayers are, therefore, able to do e-filing and payment using the different payment channels such as banks, mobile wallets; filing was made simple without the use of sophisticated phones; and partnership/collaboration with the private sector,” she added.

Director-General/CEO, National Information Technology Development Agency (NITDA), Kashifu I. Abdullahi, said Nigeria has developed a national data strategy focused on data security, which has resulted to enhanced cooperation; increased accountability; safe guarding privacy, data protection (Digital Economy Bill is being worked on); reform governance and to protect democracy-by assisting MDAs in cyber security, transparency in revenue generation.

Team Leader, Fiscal Investigations Department, Mauritius Revenue Authority, Mr. Lodassen Kisten, said in his country, taxpayer confidentiality is fundamental to tax administration, while basic principles of data protection must be adhered to.

He said: “There is regular review of processes and procedures; rigorous access control policy to prevent unauthorised access to contents and the MRA collects, exchanges and manages data in line with best practices and law.”

On legislative framework, provisions to uphold confidentiality and secrecy of taxpayers information, sanctions, Kisten highlighted the following practices: revenue laws in Mauritius provides for confidentiality and secrecy of taxpayers; officers are required to maintain confidentiality during and after their period of service; officers take oath of fidelity and secrecy, treat customers information private and collect only the one needed.

Ashish Abrol from India stated: “With the buy-in of the political leadership a faceless and contactless system was created for audit, penalty and first appeal in India. Assessment is done through data analytics and artificial intelligence. The entire process of assessment, verification, review and pre-audit is unbundled”.

India, he said, has eliminated physical meeting between taxpayers and officers. They have team based assessment and review, dynamic jurisdiction, automated random allocation of cases, functional specialisation, they have established a national center which supervises the regional, technical, verification and review units.

The change management initiatives undertaken by India to manage the process include: extensive structured feedback from field officers at each level; re-organisation of hierarchy; elimination of unnecessary approvals in workflow; created anonymous inter-unit communication; allocation of complex cases based on experience/competency, extant and new grievance mechanism in place and established a national centre which supervises the regional, technical, verification and review units.

CATA signed an Memorandum of Understanding (MoU) with ATAF and WATAF. The MoU is about sharing and exchanging data and information that would, ultimately, deepen tax compliance globally and consequently bring global economic prosperity.

For industry operators and stakeholders, one sure way to grow the economy, create jobs and boost the manufacturing sector’s contribution to government revenue is to ensure strict compliance with Executive Orders 003 and 005, which seek to grow domestic production through patronage of locally produced goods and services. Sadly, however, the implementation of the executive orders is being observed in the breach by government and its agencies. This has prompted renewed agitation by real sector operators. They are now calling for more punitive measures to force compliance in order to boost the economy’s competitiveness in the emerging continental market, Assistant Editor CHIKODI OKEREOCHA reports

If anything will add fillip to the persistent push by real sector operators, particularly manufacturers, for increased competitiveness in local and global market, it will most likely be a drastic cut down on Nigerians’ insatiable appetite for imported goods and services at the detriment of locally produced ones.

This is so because the consensus of industry operators and stakeholders including development experts is that greater patronage of made-in-Nigeria products and services is the tonic to boosting the industrial sector’s competitiveness, resulting in increased revenue to government through taxes, job creation and reduction in capital flight, among other obvious benefits.

The connection between increased patronage of local products and services and boosting the performance of Nigerian manufacturing companies and other businesses for increased contribution to national output and increased employment opportunities was obviously not lost on the government.

Accordingly, the Federal Government, via Executive Order 003, mandated all government establishments to make Nigerian manufactured goods first choice in public procurement processes. The Order, which was issued on May 18, 2017, was signed by Vice President, Prof. Yemi Osinbajo, then acting president, to promote patronage of local products.

The Order compelled Ministries, Departments and Agencies (MDAs) to channel at least 40 per cent of their procurement to locally-made goods and services. “All Ministries, Departments and Agencies (MDAs) of the Federal Government of Nigeria (FGN) shall grant preference to local manufacturers of goods and service providers in their procurement of goods and services,” it said.

It added: “Any document issued by any MDA for the solicitation of offers, bids, proposals or quotations for the supply or provision of goods and services (Solicitation Document), in accordance with (1) above, shall expressly indicate the preference to be granted to domestic manufacturers, contractors and service providers and the information required to establish the eligibility of a bid for such preference.”

The Executive Order 003 also said “All Solicitation Documents shall require bidders or potential manufacturers, suppliers, contractors and consultants to provide a verifiable statement on the local content of the goods or services to be provided. Made-in-Nigeria products shall be given preference in the procurement of the following items and at least 40 per cent of the procurement expenditure on these items in all MDAs of the Federal Government of Nigeria (FGN) shall be locally manufactured goods or local service providers.”

The items included uniforms and footwear; food and beverages; furniture & fittings; stationery; motor vehicles; pharmaceuticals; construction materials; and Information and Communication Technology (ICT).

The policy also stipulated that within 90 days of the date of this Order, the heads of all MDAs shall assess the monitoring, enforcement, implementation, and compliance with this Executive Order and local content stipulations in the Public Procurement Act or any other relevant Act within their agencies.

Heads of MDAs are also to propose policies to ensure that the Federal Government’s procurement of goods and services maximises the use of goods manufactured in Nigeria and services provided by Nigerian citizens doing business as sole proprietors, firms, or companies held wholly by them or in the majority.

Read Also: Industrial revolution plan to boost manufacturing, says Adebayo

Still determined to push immense possibilities into the hands of local operators, this time, those in the Information and Communications Technology (ICT) space, President Muhammadu Buhari also signed the Executive Order 005 (“EO5”) on Friday, February 2, 2018.

The Order directed MDAs of government to engage indigenous professionals in the planning, design and execution of national security projects and maximise in-country capacity in all contracts and transactions with science, engineering and technology components.

The thrust of the EO5 was the recognition of the vital role of science, technology and innovation in national economic development, particularly in the area of promoting Made in Nigeria Goods and Services (“MNGS”).

Strategically, its main objectives were the harnessing of domestic talents and the development of indigenous capacity in science and engineering for the promotion of technological innovation needed to drive national competitiveness, productivity and economic activities which will invariably enhance the achievement of the nation’s development goals across all sectors of the economy.

The two executive orders set the stage for what promised to significantly boost the nation’s industrial sector’s competitiveness. And this was why the policy intervention enjoyed the overwhelming support of manufacturers and other members of the Organised Private Sector (OPS).

For one, it resonated with their age-long advocacy targeted at ensuring that the buy Nigeria policy was enshrined in the procurement policy and processes of both the Federal and State Governments.

The policy also reinforced real sector operators’ consistent argument that government remained the largest single spender in the economy and could drive industrial development and economic growth by increasing its patronage of locally made products. Besides, the push for increased patronage by government at all levels was seen by not a few manufacturers as being in consideration of the prevailing high cost operating environment in Nigeria and the need to keep local manufacturing companies in production, including the need to retain jobs and create new ones.

However, several years down the line, the envisaged benefits of the two executive orders are yet to manifest. Shoddy implementation and lack of political will to force compliance by government agencies have continued to mar the policy, much to the chagrin of local operators.

The patronage of Nigerian manufactured products has failed to improve on the back of the implementation of the executive orders especially Executive Order 003, as government agencies still maintain penchant for foreign products even when local substitutes of similar quality are readily available.

Already, the enthusiasm that greeted the issuance of the executive orders has now been replaced by anger and frustration by manufacturers. This is hardly unexpected considering that manufacturers have over the years been contending with bloated inventory of unsold goods said to have been partly caused by the poor patronage of locally produced goods by Nigerians, especially government agencies, and of course, the weak purchasing power of consumers.

The President of Dangote Group, Alhaji Aliko Dangote, personified the anger of real sector operators especially manufacturers aver the lax enforcement of the executive orders to encourage the patronage of local produced goods when he recently called on the National Assembly to pass a law that would penalise the sale of banned textile materials by imprisoning culprits without any option of fine.

Dangote made the call in Lagos, recently, when he presented a paper titled, “Agenda Setting for Industrializing Nigeria in the Next Decade,” at the Second Adeola Odutola Lecture in commemoration of the 50th Annual General Meeting (AGM) of the Manufacturers Association of Nigeria (MAN).

The visibly angry industrialist, who launched a personal crusade against foreign textile dealers in Nigeria, said unauthorized foreign textile traders should be jailed, insisting that such practices are not tolerated elsewhere and as such should not be tolerated in Nigeria.

While noting that unbridled importation harms the economy, Dangote called on the Federal Government to be more hard-handed with foreigners who trade textile materials in Nigeria.

“For the textile industry, I think the government needs to formulate a law by the National Assembly that will say that anybody selling banned foreign textile must go to prison without an option of fine, even if it is just for two years,” he said.

According to Dangote, who is Africa’s richest man, “The real problem in the textile industry is not basically lack of cheaper power. If you give them cheaper power but allow the smuggling to continue, the textile will not last. What is happening is that foreign companies are using us (Nigeria) as a dumping ground. That is why I do not like to import. Anytime you import, you will be importing poverty and exporting prosperity and job opportunities outside.”

The renowned industrialist said government should apply the same force it mustered to enforce the ban on rice importation in the bid to end smuggling of textiles into Nigeria, adding that, “few decades ago, textiles used to be the largest employer of labour after the Federal Government of Nigeria.”

He also tasked the Federal Government on the conscientious implementation of its policies meant to protect the country’s industrial sector, especially textile manufacturing, without caring who would be offended.

The immediate past President of MAN, Engr. Mansur Ahmed, re-enforced the argument further when he said that for the economy to grow, create jobs and increase contribution to government revenue, the manufacturing sector must be supported to scale production through increased capacity utilisation and adequate patronage.

He, therefore, called on the Federal Government through the Presidential Committee on the Monitoring of the Implementation of Executive Order 005, which seeks to grow domestic production through the patronage of locally produced goods, to rise to the occasion and ensure strict compliance with the order.

Mansur, while noting that the Executive Orders 003 and 005 exemplified the Federal Government’s commitment to grow domestic production through the patronage of locally produced goods, said MDAs that fail to comply with the Executive Orders should be sanctioned.

“It is in this regard that the Presidential Committee on the Monitoring of the Implementation of Executive Order 005 chaired by the President and anchored by the Federal Ministry of Science and Technology should be mandated to ensure strict compliance with the order,” Mansur stated.

The former MAN president, who noted that President Muhamadu Buhari has consistently maintained that Nigerians should consume what they produce and produce what they consume, said the made in Nigeria exhibition organized by MAN in the past four years was, therefore, a demonstration of the Nigerian manufacturing sector’s capacity to produce what they consume.

He, however, said what is left is for government and Nigerians to consume what manufacturers produce. He also assured that manufacturers, on their part, will rise to the occasion and ensure that they build on the existing capacities and continue to improve on the quality and competitiveness of locally produced goods.

Mansur urged members of MAN to take advantage of the opportunities created by the policies of the current administration and the emerging continental market to expand their investments, improve their manufacturing operations and the standard of their products. “This will guarantee our competitiveness and market penetration in Africa and beyond,” he emphasized.

Faced with serious revenue shortfall that has continued to impede the capacity of various tiers of government to meet some of their financial obligations, operators and experts in the agriculture industry say that repositioning palm oil production in Nigeria could be the tonic to significantly boost exports and earn foreign exchange and also create jobs. DANIEL ESSIET reports.

The agro-commodities sector, especially palm oil, is widely credited with having the capacity to lead Nigeria’s rapid economic recovery. Indeed, industry operators and experts who hold this belief allude to the fact that since the 60s, oil palm has been a major industry in Nigeria, contributing immensely to foreign exchange earnings and lifting millions of families out of poverty.

For instance, at a time, Nigeria’s oil palm industry accounted for 35 per cent of national Gross Domestic Product (GDP).  The industry also accounted for 25 per cent of total exports, contributing significant foreign exchange revenue.

The industry was also said to be worth more than $10 billion and impacted upwards of 100 million Nigerians. Apart from generating a multiplicity of jobs for both men and women, it guaranteed a relatively steady income for various operators across its value chain.

Interestingly, the   palm oil industry, globally, is poised for growth over the coming years, driven in large part by surging demand encouraged by its various applications and low cost of product compared to other vegetable oils.

For instance, the global post COVID-19 market size of the palm oil market is expected to grow from $62.30 billion last year to $75.69 billion by 2028, at a common annual growth rate (CAGR) of 3.30 per cent, according to a report by Vantage Market Research.

Now, this sheer size of the global palm oil market, according to industry operators and experts should be a wake-up call for Nigeria to reposition her once vibrant palm oil production industry in order to boost exports and claim a share of this huge market.

This is so because Nigeria’s palm oil supply gap is currently estimated at 1,250,000 metric tonnes. Local demand is put at 3.0 million metric tonnes while local production is 1.28 million metric tonnes.

The Nation learnt that the sector hasn’t been able to stabilise its annual production per year hence, the supply gap, with Nigeria currently spending an average of $500 million importing palm oil to make up for the shortfall annually.

It was against this backdrop that the Agriculture and Rural Development Minister Mohammad Abubakar, in June, tasked stakeholders to reposition Nigeria to its rightful position as top exporter of palm oil.

The minister said that in the early 60s, the agriculture sector was Nigeria’s major source of revenue, but the sector is currently struggling.

He, however, said it is not too late for Nigeria to reposition itself and reclaim its status in the agriculture sector, recalling that Malaysia came to Nigeria some years back, got oil palm seedlings from Nigeria and became number one producers of oil palm in the world.

Abubakar regretted that today, Nigeria is ranked fifth on the list of global palm oil producers, which is worrisome. He, therefore, pledged to work with any organisation to achieve the economic and fiscal diversification policy of the present administration anchored on agriculture.

Stakeholders’ perspectives

Interestingly, the minister’s call has not gone unheeded. For instance, the Chief Executive, Jemas Energy and Construction Limited (Jemas Palmoil), Mr. Jerry Sam Etukapan, has been working with local farmers in Akwa-Ibom, where he buys their oil palm and process to oil.

Etukapan exports and others are integrated into palm oil derivatives including frozen pizzas, chocolate and hazelnut spreads, cookies, and margarine. He, however, said it has been difficult for those involved in growing palm fruit and converting palm fruit into oil.

Palm oil plants, factories and general buyers of crude palm oil purchase crude palm oil from extracting factories. And the extracting factories buy fresh palm at exorbitant prices. Etukapan lamented that those harvesting palm fruits for the farmers are making things difficult for processors and exporters.

Etukapan put the issues and challenges in the business in perspective: “Our palm oil is more expensive than that of countries such as Indonesia and Malaysia. Few days ago, I lost business to Indonesian company because our palm oil was costlier than others.

“After harvesting their palm fruits, they will collect N600 per bunch. It takes 20 bunches to produce 25 litres can of oil. If they collect N600, you will be paying N12, 000 to produce 25 litres can of oil. This makes oil very expensive.”

It is easy to see the implications of this prize difference on the local palm oil industry. Again, Etukapan put it in context: “With this (the prevailing prize structure), we cannot compete with exporters in the international market because they use sophisticated machines that make the process cheaper for them.

“We are using crude methods and ancient machines. Today, we still use those machines that our forefathers were using. The other thing is that the cost of purchasing oil palm processing machines is high. We cannot afford it here. It is one or two companies that have been able to afford such machines in Akwa Ibom.

“If these machines are made available to local farmers, production level will expand and at the end of the day, the oil palm prices will go down. We cannot compete favorably with our counterparts in Indonesia and Malaysia. We should take note of this.”

Taking a bigger stake in palm oil market

Internationally, consumption of oil palm for food and for industrial uses has been on the upsurge. The demand of the product by industries for feed and oleo chemicals has been growing. Oil palm is increasingly used as a feedstock for biodiesel production.

Apart from normal increases in demand for the cheapest form of vegetable oil as the global economy recovers, the global appetite for palm produce is being driven by its new-found health benefits and its growing application as feedstock in biofuels. This is as advanced economies increasingly go green and move away from fossil fuels.

Apparently, these have prompted calls for the Federal Government to embark on a massive oil palm cultivation programme to take advantage of the booming international oil palm market.

Those at the forefront of this call said Nigeria should take advantage of global prices of crude palm oil, uses for cooking oil, that have surged to historic highs this year amid rising demand and weak output from top producers such as Indonesia.

Indonesia is the world’s biggest palm oil producer, but its erratic export policies, including the most recent ban announced on April 22, pushed consumers to look towards Malaysia, the world’s second-largest producer whose output is less than half of its rival.

This has created a big opportunity for Nigeria to explore. Higher purchases by India, the world’s biggest importer of vegetable oil, could support Nigeria’s exports expansion.

Experts are positive that the Federal and State Governments, as well as the private sector, can work with research institutes and universities to produce and use improved seedlings, techniques, and storage to realise optimal output from the 3.0 million hectares of farmland said to be available for palm oil cultivation in the country.

For instance, the National President, Palm Produce Association of Nigeria, Alphonsus Inyang said the industry has the potential to close the domestic demand as well as capacity to produce for export.

He said Nigeria has several thousands of acres with high potential for palm oil development that could be used for cultivation with foreign investors. He said oil palm products made in Nigeria can find ready export markets in the United States and Europe.

As part of effort to revive palm oil production and boost exports, Inyang urged the government and the private sector to plant one million oil palm trees in four years. He also wants policymakers and business actors to discuss how to ensure Nigeria plays a big role in global oil palm supply to meet demand for edible oils.

Read Also: ‘Palm oil value chain best in Nigeria’

In doing so, one of the issues that will engage the attention of policymakers and business actors is perhaps, the traceability for much of the palm oil produced in the rural areas, as larger companies depend on middlemen to source palm oil fruit in the rural areas.

There is also the issue of ease of doing business in Nigeria. “The ease of doing business is not there,” Etukapan pointed out, accusing the Standards Organisation of Nigeria (SON) and the National Agency for Food, Drug Administration and Control (NAFDAC) of making it difficult for entrepreneurs to get certifications.

“Sometimes, it can take you more than three years to have one certification. Before they give you that paper, they will come to your office 10 times, collecting money here and there. At the end of the day, if they don’t collect enough money, they will not release the paper to you.

“When it happens like this, people cannot do oil palm exports. As far as oil exports is concerned, I want to say that the Nigerian Exports Promotion Council (NEPC) is really trying. If other agencies can do like NEPC, we will make a headway.”

A glimmer of hope

There is hope of a rebound of Nigeria’s palm oil industry, following recent global partnerships to deal with shortages of fertiliser and workers, for instance.

The price of fertilisers makes up about 40 per cent of palm oil’s production cost. So far, oil palms in Nigeria have not reached their full potential because of the lack of fertiliser input and farmers cannot get certain types of fertilisers

According to the Chief Executive, Oil Palm Research (NIFOR), Dr. Celestine Ikuenobe, oil palm trees require a steady diet of nutrients and minerals. Malnourished trees produce less, which leads to lower oil extraction rates.

However, to ensure Nigeria’s oil palm production rise beyond two million metric tonnes per annum (MMTA) in the next three years, OCP Fertilisers Nigeria Limited and NIFOR are working on trials for the specialised fertiliser that will increase production by 40 per cent per hectare.

The Nation learnt that researchers at the Institute of Agricultural Research and Training (IAR&T) and NIFOR are testing fertiliser formulation at various agro-ecological situations across oil palm production states.

The Deputy Managing Director, OCP Fertilisers Nigeria Limited, Mr. Caleb Usoh, said the company, in partnership with NIFOR and IAR&T, have conducted a soil mapping survey, to facilitate the development of specialised fertiliser recommendation for oil palm nationwide, so as to address complaints of low yields by farmers.

Ikuenobe, explained that oil palm output has failed to keep pace with rising demand, so millions of dollars on imports have put a strain on state foreign currency reserves. He noted that characterising soils of the oil palm belt has helped to determine limiting nutrients based on new fertiliser formulations tested on farmer’s fields in validation trials across the country.

He noted that the soil test- based application of nutrients would help oil palm farmers to realise higher response ratio and in turn, higher yields.

A rebound in the offing

The President, Federation of Agricultural Commodities Association of Nigeria (FACAN), Dr. Victor Iyama believes that the sector can achieve a lot in increasing domestic and export production of oil palm if the government work with producers to ensure that smallholder communities living in the production belts enjoy higher incomes and a better quality of life, and improved rural infrastructure.

According to him, oil palm offers an opportunity to support rural livelihoods. He said as oil palm industry rapidly expands, so too will the opportunities for the private sector to tap into the demands, particularly with regard to export.

He posited that the projected unprecedented growth in national income will be largely driven by unlocking opportunities in agriculture.

For Etukapan, there is the need for the government to provide the necessary support and an enabling environment to increase the competitiveness of local businesses to meet the demands of the sector.

He noted that while there has been a growing interest in strengthening and intensifying local oil palm production to capture the global market over the years, measures need to be implemented to mitigate the adverse effect of operational volatilities.

Central Bank of Nigeria wades in

The Central Bank of Nigeria (CBN’s) intervention in the oil palm value chain was aimed at increasing production from 1,250,000 metric tonnes to 2,500,000 metric tonnes by 2028, through the cultivation of approximately 350,000 hectares.

The overall policy objective, The Nation learnt, was to meet local demand for palm oil and its derivatives and at the same time improve local processing quality and standards; conserve foreign exchange reserves and create jobs.

It was aimed at enhancing the skills of Nigerians along the oil palm value chain; facilitate easier access to funding for palm oil majors, Small and Medium Enterprises (SMEs), and smallholders in a way that will improve and grow the economy.

According to the CBN, if Nigeria had maintained its market dominance in the palm oil industry, the country would have, today, been earning approximately $20 billion annually from the cultivation and processing of palm oil. That’s about half the 2022 federal budget.

CBN Governor Mr. Godwin Emefiele said over $500,000,000 was being spent annually on the importation of palm oil. He said with the help of the state governments, Nigeria could reach self-sufficiency in palm oil between 2022 and 2024 and ultimately, overtake Thailand and Columbia to become the third-largest producer over the next few years.