Category: THE CEO

Chartered Institute of Stockbrokers (CIS) outgoing president and Magnartis Finance & Investments Limited Managing Director Mr Oluwaseyi Abe is an accomplished investment banker with over 20 years’ experience. In this interview with Capital Market Editor Taofik Salako, Abe speaks on the investment environment, the economy and his stewardship, among other issues.

IN the light of recent high-profile infractions in the market, what regulatory and enforcement frameworks have been put in place by the Chartered Institute of Stockbrokers (CIS) as a Self-Regulatory Organisation (SRO) to checkmate abuses and ensure professional integrity?

We have our disciplinary processes that ensure proper handling of complaints and enforcement actions against any erring member. Our processes are robust enough and provide opportunities for all parties to seek redress through transparent disclosures and fair hearing. You must have heard of cases decided in the past by the disciplinary committee of the institute. Our disciplinary framework complements other frameworks that are obtainable on the different platforms across the capital market space. We all have one thing in common; all of us have zero tolerance for infractions because we are obligated to promote and sustain investor confidence.

What will facilitate greater flow of foreign investments into Nigeria?

Foreign investments depend on a lot of things, and all these are what you look at when you are determining the macroeconomic outlook.You know that investors generally – both foreign and domestic – usually look at risks and returns and the risks are basically in the areas of political, legal, monetary management and policy formulation and stability. When you look at our current scenario, we need improved currency regulations, fashioned towards encouraging ease of movement of capital by foreign investors. Our laws on sanctity of contracts must be enforced. We need improved security of lives and properties. We also need workable fiscal and monetary policies to provide the much-needed enabling environment for local and foreign investors at individual and corporate level. So, you will talk about a basket of policies that cumulatively reduce macroeconomic risks.

What’s your assessment of the outlook for the economy?

The outlook is very bright. All the indices are there, and you would have noted that most assessments favour Nigeria. But there are downside risks, things that must be done to unlock the potential of the economy and, which invariably, if left undone, will continue to stifle growth. First, there is the need to depoliticise policy making and implementation, we must downplay the act of reading political meanings to everything. Let’s put professionalism above personal interest, national interest above regional or ethnic interest and do the right thing because it is good for the economy, rather than for politics. Skill and competencies of every professional must be accorded priority without prejudice to the issue of integrity. These are necessary basic variables that can drive economic growth and development. When you get the basics right, it permeates all the other major decisions.

How do you see the regulatory structure at the capital market, especially with the recent happenings at Securities and Exchange Commission (SEC)?

In my personal opinion, the government should reduce involvement in the affairs of our capital market regulators for enhanced independence of these institutions. Capital market regulators, such as SEC, need to be independent of undue influence to play larger roles expected of them in the entire capital market space.

What can be done to encourage companies to list on the stock market?

We must accord priority to investor education with emphasis on the benefits of listing companies on the stock market. Investors must be educated on liquidity generation and risk – return trade-off. Also, there is a need to review listing fees across all platforms to make our stock market attractive and competitive. We must continually create healthy competition among our listed companies through innovative criteria such as corporate governance and shareholder value among others. These will encourage listed companies in the valley of indecision to brace up for outstanding performance. When the listed companies are doing better and the stock market becomes viable linchpin for growth and sustainability, more companies will naturally seek listing. The government can also weigh in with incentives, given that the development of the capital market will rub off positively on the economy.

If you are to offer President Muhammadu Buhari three pieces of advice, what will they be?

I am not a politician. As a technocrat, we have our medium for advising government officials at all levels. President Muhammadu Buhari should weigh the cost-benefit analysis of re-contesting rather than be persuaded by all sorts of people that are clamouring for his re-election for their selfish interest. He should endeavour to live his footprint on the sand of history. There are a lot to still address in the areas of economy and security.

Few Nigerians invest in the capital market  and our savings ratio is one of the lowest in the world. What can we do to improve savings and investments?

There should be more enlightenment on savings and investments. On our part as professionals, we should be encouraged to create more financial products. The government should improve on its financial inclusion activities across all strata of the economy to boost savings. This will have multiplier effects on our activities in the financial market. Savings and investments are bedrocks of national economy growth, and the government should galvanise all stakeholders to tackle this problem of low savings and investments.

With many rules and code, is there any fear of overregulation at the capital market?

Rules and regulations are meant to guide human conduct. We need those rules as the market continues to evolve. We cannot operate optimally in the global space without strengthening our regulations. These rules are designed to protect investor and uphold market integrity in the final analysis.

What’s your opinion on the government debt issue and management, especially the background of the recent uproar on debt level and financing?

It is the sure way to go. We must appreciate that the Federal Government has been able to bring down considerably the cost of local borrowings. This is good for the economy. We expect the government to take advantage of the capital market to finance infrastructure projects. It had been done in the past and such opportunities always abound in the capital market. The market has potential to provide funds for long-term projects.

The primary market segment, especially for public offerings and initial public offerings (IPOs), has been largely inactive, despite the rally at the secondary market. What’s responsible for this?

We cannot shy away from the fact that we are just recovering from recession. Economic growth and development are often moderated by recession. Although recession also has its positive impact as it challenges everyone to wear thinking caps on how to get out of it in a better form. Recession encourages creativity. I am sure we will start to see a lot of tractions in this segment, given the fact that we are out of recession. Our economy is improving generally and this should encourage companies to seek opportunities for growth.

How much influence do you think political risk will have on the performance on the  capital market as we head for the 2019 national elections?

We have not totally overcome the recent challenges that were brought about by recession. We, therefore, need to thread logically and cautiously. Usually, transition years have their effects on the economy. We must focus on recent gains and achievements and protect same and gun for more, despite the inevitable challenges of globalisation. The stability of the political system and national interest should be paramount in the minds of all the political actors. But I think we should weather it pretty good.

You have just concluded your tenure as the President of the Chartered Institute of Stockbrokers (CIS), what are the highpoints of your achievements? What are the challenges and what would have done differently? What are your pieces of advice for your successor?

We have been able to refocus and reposition the institute greatly. We have returned the institute into profitability, though there is room for improvement. We got our council’s approval to confirm Honorary Fellowship on four eminent Nigerians for the first time in the history of the institute. This allowed us to invite prequalified prominent Nigerians to be part of us as stockbrokers under the Honorary Fellowship provision.  At 25, the institute acquired a befitting secretariat at highbrow Ikoyi area of Lagos, this is in spite of our challenging operating environment. We have also commenced the Specialised Professional Certification (SPC), which provides for specialisation and allows professionals to acquire practice licence in a particular area.This is in line with global best practices to encourage specialisation.

We have increased awareness through ”Operation Catch them Young’ by partnering tertiary institutions. We have recorded significant improvements in members’ participation in the institute’s functions, an indication of renewed confidence. We have re-launched the Nigerian Stockbroker Magazine. We have held successful national workshops that received Federal Government’s nod. With all humility, I can say we have done well. Our successes are also predicated on the support from stakeholders. It is a collective effort and I have no doubt that my successor will keep the flag flying.

Where do you see  stockbroking in Nigeria in the medium- to long-term? Relatedly, how will the enlarged scope of CISI bill impact the capital market?

CIS has built an enviable profile as a force to be reckoned with. Quite a lot of people are showing interest in our affairs. Going forward, we are on a better pedestal to play our advocacy roles in the economy. The CISI Bill will unite all players and professionals in the entire financial market by putting everyone under the same monitoring radar. This will enhance cooperation and sanity in the market. With this, there will be a more cohesive regulatory system for all professionals, which should impact positively on the operations of the capital market.

What strategy is being put in place by the market operators to woo back investors into the market?

It is a multi-faceted approach: first, the investors must be educated that our market has recovered, and that current price swings are normal. The Nigerian Stock Exchange (NSE) must fashion out a policy that encourages the licencing of more stockbroking firms to operate in the remote states and towns. Corporate governance at all levels must be significantly enhanced.The government also has a role to play in providing liquidity to stabilise the market. Finally, efforts should be stepped up to revitalise the primary market and promote new listings of local and foreign firms.

CIS at 25. What is the institute’s major request from the administration of President Muhammadu Buhari?

In formulating economic policies, the potential impact on the capital market should be a key consideration. Some of the issues we will also want the administration to give utmost attention to include financing of major infrastructure projects through the capital market, thereby moving from a largely bank-based to a capital market-based financing model. The government must support capacity building initiatives by funding appropriate professional groups such as CIS to carry out the task. The government should provide a buffer stabilisation funding arrangement for the capital market.This can be done through the Asset Management Corporation of Nigeria (AMCON), for instance. The government should also put in place policies aimed at channelling more savings and investments into the capital market. For instance, the government should encourage pension funds, through the National Pension Commission (PENCOM) to invest more in the stock market. It should also provide appropriate incentives and legislation for companies to list, especially those in the major sectors of the economy.

What is your advice to the investing public?

The public should be assured that the  capital market has fully recovered and it is on the path of surpassing our previous high points. Domestic investors should, therefore, take advantage of emerging opportunities. However, investors need quality advice from qualified professionals. The investing public should work with reputable stockbrokers. For the teeming young Nigerians who wish to become finance and investment professionals, the time to take action is now. CIS certifications will open doors of opportunity to you, as they are some of the most attractive in the country, especially now that activities in the capital market are booming once more.

You recently announced scholarship for capital market correspondents to undertake professional studies and possible certifications under the CIS, what informed this?

We believe the press is our partner in progress. It is in pursuance of our institute’s capacity building that the Governing Council endorsed the scholarship. The capital market has evolved over the years and the role of the financial press cannot be underestimated. The market is dynamic and there is a need to empower the press by ensuring that they understand the dynamics of the market to report the market professionally. We believe this will be to the advantage of the market.

National Centre for Agricultural Mechanisation (NCAM) Acting Chief Executive Dr Yomi Kasali says for Nigeria to attain food security, it must improve on agricultural mechanisation. Kasali spoke with DANIEL ESSIET on this and other issues. Excerpts:

What can be done to increase agricultural sector’s contribution to Gross Domestic Product (GDP) and its employment generation?

The agricultural sector has improved tremendously since the advent of this administration. The government has focused on agriculture as one of its cardinal programmes and has treated agriculture as a business.

There has been tremendous increment in productivity due to the various incentives given by the government to farmers. Some years ago, the contribution of agriculture was about 22 per cent, but it has increased significantly now; however, much is still needed to be done to further improve its contribution to the GDP and improve the economy. In the early 1980s, agriculture’s contribution to GDP was about 50 per cent – second to the contribution of the oil sector. To improve agriculture’s contribution to GDP, there is need to improve on the quality of input to the farmers, such as seed, fertiliser and agro chemicals. Secondly, the rural infrastructure needs to be developed and improved to aid in agricultural production. Thirdly, there is need to make credit facilities available and accessible to farmers and at one digit interest rate. Eighty per cent of agricultural productions in the country are from the small holder farmers with holdings less than 2ha; it is, therefore, any credit facility granted above a digit interest rate will have adverse effect on the farmers.

What other steps should be taken to drive agriculture?

There is the need to introduce low- cost machinery to replace the traditional method of farming.This will help to increase production and accelerate the pace of agricultural mechanisation, which will improve timeliness of operation and increase productivity. All these factors are geared towards increasing agricultural produce. When production is increased, there is need for post-harvest infrastructure, which will enhance processing of these products. To earn export value on these products, efforts should be geared towards the training of commercial farmers who are looking towards the exportation of their produce. These farmers need to be trained on export requirements for various crops and how to process these produce to meet the international market. It is also imperative to gear some of our efforts to produce secondary produce by adding value to it in order to earn more foreign exchange. To this end, more agro-processing clusters should be established so that entrepreneurs would be encouraged to process these produce instead of exporting raw produce.

What is the future of agriculture in the country?

The future of agriculture is very bright. Nigeria’s economy had been an agrarian economy before the advent of petrol. The country is tending towards mechanised farming and as such, many youths are now venturing into agriculture. Hitherto, agriculture has been an orphan, but recently, many people from diverse professions have been investing in the agricultural sector. Agriculture is a gold mine waiting to be tapped and many people have now realised this because of the dwindling pricing of petrol. In the developed countries, farmers are the richest set of people, but in Nigeria, a farmer is looked down upon; this scenario is, however, fast changing. In the nearest future, agriculture will be contributing at least 60 per cent to the country’s GDP.

How can the development of large-scale agricultural projects be encouraged?

The government will need to provide an enabling environment that can allow the private sector to operate. To do this, the government needs to enact policies that can encourage inventors in the sector. For large commercial agriculture, the lending rate should be moderated through the Central Bank. The Land Use Act needs to be reviewed; or the various state governments will give preferences to these investors in large scale agriculture to make more land available for them. The government has already enacted policies on importation of agricultural machinery, which is in favour of this group of investors. Most agricultural machinery is duty free. Other issues to be considered are: favourable credit facilities, rural infrastructure development, and rural infrastructure.

How can increased agricultural productivity be encouraged in every state?

Farmers reside in the states; therefore, the state governments need to have profile of their farmers to know the population of their farmers and their locations. The states need to encourage these farmers to form cooperative groups so that they have better capability to access credit facilities. This formation will also allow them to share risk and have a better reach in terms of marketing. States need to also assist in organising a hiring scheme through public-private partnership (PPP). This is what the Federal Government is doing through the Agricultural Equipment Hiring Enterprise (AEHE) programme, which is a PPP where the Federal Ministry of Agriculture sold to private entrepreneurs (service providers) tractors and equipment for hiring to farmers.These entrepreneurs purchased these tractors and machinery on subsidy by depositing 20 per cent while 80 per cent cost is shared by the Federal Government, vendors, and Bank of Agriculture. The service providers were given a moratorium of two years and the loan is to be paid in four years by instalment by the entreprenuer. They are monitored to be sure they are providing the services that they are required to do.

Good quality seeds are out of reach of the majority of farmers, especially small and marginal farmers, mainly because of their high cost. What should be done to enable the industry record impressive yield?

Seeds are classified as breeder, foundation and certified under the seed certification scheme.The breeder seed are produced by relevant research institutes, according to their mandates. The overall seed production is supervised by the National Seed Council. The quality of agricultural production lies on the quality of seed produced. The Federal and state governments are advised to establish multiplication Centres to produce certified seeds of various crops for farmers’ use. Research stations that produce breeders’seeds and plant materials should make them available to the Ministries of Agriculture or National Seed Council for multiplication to produce certified seeds, and these can be sold to farmers at a fairly subsidised rate. Another option is to organise the farmers into cooperative groups, where they are in large numbers and will cultivate large area of land; pool resources and they will be able to afford high cost of Foundation/Certified Seeds. The use of pure (certified) seeds will ensure a uniform stand, uniform ripening and healthy plants with higher yields. This will reduce cost of producing the crops and eventually increase farmer’s profit margin

To what extent does post-harvest infrastructure impact agricultural productivity?

Post-harvest infrastructure is critical to the agricultural productivity. Proper storage will reduce post-harvest losses and improve the shelf life of the produce. Threshers, driers and processing equipment are as important as storage and transport. Threshing of grains at appropriate moisture content will reduce yield losses, when moisture is low, the grains are lost due to inability of the machine to thresh the grains and also separate the grains from the chaff. Likewise, transportation of these produce from the point of harvest may lead to losses due to improper storage most especially fruits and tomatoes. Therefore, availability and the qualities of post-harvest infrastructure impact positively on agricultural productivity.

Outside of improving supply chain infrastructure, what other measures are needed?

The major measures outside improving chain infrastructure is to have a coordinated supply chain that can lead to good management of the relationship between the actors in the supply chain from the farm level to the consumers; others are: provision of credit facilities to allow supply chain actors participate effectively; the system should be strengthened by putting in place proper marketing system that places more emphasis on information dissemination on what to produce and when to sell.

Which staple foods offer investment potential in the country’s agricultural sector?

Most of the staple foods in Nigeria offer investment potential. Let’s look into cassava. Cassava has been underutilised in terms of investment potential. It can be used in the food industry as cassava flour for confectionary, garri for local consumption; in textile as starch; in animal feed as pellets for livestock feeds; in paper industry as adhesive and particle board; in pharmaceuticals as syrups and tablets; and in alcohol industry as ethanol. All these category of usage leads to different forms of investment. They are all money spinning ventures. Nigeria has not utilised this crop efficiently enough because most of the cassava produced in the country are consumed as garri and starch in some cases.

Also, let’s leave tuber crops and look at grains, such as rice and maize. Apart from the investment potential of rice in milling and selling of the product, the by-products of rice can be used in industries as rice husk and bran, which are used as animal feeds.The mixture of broken rice from mills, rice bran and rice germ is used in the brewery industries in the production of beer. Oil extracted from rice bran is medicinal and lowers cholesterol level in human. For maize, it is used in feed industries as animal feed, the cobs can be used for the manufacture of pulps, paper and hard brands. It is also processed as starch, which is used in paper industries, textile and pharmaceutical industries. At this juncture, I want to say that most of our staple foods have diverse investment potential, which have not been exploited.

Where are the greatest opportunities in agriculture?

Opportunities are found in all aspect of agriculture. The opportunity that is being exploited is in the production sector but more is still needed to produce enough for food security and export. The greatest opportunities are found in the agro-processing industries, which are not yet fully exploited. The processing of primary products into secondary products in terms of value addition will not only create wealth to investors, but also double the foreign exchange earnings of the country. It will generate employment to the rural areas and improve the economy of the specific locations of the agro processing industries. The employment generation of the value added industries is more than double that of the production sector.

Are there specific policies that might help to encourage value-added agricultural activities?

Value added agriculture is an important strategy to both entrepreneurs and the rural development. The policies to be adopted should include policies that will create enabling environment for the establishment of the value added agro industries; policies that concern the macro-economy of the industries in terms of creating enabling environment for access to credit facility; regulatory environment for entrepreneurship where all the supply chain actors are regulated; tax policy that will encourage investment, and infrastructure and rural development policy which will help in boosting the rural economy.

The National Centre for Agricultural Mechanisation (NCAM) was estabished for designing and development of technologies &equipment. How is this centre functioning across Nigeria?

NCAM was established to research and innovate into the development of indigenous machines for farming and processing techniques; by designing and developing simple low-cost equipment which can be manufactured with local materials, skills and facilities. The centre was also established to standardise and certify, in collaboration with Standards Organisation of Nigeria (SON), agricultural machines, equipment and engineering practices in use in Nigeria; and also develop manpower by training stakeholders in the field of agricultural mechanisation. In line with these mandates, the centre has achieved modicum of success in machinery development. Though NCAM is a research institute, the centre design and develop machinery based on farmers’ need. Many machinery and equipment for production and processing have been developed across various crop value chains. For cassava, the centre has developed the processing line such as cassava peeling machine, grater, hydraulic press, sifter, mechanical fryer, as well as chipping and dicing machines.  We have also developed for rice the following machines; rice parboiler, distoner, rice milling machine and polisher. We have also developed complete processing equipment for oil palm processing. Aside these processing lines, the centre has produced multi-purpose threshers to thresh major grains and legumes; fish kiln, hammer mill, feed mixer, groundnut decorticator, maize shellers, dryers, etc.

On production equipment, the centre has developed a 30hp and 40hp mini tractors, two-row tractor drawn cassava planter and harvester, motorised hand guided rice reaper, mini rice combine harvester, four-row multi-seed planter, hand push multi-seed planter for small holder farmers and hosts of other production equipment. Recently, the Minister of Agriculture and Rural Development, Chief Audu Ogbeh mandated the centre to develop a yam heap moulding implement. This has been developed. It can produce 1050 heaps per day.

Most of the processing machines we developed have been installed in many states. Apart from machinery development, NCAM has developed her technology on rice production called SAWAH Eco-Technology. We have successfully promoted this technology in 12 states cutting across the six-geopolitical zones. The technology has increased the average yield of paddy from as low as 4t/ha to 7.2t/ha in states like Ebonyi and Kebbi. Kebbi was one of the first states the technology was introduced and I will say that NCAM had contributed to the success of the rice revolution in Kebbi, though this was largely due to the state government’s efforts to support the farmers, to boost the growth of rice production in the state. At present, a two-ton capacity rice mills are being installed at Nasarawa, Ebonyi, and Borno states. In Kwara State, 11 rice and cassava processing sheds equipped with appropriate machines for rice and cassava processing were constructed last year. These sheds were also established in Kogi, Rivers and Cross River states. The level of mechanisation in the country is still low due to the fact that the majority of  farmers have small farm holdings and they have fragmented farm lands, which make mechanisation difficult. Farmers can access tractors better due to the public-private partnership on hiring enterprise introduced by the Federal Ministry of Agriculture and Rural Development. The small holder farmers are still not having the privileges of acquiring mechanisation equipment due to their financial limitations and so the traditional methods of farming still prevail; though some small holder farmers have embraced new mechanisation technologies. The tractorisation index still remain low and for some time the index has remained 0.027, which means that we have 27 tractors to a thousand hectares; this is too low.

Although Nigeria is an agricultural country, its farm holding is mostly small. How can a small farmer afford the costly farm machinery?

The small holding of farmers is between 0.1 and 2ha. This is just sufficient for subsistence with little available for sale. They are incapacitated financially and, therefore, they are not able to grow their hectarage. For this set of farmers  to acquire farm equipment, there is the need for them to come together and form cooperative groups, so that they can pull resources together and share capital investment and also share risk in investment. Let me give you an example, in 2015, a group of farmers approached NCAM to buy a thresher, but they couldn’t pay more than one third of the total cost of the machine. We accepted the money and asked them to pay the rest in three instalments. After about three months, they came back to pay the balance in a single tranche instead of three installments and told us that after using the machine, they hired it to their co-farmers and was able to raise the balance. So, the centre always advise farmers to come together and buy equipment as a group and then render services to other groups to recoup their investment. The cost of equipment depended mainly on imported components, such as mild steel, stainless steel as well as prime movers, which are usually the most expensive parts of a motorised machine.

Are there any results or impact of NCAM’s work so far?

Yes, as I have said before the NCAM rice Eco-Technology (SAWAH) was introduced in many states, among which is Kebbi State, which has effectively applied the technology to develop the rice production. Most of NCAM-developed machines and equipment are in use in many farms in the country. Efforts are also in place to work with the states to bring our technology to the local farmers. In 2016, about 100 of our rice threshers were procured by the Federal Ministry of Agriculture and distributed to farmers in various states. Eleven processing sheds were also constructed in Kwara State for cassava and rice processing. In 2016, the processing lines have impacted on the local processors. The centre also trained artisans on its technologies every year to disseminate the knowledge to welders who have been producing these equipment. At present, women are also trained on the use of cassava flour to produce confectionaries such as cake, biscuits, chinchin, doughnut and meat pie.

What can be done to stop the perennial fuel scarcity? It’s by privatising the refineries, says Integrated Oil and Gas Limited Executive Director Captain Emmanuel Iheanacho (rtd). In this interview with AKINOLA AJIBADE, he says repairing moribund refineries will end the drama over subsidy and importation.

WHY has the government been unable to fix its refineries?

The reasons are many. First, is the fact the refineries are old and they defy resuscitation. The refineries are in dire strait, a development, which has made it difficult for the government to bring them back on stream. Built in the 1980s, the refineries were replete with old spare parts, and replacing them have been pretty difficult. This has impacted negatively on the output of the refineries. Little wonder the capacity of each of the refineries has fallen below 50 per cent.

Secondly, the refineries have suffered from lack of proper maintenance from successive administrations in the country. It is not surprising that the Turn Around Maintenance (TAM), aimed at putting the refineries in tip-top condition, has always failed. Thirdly, Nigerians showed non-challant attitude to the refineries. To them, the refineries are public institutions and as a result, no one showed interest in their maintenace. These, among other issues, have hindered the government from providing solution to its decaying facilities, of which refineries are some of them.

Will the refineries fare better under private entrepreneurs?

Yes, the refineries would perform better whenever they are managed by private individuals. The reason is because private operators have enough capital, expertise and the motivations required to make refineries and other projects work. They are committed to the growth of the refineries and other projects that were designed to serve the needs of the masses. They know full well that they would be sacked, in the event that they are not performing and would not like to lose their jobs.

In achieving cost efficiency, private operators are better than their counterparts in the government. They make good use of the resources available to them (human and capital), by minimising cost of operation, reduce wastages and do overhauling, where necessary. All these have helped in promoting efficiency in many of the privately-owned institutions. I believe that the Federal Government has done the right thing, by allowing private investors to set up refineries for the growth of the country.

How can Nigeria end perennial fuel scarcity?

For Nigeria to end the recurrent fuel scarcity, the stakeholders in the value chain must work together. That is, the Federal Government, the Nigerian National Petroleum Corporation (NNPC), the oil production and exploration companies, refinery operators, marketers and other stakeholders must come together to proffer solution to the problems affecting their organisations.The stakeholders must not shy away from their responsibilities if they want to achieve necessary growth in this regard. They must work to fulfill the mandates given to the agencies of the government by the constitutions, of which refineries are one of them.

In a situation whereby marketers play their role as expected, so also the refinery operators and other relevant stakeholders, there would be enough fuel in the country. Not only that, there would be seamless distribution of fuel, coupled with the fact the country would not find it difficult to achieve self sufficiency. Once there is enough fuel to consume domestically,  demand for the product would not outstrip supply and this means there would not be fuel scarcity in the country. On the other hand, when there is a deficit in the supply side and the demand exceeds supply of fuel, there would be scarcity of the product.

Can the country meet its needs, with the Nigerian National Petroleum Corporation (NNPC) as the sole fuel importer?

Yes, the country has the capacity to meet its needs once its able to improve on the level of fuel imported and distributed in the country. The NNPC, which is the only institutions approved by the government to import fuel, is trying its best in this regard. It needs to put more efforts.  The government can meet the fuel need of its over 170 million population by directing the NNPC to work harder in the area of importation of petroleum products. To achieve this goal, the NNPC must allow other stakeholders, especially marketing oil firms, to import fuel into the country. When this happens, the NNPC‘s efforts at improving fuel supply would be complimented, as well as appreciated by the vast majority of Nigerians.

What should be marketers’ role in this regard?

Private marketers play important role in ensuring efficiency in the distribution of fuel in Nigeria. They are regarded as middlemen, serving as link between the refiners and the consumers of the product. It is on record that private marketers have played similar role in the past and I believe that they can still do the same, if they are given the opportunity to do so.There was a time in Nigeria when marketers were saddled with importing 63 per cent of the fuel consumed in the country. The marketers were taking the unenviable risk of locating the refineries abroad in order to help them process the crude oil into petroleum products; taking the risk of buying dollars to import fuel despite the fluctuations in the foreign exchange market; taking the risk of importing fuel from abroad; taking the risk of putting the fuel in the ships; taking the risk of bringing the fuel to Nigeria; taking the risk of storing the fuel in their farm tanks and distributing it nationwide.

Private marketers have done this job before and can still do it. They have the infrastructure required to improve fuel supply in the country, coupled with the fact that they have a good knowledge of the operation of the oil and gas industry, especially the downstream sub-sector.

How can marketers overcome liquidity challenge?

It is not true that marketers are having liquidity problem. Marketers can raise enough money for importation of fuel by borrowing money from both local and international banks. The banks are ready to provide loans to the marketers, provided they (banks) see opportunities to make profits in the business. Once the banks realise that they can make enough profits from the business, they will not hesitate to make funds available to the marketers.

The only way, by which profit motive cannot be constrained, is for the government to allow a free market economy or liberalised economy to be in place in the industry. That is, there should be a free market economy where every player comes in, plays and exit the market when there is the need to do so. There should be a free entry and free exit market system. Under this system, a marketer may decide to make N500 profit, another may make N700 profit on the fuel sold. Another may decide to make a profit that is a little bit lower, until the time the price gets to a level refered to in economics as equilibrium price.

In economics, equilibrium price is the best price, which consumers can buy his/her product. It is a situation where a marketer may decide to sell a litre of fuel at N140, knowing full well that a litre of fuel costs him N181 a litre to bring to Nigeria. When a marketer is able to sell his fuel in large quantities, he will in the process make huge turnover.

What are the benefits of a liberalised market?

In a liberalised market or economy, there would not be restrictions regarding what a seller of a product must do, how he would do it, when he would do it and where he would do it. In a liberalised market, the issue of allowing somebody to dictate to others what they should import, the volume of goods they must import and the price they must sell the product would not arise. Marketers will be free to buy and sell at a price, which he or she thinks will provide values.

At this point, we need to look at how we can engineer a change in the price regime of fuel. That has to come from the issue of deregulating the market. Though the market has been deregulated partially, the market should be fully deregulated. When the market is fully deregulated, the control of the market will not be in the hands of a few, but privileged people. That is, people, who by their closeness to the corridor of power, enjoy a high level of patronage from the government. You can see how deregulation of the fuel market has helped the country. For instance, if you go to the Eastern part of the country, you see people buying fuel at N190 per litre. The same thing happens in the West and the far North.

If people are willing to buy fuel at different prices, not minding its cost, that shows that the country needs to deregulate its market fully by removing obstructions that will hinder the flow of the business. When marketers are able to male their profits, the issue of smuggling fuel to other countries in order to make more money will not happen.

What is delaying the take-off of modular refineries?

Basically, the problem facing people trying to set up a modular refinery is underestimation of the tasks or the challenges in the area. People are underestimating the amount of time and work required to set up a modular refinery. They are under-estimating the time it takes to conceive the idea of owing a refinery, the time it takes to do visibility studies, do the market survey, write an articulate content engineering paper and look for the financiers among other things that will help in the take–off of the refinery. It is painful to hear people say that the Department of Petroleum Resources (DPR) issued forty licences or more and that none of the companies  given licences was able to set up a refinery.  They failed to look at the volume of works required to own a refinery. These are the steps which anybody, who wishes to own a refinery in order to improve fuel capacity in the country, must follow.

How can modular refineries help in addressing fuel crisis?  

Modular refineries would help in solving fuel scarcity when they are well established. When modular refineries are built in states such as Lagos, Imo and others, they will help in reducing scarcity of fuel in those areas. For instance, when you have modular refineries in the riverine areas, they will help in improving availability of fuel in the country. Secondly, the refineries will assist in creating jobs and thirdly, people in the communities where such refineries are located, will feel a sense of belonging. They will be proud to identify with the lofty and developmental programmes that are taking place in their environment.

Can Nigeria achieve self-sufficiency, with the coming on stream of Dangote Petro-chemical Refineries soon?

It is a good thing that Dangote Petrochemical Refineries is coming to process 650,000 barrels of crude oil per day. The project, which is billed for completion in 2019, will help in improving fuel supply in the country, boost employment opportunities, improve individual and government earnings by way of taxes and other fees charged by the state and Federal Government. Even at that, the supply of fuel in the country is not going to be enough. The reason is because Dangote Refineries is not going to refine crude oil for Nigerian market alone. There is room for fuel exports, which Dangote as a business oriented firm, will be ready to leverage for growth. The company will be exporting its products to countries in the West African sub region in order to earn foreign exchange.

So, if one considers the size of the fuel market in Nigeria, one will realise that the market goes beyond Nigeria. It goes as far as all the countries in the West African sub-region and beyond. So, if the government and its people demand that Dangote should be refining crude for the Nigerian market, there will be still be deficit, which will create opportunities for modular refineries to grow their business.

How many barrels of crude does Nigeria consume daily?

The country consumes between 700 and 800 barrels per day, which runs into millions of litres, after it has been processed into petroleum products. To me, the 700 or 800 barrels of crude are still not enough to meet the demands of over 170 million Nigerians. This is aside the fact that Nigeria’s neighbours, such as Benin Republic, Togo, which rely on the fuel to carry out their social and economic activities.

When was Integrated Oil and Gas Company established?

The firm was incorporated in 1998 as a spin-off from its parent company, Genesis Worldwide Shipping (GWS), the ship owning/vessel chartering arm of the corporate group. The firm specialises in offering one-stop services to consumers in the downstream sector. The company has retail outlets through which it dispenses fuel to customers nationwide.

What is the capacity of the refinery? 

The firm is building a modular refinery with a capacity to refine 20,000 barrels of crude oil per day to help bridge the demand and supply gap, and further ease fuel scarcity in the country. The refinery can increase its capacity to between 50,000 and 100,000 barrels per day in the nearest future by adding more modules to it. The refinery, farm tank and other plants will be located in Tomaro Island, Apapa, Lagos.

Besides the refinery, which other companies will be on the island?

The island is going to serve as an industrial hub for oil and gas and maritime in West Africa. The reason is because indigenous ship owners will be able to participate in the lifting of crude oil from the island aside the refinery, farm tanks and other plants.