The Nation Newspaper

Category: Business

  • Emirates deploys Boeing 777 on Lagos route

    Emirates deploys Boeing 777 on Lagos route

    Emirates Airlines is responding to strong passenger and cargo demand in Nigeria, by upgrading one of its Lagos flights to a Boeing 777-300.

    The Airbus 340-500 deployed on one of Lagos’ two daily flights, EK781, will be replaced with a larger Boeing 777-300ER from December 1, 2012 giving a 48 per cent boost to seat capacity.

    “Deploying a Boeing 777 on the Dubai-Lagos route demonstrates the strong demand from travellers to fly with Emirates and experience our superior products and services,” said Jean Luc Grillet, Senior Vice-President of Commercial Operations for Africa.

    “The aircraft upgrade will open up more seats to our customers travelling to and from Nigeria and further raise Emirates’ contribution to Nigeria’s economy.”

    The aircraft passengers will enjoy Emirates’ award-winning ‘ice’ Digital Widescreen, the industry’s most sophisticated video and audio system, offering 1,400 channels of on-demand entertainment – the largest selection of programming in the sky.

    “With the introduction of this larger aircraft, we will offer over 10,000 seats every week to and from Lagos.This aircraft upgrade will offer travellers from West Africa markets seamless connections to the Indian Subcontinent, East Asia and Australasia, via Emirates Terminal 3 at Dubai International Airport,” Jean Luc added.

    Nigeria has been part of Emirates’ route network since January 2004,when services were launched between Dubai and Lagos with four flights a week. From December 1, this year the Dubai-Lagos service will be operated twice a day by a Boeing 777 aircraft in a three-class configuration that offers 12 luxury First Class seats, 42 seats in Business Class and generous space for 310 passengers in Economy Class.

    The Boeing 777-300ER is the backbone of the Emirates fleet, with 91 in service and a further 72 on order.

    Emirates has a fleet of 189 aircraft and are the world’s largest A380 and Boeing 777 operator, flying to 126 destinations in 74 countries.

  • NHRC summons NAGAFF over invasion

    The National Association of Government Approved Freight Forwarders (NAGAFF) has appeared before the National Human Rights Commission (NHRC) over an allegation that some military personnel invaded its office in Apapa, Lagos.

    Last week, investigations revealed that some NAGAFF members appeared before the NHRC to give information about the alleged invasion of it’s national headquarters at Apapa, Lagos.

    At the commission’s office, NAGAFF, sources said, alleged that some soldiers invaded its headquarters on the orders of a Deputy Comptroller of Customs, who was then in charge of the Customs Intelligence Unit (CIU) at the Tin Can Island Port.

    Sources at the Commission said NAGAFF through its solicitor, Larry Okonkwo, in a letter entitled: “Invasion of NAGAFF Headquarters Lagos by 13 Unknown Soldiers at Instance of a Deputy Comptroller of Customs, Customs Intelligence Unit (CIU) Tincan Island Port, Lagos and Threat of Life of Dr. Boniface and other Officers of NAGAFF,” had petitioned the senior Customs officer over her alleged role in the invasion and subsequent alleged threats to the lives of Aniebonam and other NAGAFF members.

    The Commission said in the invitation letter to NAGAFF, a copy of which was sighted by The Nation, that the request to appear of before the Commission was based on the human rights issue, raised by the NAGAFF’s lawyer.

  • Tackling challenges to stable power supply

    Tackling challenges to stable power supply

    With deteriorating generating capacity and high inefficiencies, the nation’s electricity system (generation, transmission, and distribution) is under stress, requiring urgent measures to ensure that the electricity demand is commensurate with growth, DANIEL ESSIET reports.

    As the economy grows, so is the demand for electricity, which has surpassed the capacity of the current electricity generation levels.

    Across the country, power shortages have become the norm with some areas barely receiving 12 hours of electricity supply. In the wake of massive blackouts, half of the country’s population have been left without power. This is attributed to technical challenges that prevent sufficient volumes of electricity from being delivered to end-users. The challenges span across the entire power system value chain: from insufficient capacity to large losses in the transmission and distribution networks.

     

    NIPP

    Speaking during the commissioning and handling over of some National Independent Power Projects (NIPP) at Ijede, Agbowa, Imota and Ipakado subjection stations in Lagos, the Managing Director of Niger Delta Power Holding Company (NDPHC), owners of Nigerian Independent Power Projects( NIPP), James Olotu said aging power plants, lack of adequate maintenance, and sub-optimal use of fuels in the power plants have reduced the share of the nation’s generating capacity that can actually be delivered to the grid. This reduction combined with the less than optimal operation of power plants have together led to reduction in the capacity of thermal power plants. The challenge with older power plants, according to watchers, is that soon, the aging turbines and components lose efficiency. This leads to a reduction in capacity output.

    Olotu said transmission and distribution of electricity through transmission lines and substations is normally accompanied with “technical losses” in the metallic lines that connect power plants to end-users. There are however, higher losses attributed to lack of rehabilitation of power lines as well as to the inadequacy in the number of substations, which are used to step up and step down voltages across the system.

    He said the distribution system is suffering from high overloads, thefts, and lack of asset and demand side management. Congested transmission paths, or “bottlenecks,” now affect many parts of the grid across the country.

     

    The Challenges

    He said monitoring is used to identify the weak points in the system, regulate power outages, and anticipate electric failures. This he explained, helps to decrease the number of technical losses and facilitates the detection of non-technical losses, consequently increasing the share of electricity produced that is actually delivered to customers. He explained that congested transmission paths affect many parts of the grid across the country.

    To address this challenge, Olotu said the project is providing 966 low voltage, completely self protected (CSP) transformers, which will be connected to the four sub injection stations to provide reliable and safe electricity to consumers. In most of the areas of the country, NIPP is deploying CSP transformers. He said a CSP transformer can protect itself from faults. The CSP technology enables the transformer to protected it from over loading and lightning.

    He said the project is prepared to provide adequate transmission infrastructure to supply reserve margins and operating capacity that are an important part of the national reliability plan.

    Olotu said the project is providing service wires and poles to help the Power Holding Company of Nigeria(PHCN) expand the distribution to meet population and demand growth.

    The NIPP is gradually increasing the total power distribution capacity in Lagos towards lightening up the entire state as well as the adjoining state of Ogun.

    With these developments, he observed that power will be more stable in the covered areas in the states, there would be reduction in low current, load shedding, and improvement in the quality of power base and distribution along with its multiplier effects on other strata of life and the economy.

    The NDPHC boss also pointed out that the issue of gas supply had become very challenging though it was being addressed from the highest quarter.

    Olotu insisted that these were parts of the challenges and NDPHC was dealing with now in order to deliver to the nation the required quantity of power in the nearest future. Noting that Nigeria was a growing nation with the current population of 160 million people and a growing economy, he said power generation, transmission and distribution are projects that will continue to receive attention and will be improved upon.

    To improve power supply in the country, Niger Delta Power Holding Company (NDPHC) said it will continue to commission new projects every month across the country until the end of this year. He assured Nigerians that Omotosho Power Plant Phase ll is ready to contribute additional 500 megawatts to the national grid by December. Olotu said Unit 3 out of the four units in Omotosho is ready contributing about 375 megawatts into the national grid while the last unit would come on stream by December to make 500 megawatts.

    He said on-going successes recorded in the NIPP power project was in line with the transformation and power sector reform agenda of President Goodluck Jonathan administration.“I have been assured by the contractor handling the projects that the 500 mega watts will be available by December to the national grid. At present, three units, which are 1, 2, and 3 are generating about 375 mega watts are on the grid, while the last unit 4 would come on stream by December,’’ he said.

    The NDPHC, however, expressed satisfaction on the total level of commitment of the contractors handling the ongoing-NIPP projects in Omotosho.

    He said that with the level of work in all NIPP projects, the country is expected to get about 1, 500 megawatts from NIPP to contribute to the national grid by December, which is subject to available of gas.

    Olotu said that some units are not working due to non-availability of gas, adding that they have been assured availability of gas by NGC.

    The NIPP boss said that about 300 million standard cubic feet of gas has been promised by NGC to be available to the power plants by December, which he said will go a long way to boost Omotosho power plants generation.

    It will also be recalled that last the week about 1,214 self protected transformers had been handed over to the management of both Eko and Ikeja Electricity Distribution Company by the NDPHC for effective power supply in Lagos.

    A breakdown of the commissioned transformers revealed that Ikeja Electricity Distribution Company got the lion share of 966 while EkoElectricity Distribution Company received 248.

    Olotu, who participated at the event held in Lagos said that about22,500 of such micro transformers will be commissioned before theend of this year across the country to boost power delivery and reducetechnical power loss.

    The NDPHC boss, who declined to name the cost of the project, said it is a nine in one contract spread throughout the nation .He added that three of such projects have been completed in the country. He said that the transfer, which was designed to eliminate technical loss of power during transmission and distribution to end users waspart of government gesture of adding value to the privatisation of thepower sector.

    The Chief Executive officer of Eko Distribution Company of NigeriaEngineer Oladele Amuda, who spoke while participating at the ceremony in Mushin suburb of Lagos where 248 transformers was located,commended President Goodluck Jonathan, Vice-President Nmadi Sambo, the Management of Niger Delta Holding Company and the contractors for the completion of the Project that will reduce technical loss as well boost power delivery to end users in the area.

    The Chief Executive Officer, Ikeja Distribution Company, Chris Akamnonu, who spoke at the ceremony at Ikorodu suburb ofLagos where 966 transformers was installed, also commended Federalgovernment for taking the bold initiative of reducing technical lossand boosting of power delivery to the end users in the area.

    The Management of NDPHC handed over two drums ofservice wires for power distribution to Management of Ikeja Distribution firm for distribution of power to end users.

     

    Conclusion

    For followers of events in the energy sector, the crisis in the region adds urgency to the timeframe for transitioning to a more sustainable energy future. Also, because energy infrastructure tend to have a life-span of at least a half a century, the government need to develop alternative energy sources — along with production and distribution systems — at a scale that serves millions of people every day, in perpetuity.

    The nation is woefully under-spending on research to support renewable energy and a sustainable energy future. Since the roadmap is needed to address the daunting energy challenges of the 21st century, programmes should be designed to solve basic energy research problem, support transformational energy technologies and businesses, and develop cross-cutting centres of energy excellence focused on moving technologies from the concept to commercialisation phase. As the year draws to an end, expectations are high from electricity consumers.

    Recently, Vice-President, Namadi Sambo ordered the speedy evacuation of power generated from the various power stations to ensure constant electricity supply across the country. He commended the current 4,200mw of electricity being generated by power plants in the country.

  • Ogun reworks its land administration

    Ogun reworks its land administration

    The Ogun State Judicial Commission of Inquiry into Land Allocations, Acquisitions, Sales and Concession of Government Properties and Administration of Land Policies, Rules and Regulations was set up for a purpose—to correct the perceived wrongs done to certain people and communities whose land were forcefully acquired between January 2004 and May 29, last year, OKWY IROEGBU-CHIKEZIE reports

    The Ogun State Government has liberalised land acquisition and documentation. This is a fall-out of the judicial commission of enquiry set up on September 16, 2011 by  Governor Ibikunle Amosun.

    The committee had, as part of its mandate, to inquire into allocations of state land between January 2004 and May 29, 2011. It also had to identify whether such allocations involved breaches of policies, guidelines, rules, regulations or procedures resulting in non-payment or underpayment of appropriate fees.

    Others were: to establish loss of revenue to the state; multiple allocation of prime land to any person or group of persons; loss of opportunity to the state for industrial, commercial and agricultural development or any other situation, which in the opinion of the commission, was not in the public interest.

    Besides, it was also mandated to inquire into the structures, systems, methods, policies and procedures of land administration in Ogun State between January 2004 and May 29, 2011 to determine the adequacy, conformity with best practices and transparency of the systems, methods, policies and procedures as well as identifying instances of impropriety in land allocation and acquisition.

    Before then, the International Finance Corporation (IFC) had tagged the Ogun 36th among states on the ease of doing business, especially on land acquisition and documentation.

    But  the Special Adviser/Director General, Bureau of Lands and Survey, Mrs Ronke Sokefun, said  the challenge before was not that the bureau didn’t have the required manpower but what they lacked was cohesion between the various agencies, which created the time lag in land document processing.

    She said the government hired a consultant to handle the review and re-engineering to automate the processing of Certificate of Occupancy (C of O), review how various departments interact. She said the bureau has succeeded in generating a work flow of how the papers would move from desk to desk until they get the final signature. This, she said, had not only reduced time but also removed duplication, exploitation, fraud and loss of important land documents of members of members of the public.

    A surveyor, Mr Lukman Kasali,  whose office is in Mowe, Ogun State, confirmed that he has had some reprieve since the land documentation was automated by the state government. He recounted how he used to tip people to push his clients’ files, but noted that there was no longer any need to do that as interaction with members of staff was almost nil.

    He said: “My duty now is just to pay the prescribed fees and submit the necessary files and when it is ready, they will contact me, professionals have never had it so good.”

    Another surveyor, Mr Adeyanju Adelekun, had the same testimony.  He said surveyors were experiencing ease of business due to the automation of the  land bureau.

    On Geographic Information System (GIS), Sokefun said they have information on their border areas as accurate as 50 centimetres while inside the estate is as accurate as 80 centimetres. This, she said, is also geared towards accurate land information processing.

    She said staff members of the Bureau have a schedule of training to make them competent and conversant with the new technology.

    Mrs Sokefun also revealed that the Surveyor-Generals and Deputy Governors of Ogun and Lagos states are meeting on border issues relating to Agbara, Ojodu and Akute among others, to  have an amicable settlement on the contentious borders.

    She refuted claims that the state has taken people’s land from developers on the Mowe, Ibafo, Papalanto along the Lagos/Ibadan Expressway. She, however, contended that the law stipulates that the state government owns any land that is within two kilometres on each side.

    Sokefun regretted that before now, some highly placed people got land on discount at ridiculous prices to the extent that 20 hectares sold for N20 million, which was as good as free without any evidence of payment in several cases.  She regretted a case at hand in Papalanto where there are over ‘40 estates’ by signboards, stressing that most of them are land speculators  and warned that the entire left side of the area falls into the state government’s new towns project.

    On the contentious River View estate in Isheri, she once again denied the rumour that the government has cancelled the allocation but blamed the past administration for allocating the area, which it knew to be a water belt and not fit for habitation.

    She said: “OPIC knew River View estate is a water belt, the water there is meant to flow into Ogun River. The whole deal is a scam. It was never supposed to be an estate but they made it so in 2004.

    He added: “Some experts have suggested that we construct artificial lake to check the flooding challenges in the estate but the truth is that we cannot deep our hands into our lean resources to do channelisation for them.”

    She also refuted the allegation of collecting the balance of N250 million from the N700 million promised by President Goodluck Jonathan.

  • ‘Banigo’s kingship’ll enhance Brass LNG project’

    The inauguration of renowned banker, Ebitimi E. Banigo, as paramount ruler of the Okpoama Kingdom in Bayelsa State, will not only remain topicical for a long time but also quicken the completion of the multi-billion dollar Brass Liquefied Natural Gas (Brass LNG) project.

    Installed as Okpo XXl and the Amanyanabo of Okpoama Kingdom, one of the host communities of Brass LNG project, Banigo, according to industry operators, came at an auspicious time in the life of the project.

    As a boardroom guru and entrepreneur, the operators said he would not only boost the project but will usher in a new lease of life for the people of the Kingdom.

    With him at the inauguration was another key personality that will assist in successful execution of the project, a former Governor of old Rivers State and frontline leader and the paramount ruler of another host community of the project, Twon Brass, Amanyanabo Alfred Diete-Spiff.

    At the event was the Chairman of the Brass LNG Limited, Dr. Jackson Gaius-Obaseki. He expressed joy with the installation of Banigo as monarch, saying as a boardroom player, the monarch would, no doubt, strive to ensure a peaceful environment for business operation, which would be a catalyst to a successful execution of the project.

    Gaius-Obaseki, who is a a former group managing director of the Nigerian National Petroleum Corporation (NNPC), said the visit of President Goodluck Jonathan to the island to witness the installation of King Banigo was a testimony of the commitment of his administration to a successful execution of the project.

    He said Brass Island could be the commercial gateway to Bayelsa State and expressed confidence that when completed, the project would offer job opportunities to hundreds of indigenes of the community and the state.

    The Final Investment Decision (FID) on the two-train, 10 million metric tonnes per year project has been scheduled for the first quarter of next year, which Gaius-Obaseki confirmed at the company’s Eighth Annual General Meeting (AGM) in Abuja.

    The Nigerian National Petroleum Corporation (NNPC) holds 49 per cent equity in the company, and plans to divest about 30 per cent from it out of which five per cent will go to the Bayelsa State Government, while LNG Japan would take four per cent, Itochu Corporation, three per cent, and a joint venture between Nigerian indigenous company Sahara and France-based Sempra Energy would hold two.

    American oil group, Conoco Phillips, which is divesting its interest from Nigeria, French giant – Total and Italian company, Eni, hold 17 per cent stake apiece in the project.

    Under the Shareholders’ Agreement, the NNPC cannot divest its equity in the project until an FID has been taken; and towards the realisation of this (FID), a crucial meeting of the Board was held earlier last week. At the moment, efforts are in top gear to make sure that the FID was realised.

    Earlier, the Chairman of Okpoama Kingdom Council of Chiefs, Chief Wapaobinyo Amade-Obasi, noted that the coronation signals a transformation of the kingdom with its proud heritage into a world class global economy.

    In his address, Banigo pledged to work for the common good of the people. He noted that the kingdom is poised to provide the enabling environment for well-meaning investors to harness its abundant resources with a view to becoming an industrial hub especially in the gas and oil sector.

    King Banigo, who praised the efforts of President Jonathan and governors of flood affected states for alleviating the sufferings of internally displaced persons, also thanked those who contributed to the success of the event.

  •  Akpabio unveils projects

     Akpabio unveils projects

    Akwa Ibom State Governor Godswill Akpabio has changed the skyline of his state  by the number of projects he has delivered since the inception of his administration.

    Speaking at the unveiling of the projects by President Goodluck Jonathan, the governor in a statement signed by his Information Commissioner, Mr Aniekan Umanah, said the latest project is  the new  Governor’s Office, which was  conceived to meet the demands of an ever-changing world.

    ”It is not only ICT compliant; it has all the facilities needed for e governance and contemporary governance. It replaces a building we met, at the inception of this administration, which lacked space for visitors and facilities for the administrative controls  needed in today’s world,” he said.

    On the completion date,  he said though they estimated  18 months but the building was finished in just eight months. According to him, “this is a proof that we are running Government at the speed of light, because we know that time waits for no one’.

    On the pipeline is the  Akwa Ibom State Stadium, which  will be a 30,000 seater stadium with a banquet hall, proximate conveniences for all spectators, restaurants on each floor including other amenities. It is planned to meet global standard in stadium architecture.

    On why his administration is investing in sports, he said the global sports industry is four times larger than the automobile manufac-turing industry, and seven times larger than the film industry.

    According to him, despite a global economic slowdown, a study by Price Waterhouse Coopers predicts a revenue growth rate of 3.7 per cent ($145.3 billion) for the sports industry by 2015 and the state intends to be part of this action.

    The governor  recalled  that the state government  took up the construction of the Ikot Ekpene-Aba Federal Road and the Ikot Ekpene – Itu-Odukpani-Calabar Federal Road  to maximise the Deep Sea Port and the Ibom International Airport, which has facilities for cargo flights.

    Responding President Goodluck Jonathan,  who was the special guest on the occasion, asked other governors to learn from Akpabio  in his infrastructure devlopment  in the state. He said: “In coming to inauguration of the new Governor’s Office, Uyo, and laying the foundation stone of the 30,000-seater Akwa Ibom State Stadium, we celebrate the exemplary leadership and patriotism of Governor Godswill Obot Akpabio of Akwa Ibom State. He has shown us what we can achieve, when we seek pragmatic solutions to our national problems.”

    He also said:  I am not here because this edifice is beautiful; I am here because the principle of democratic accountability is thriving here in Akwa Ibom State. It was this principle, which, apparently, led the Akwa Ibom State Government to partner with the Federal Government and to tar some of the Federal roads in its territory for the benefit of Nigerians and to save the lives of Nigerians. What is morally right, cannot be politically wrong.”

    He confirmed Federal Govern-ment’s readiness to partner with the state  as co-investors in the Akwa Ibom State funded Maintenance, Repair and Overhaul (MRO) facility at the Ibom International Airport, and to turn it into a National Hanger.

    The character of the stadium,  according to the statement, is created by its unique physical appearance that will be enclosed by a white triangular shaped out skin that wraps around the entire stands area made of acrylic glass.

    The main criteria of the stadium concept he said are classic multi-purpose stadium layout with running tracks, two-tiered seating arrangement excellent viewing conditions, arena with football pitch and eight-lane 400-metre standard track including complete athletic facilities in the segment of the field and access system of the tiers with “Vomitories”, among others.

    The Information Commissioner also revealed that the governor’s office has, among others, the governor’s conference hall, courtesy call room lounge, multimedia studio Executive Council chambers with video conferencing facilities, among others.

  • Lasaco is first ISO-certified underwriter

    Lasaco is first ISO-certified underwriter

    • Posts N2.7b premium income

    Lasaco Assurance Plc has set a record by becoming the first insurance firm in the country to get the International ISO 9001:2008 Quality Management System Certification issued by the Standards Organisation of Nigeria (SON).

    Its Chairman, Edward Akin Leigh, at the certificate presentation in Lagos, said the company started the process in 2010, adding that in the past 18 months, the company’s staff, branch network, business processes procedures and practices, reports and reporting standards, quality policy and management, have been subjected to world class rigorous checks, analyses and various audits both internally and by SON’s audits teams.

    He noted that the certification conferred on the firm a unique competitive advantage and position-of-strength as it pursues growth and profitability.

    SON’s Director-General, Joseph Odomodu, said getting ISO certification was the only thing that could change business practice, adding that the more companies are certified, the better would be the economy.

    He noted that SON has decided that even the small and medium enterprises should benefit from being certified to boost their operations.

    He said: “It is more interesting that insurance companies are getting certified and I really want to congratulate Lasaco for being a premier among others. Their certification indicates that we are coming up. Other insurance companies should follow the step of Lasaco for with the certification, the company’s result would soon begin to show that something has changed, for the system is structured in such a way that it would help them to offer better services and once that happens, people would flock to where better results are being posted. ISO certification is simply ensuring that things are done properly.”

    The Managing Director Olusola Ladipo-Ajayi, said the company would live up to expectation, to enable it to retain the certification, adding that the company decided to raise the standard in the industry by applying for the certification.

    He noted that the company is repositioning to remain atop in special risks, adding that the firm led a consortium last year to underwrite Nigerian satellite, an achievement which was uncommon.

    He said: “What we are trying to do is to carve a niche for ourselves in the special risks, without losing sight of the everyday insurance. Special risks are the type of risks that are denominated in dollars. They are international business; they give you a window into the international realm of insurance. You have an idea of best international practices. The major problems that Nigerian insurers face does not exist in special risk and that is to ensure prompt payment of premium.

    “In special risk, underwriters are empowered, and have the enabling environment to meet their obligations. Most of the problems of insurance companies of not being able to pay claims in Nigeria emanates from the fact that the premiums are not paid on time. But when you go to the realms of special risks, premiums are paid quickly; every obligation is met quickly, so when it is your turn, there is no excuse for you to drag your feet.”

    Lasaco’s gross premium income for last year stood at N2.7 billion as against N2.1 billion in 2010. The profit before tax was N478.91 million as against N249.65 million in 2010 while profit after tax stood at N213 million as against N249 million. The company paid total claims of N157.733 million in the 2011.

  • ‘Mobile apps development can spur economic growth’

    ‘Mobile apps development can spur economic growth’

    If properly explored, the mobile apps development segment of the Information Communication Technology (ICT) industry can spur growth in the economy by creating jobs and boosting the growth of the nation’s Gross Domestic Product (GDP), Bayo Puddicombe, the Chief Executive Officer (CEO), Pledge 51, an application developing firm, has said.

    Puddicombe, whose mobile application, Danfo, is running on Nokia 40 series, spoke with The Nation in Lagos.

    He said there is a huge market for mobile applications not only in Nigeria but Africa, adding that because the continent has been underdeveloped for so long, mobile technology represents the possibility of bridging the digital divide by making information, entertainment and productivity tools accessible to the ordinary man on the street.

    Mobile application development is the process by which application software is developed for low-power handheld devices, such as personal digital assistants, enterprise digital assistants or mobile phones which can be pre-installed on phones during manufacture, downloaded by customers from various mobile software distribution platforms, or delivered as web applications using server-side or client-side processing, such as JavaScript, to provide an “application-like” experience within a Web browser.

    “Though there are a number of people doing great things in the field of mobile applications development, but I don’t think we have come close to hitting a critical mass just yet. There is still a tremendous opportunity and it is in our best interests to encourage more young people to consider this opportunity.

    “Mobile application development is one of the many answers to youth unemployment facing our nation today. The barriers to entry for an aspiring developer are relatively low. If well harnessed, this can be transformed into a huge industry with significant potential for growth. When critically analysed, the major resources required to develop mobile applications are your mind, a half decent computer and maybe internet access,” he said.

     

     

     

  • ‘Nothing wrong in borrowing’

    ‘Nothing wrong in borrowing’

    At the last count, eight states Lagos, Edo, Ekiti, Imo, Yobe, Kwara, Bayelsa and Delta, had borrowed from the capital market to fund some infrastructural projects, raising fears about the sustainability of their debts. But the Director-General, Debt Management Office (DMO), Dr Abraham Nwankwo, says there is nothing wrong in states or the Federal Government borrowing, as long as it is within acceptable limits.He spoke to with Group Business Editor AYODELE AMINU on a wide range of issues on the sidelines of the World Bank/International Monetary Fund (IMF) annual meeting in Tokyo, Japan. Excerpts:

     

    Some states have gone to the capital market to borrow. Given that most of them have low internally generated revenue (IGR) and rely on federal allocation and oil, can they sustain these debts if something happens?

    The issue of borrowing is global. Borrowing is for regions, countries both developed and undeveloped. It is for states, provinces and households. So, first of all, let me make it clear that it is specifically wrong, politically and methodically to single out states and start talking about states borrowing or not borrowing. We have to say that whether as an individual, family, school, organisation, company or country, you have to borrow responsibly. So, let me make it clear that there is nothing that makes borrowing by a state sinful in itself. Every economic agent should borrow responsibly. In the case of Nigeria, of course states borrow within acceptable limits .There are rules and guidelines and states follow those rules and guidelines. First of all, no state in Nigeria can borrow from the capital market without following the process of borrowing from the capital market.There are guidelines that apply to every government entity that wants to borrow from the capital market and those rules have been there and are still there and they are being enforced by Securities and Exchange Commission (SEC) through the investment and security Act as amended. There are terms and condition for any entity whether private or public that wants to borrow from the capital market. So, it is for SEC to ensure they monitor states or make sure that whoever wants to borrow comply with the various specifications in the investment and security act 2007. Hence, the procedures, which private companies that wants to borrow from the capital market undergo is the same with that of the states in the hands of SEC.

    Secondly, in the case of states because they are government’s entities and sub-nationals, they have additional regulations and monitoring guiding them as contained in the fiscal responsibility law in the debt management office Act. And based on the authority given to the DMO and the authority given to the minister of finance in the Fiscal Responsibility Act, states are also enforced to comply with additional requirements beyond what is already provided in the Investment and Security Act. So, linking states’ability to service their debts with their Internally Generated Revenue (IGR), of course, is the prudent thing to do and that is what is being done. That is why the guidelines allows no state to borrow in such a manner that its total debt service on a monthly basis is more than 40 per cent of its monthly allocation from Federal Allocation. What is taken into account is the fact that the money is essentially oil revenue. So, as a state, it is expected that your total debt service should not be more than 40 per cent of Federal Allocation money. This means that the idea of sustainability of oil revenue has already been factored in. Everybody must realise that it has been taken into account that oil revenue is volatile and unstable. What this means is that for states that already have internal generated revenue now have a buffer. The rule has been made such that every state must depend not 100 per cent on oil revenue. This is to account for the volatility and vulnerability of oil revenue. So, if you have internally generated revenue, it is being neglected and considered as a back up. The second way to look at it is that every year, DMO conducts a debt sustainability analysis and takes into account that oil revenue may drop to as low as $30 per barrel. It is on this basis that the DMO has an idea of the total debt owed by the country and looks at it and consider what could happen if oil revenue were to drop to as low as $30 per barrel.

    This means the way we manage our debt or control it is such that the vulnerability or volatility of oil revenue is essentially taken care of. The second thing is beyond the figures – that is the value added. This is what I believe every country and states should be focusing on. What value do you generate in terms of productivity, growth and employment with the use of financial resources whether borrowed or not?

    From the guidelines, I can say Nigeria’s method meets the best standard in the world. But in addition, over the past few years, effort is being made so that emphasis is not placed only on the statistics. Emphasis should be on using resources effectively and efficiently so that you can use it to generate maximum growth, employment and eradicate poverty.

    When you look at the discussion going on at the IMF/World Bank meeting, you can discover that all over the world, countries are battling with issues of debt sustainability and the like. But you can say that Nigeria is relatively lucky because even before the global financial crisis started Nigeria has been on path of reform since 2004. We continued on that path of reform up till the time that the global crisis set in and that is why despite the global crisis, the country has not been badly impacted like other parts of the world. Because if Nigeria had not been on the path of reform in 2004, when the crisis set in 2008 up till about 2001, it means that with the turbulence in the oil market it is possible for us to now be experiencing the serious impact too. But go and look at the statistics, we will see that even despite the turbulence our growth still averaged about seven per cent. There are few countries in the world that did better than Nigeria in terms of growth and stability during this turbulent period. The country has been minimally volatile and vulnerable. It continues to maintain stability and growth.

    The lesson to take is that Nigeria is not isolated from the global turmoil but because it has continued to maintain a path of reform its economy is stable. What it means is that we should take advantage of the situation and continue with the ongoing structural reforms by intensify the processes.

    Despite the period of growth and rising price of crude oil that the country is touted to be enjoying, why then are we still borrowing?

    Can you tell me any country in the world that do not borrow? It is like saying that because Mitsubishi is producing and making sales it should not borrow. The economic fact is that for any country or business that is doing well it should be able do what can ensure its expansion and that includes borrowing. It would borrow to build more factories to give it a competitive edge and make it dominate the global market. That is the rule. In the history of the economy of the world, borrowing, I must say, has played a significant part. Developed countries, such as United States, Germany, Japan and China are not left out in the exercise as every economy is looking forward to expanding its business and that means it must seek for fund through borrowing. So, we must not look at borrowing as an absolute thing but relative to something.

    So, is that why Nigeria is embarking on another borrowing come next year?

    Nigeria is not borrowing next year.Borrowing is done on a medium term based on the development project to be executed. That is why there is a budget to help decide how the available resources can be used to execute these projects. We should be praising the government for coming up with this medium term expenditure framework

    How sustainable is the cost of servicing these debts?

    When you talk of debt sustainability it has to do with solvency and liquidity. In fact, that explains why we do debt sustainability analysis every year. It is the duty of the public including the media to get a copy of the report and see whether the solvency and liquidity ratios are okay or not. After looking at, it we must ask ourselves this question; what is the relation between our total debt – both domestic and external with our revenue generation? These two things would lead to liquidity ratio and answer these questions. Every year, we do debt sustainability analysis, which includes solvency and liquidity ratios.

    So, if we are not going to service our debt, then it means we won’t borrow. Nigeria borrows at fixed rate and that makes it easy to service our debt. Once we go to the bond market, we borrow at fixed rate. So, upfront you know how much you are going to pay because it is fixed. You don’t borrow free. Even for external loan, where borrowing is done on concessional terms, you still have to pay service charge and commitment fee, which is very low. But it is these combinations that make it possible to know if you can service your debt. But the issue is, do we have the framework for managing our debt?

    But it appears the private sector is being crowded out?

    What do you mean by crowding out of the private sector? Crowding out means you have a market where private sector is borrowing and the government too is borrowing. Before now, in Nigeria, there was no bond market, it is the government that tried to develop the market. So, there is no justification for accusing the government of crowding out the private sector when in actual fact the bond market was not in existence until the government started it. There was no way a three- or 10-year loan could be got before now until the government created the bond market, which has made it possible to get a 20-year money from the market. It is wrong and mischievous to say that the government crowded out the private sector when in actual fact there was no bond market until the government developed it.The government is retreating by reducing its borrowing from the market since the past three years if one looks at the statistics.

    But it seems that the objective for which the borrowing is done hasn’t been realised going by the fact that the projects are not feasible on the ground?

    We don’t have to make conclusions if we have not done our investigations on this. If your revenue is less than your expenditure, then you have to borrow.That is why there is a budget. But before the budget gets approved, stakeholders including the media and civil society organisations are called together to look at it. After then, it goes to the National Assembly which considers the Appropriation bill before making it an Act. They would have looked into the budget to see the expenditure and the revenue before taking action on whether to approve or not. At the end of the day, why would anybody say there are no feasible projects if the budget contains the expenditure both capital and recurrent? And the same budget tells you the difference between the two to decide how much to borrow. You can’t come back and say, you don’t know where the bond money goes to.

    But there is always a contention between the National Assembly and Executive on the execution of projects for capital expenditures. So, why do we have 50 per cent implementation of the budget?

    I know you are aware that in certain years the money meant for capital expenditures were returned. Every year, we know that every penny allocated for capital expenditures, which was not spent is returned to the treasury. If you are not able to spend, you should be able to account for what you did not spend. Secondly, on the issue of capital budget implementation, Nigeria needs to improve on it and that is why measures are being put in place to make this possible. Last year, for instance, I am aware that all Ministries Departments and Agencies (MDAs) were tasked to start execution of projects in advance to make a significant implementation of the budget feasible. They were told not to wait until the funds were available. This is to encourage them to make preparations so that when the fund is made available, they can commence the implementation straight off. There are corrective measures that have been put in place to ensure that there is higher implementation of the budget.

    Secondly, we must realise that the budgetary process is not completed until some months into the year, sometimes up till April. So, when you are talking of budget implementation in Nigeria, it is done for nine months and not 12 months as expected. That is why this year, the1 government is committed to working with the National Assembly to ensure the process is completed on time so that the implementation can start in January of the New Year.

    If the budget is not fully implemented after borrowing by the government, don’t you think this could have consequence?

    I think there is no linkage. Of course, when you borrow there is a cost on doing so. Each year, you also look at the revenue generated and expenditure to be made even without borrowing at all. If what is expended is not up to what is set aside for projects, would it not be returned to be used the next year? I must say that borrowing is the way of helping you to boost your cash flow.

    Shouldn’t we have a penalty for non-implementation of budget, especially by the MDAs?

    I would not answer you either yes or no because it is not as simple as you think. But you can come up with that proposal so that Nigerians can look at it and decide whether it is good for them or not.

     

  • CBN begins phased execution of ‘Guide to Bank Charges’

    CBN begins phased execution of ‘Guide to Bank Charges’

    The Central Bank of Nigerian (CBN) has begun a phased implementation of ‘Guide to Bank Charges’.

    The guideline is meant to protect bank customers’interest in their dealing with lenders, The Nation has learnt.

    Last week’s lifting of N100 transaction fee on other banks’Automated Teller Machines (ATMs) by the Bankers’Committee was seen as an initial test for the guideline, which is at its final stage of approval, a top executive in one of the commercial banks said.

    The apex bank had last Tuesday agreed to stop ATM charges.The agreement was the highpoint of a meeting between the Bankers Committee made up of Chief Executive Officers of Deposit Money Banks, directors and top officials of the CBN and NDIC. Before now, account holders paid N100 per withdrawal through ATMs.

    The source said the guideline was meant to address complaints arising from bank tariffs and other miscellaneous fees charged by banks on their customers’ accounts.

    He said the review was, among critical issues, discussed during the last Bankers’ Committee meeting in Abuja. He said the review was at ‘advanced stage’ and that the apex bank was working on harmonising all areas to bring the review to completion.

    He said the exercise was of efforts to reduce the cost of banking and financial services on customers.

    In a statement the CBN said such complaints arising from high bank tariffs could threaten confidence in the banking system. It said in reviewing and updating the document on the charges, the CBN will be guided by, among other factors, financial inclusion, with emphasis on consumer protection, unit cost of banks, and contemporary developments in Nigeria’s banking industry.

    The banking watchdog said the guideline, which was issued to the industry several years ago, is being reviewed to protect bank customers’interest.

    It lamented the practices in some banks, where products and services are deployed at exorbitant costs to the customers, saying that the high costs have helped in discouraging many people from assessing financial services.

    According to the apex bank, commercial and other banks need to be key partners in its drive for financial inclusion, even if for reasons of enlightened self-interest.

    In this context, there is a need to take a different approach to bank charges and fees to customers.