The Nation Newspaper

Category: THE CEO

  • ‘Non-oil sector can’t take Nigeria far for now’

    ‘Non-oil sector can’t take Nigeria far for now’

    To many watchers of the economy, the non-oil sector should be the next money spinner, following the oil price slump. But, Nigeria Employers Consultative Association (NECA) Director-General Mr. Segun Oshinowo cautions that revenue from the sector cannot be used for importation, but only to fix infrastructure. He tells TOBA AGBOOLA that Nigerians should brace for hard times because of the economic downturn.

    We are already moving towards the third quarter, what  are your expectations in the economy?

    The reality is that things are really tough out there and it may not get better unless there is a miracle. Our economy is in shambles and that is the truth about it. The biggest threat to our economy is the issue of generating enough revenue. This is because our economy is highly dependent on crude oil; we can only hope that price of crude oil will experience a miracle of an upward surge. Anything short of that is going to be tough for the country because everything shall point to our foreign reserves.

    I do have some measure of sympathy for the government of the day. It inherited an economy that has gone into depression, and more unfortunately at a time when the price of crude oil has been declining. The decline in our foreign exchange reserve, which has necessitated quite a number of administrative measures by the Central Bank of Nigeria (CBN), has been sending businesses and enterprises to their early graves. The unfortunate thing is that the full impact of that is not known to the public yet, but the truth is that quite a number of businesses are beginning to close shops or scaling down their operations. What that means in effect is that more Nigerians will fall below the poverty line because when a company closes shop or scales down operation, while its assets like machineries might still be there, it cannot keep the human assets.

    Now that the budget has been signed, how realistic do you think the goals of the budget are?

    The budget is anchored on the fact that from January to December, crude oil will sell as $38 per barrel. That is the assumption. To the best of our knowledge, crude oil did not sell for that price in January, neither in February, though the price has increased slightly in recent times. What it means is that government revenue projection is going to be affected. So, the only thing for us is to hope for a miracle for the better part of the year. Now, there is another assumption which will affect the revenue generation of the government. The assumption is that government will be able to sell 2.2 million barrels per day. We know that there has been some challenges in the Niger Delta and the question again is that will that not affect our ability to produce 2.2 million barrels per day. Now, if that will be a threat, then you have double jeopardy  that will undermine your ability to attain your revenue target. Again, when you look at other assumption that is attached to the budget, which says it will be able to keep inflation under 10 per cent. That looks very faulty. Forget the fact that government said it will not thinker with the exchange rate of the naira to the dollar. The  truth about it is that most of those going to import are not going to get the exchange rate from the official channels. They are going to get from other sources which are going to be higher than the official rate. There is going to be inflation much higher than what government projected. To me, some of these assumptions may not work since two of the assumptions actually depend on the critical aspect of the budget, which is revenue. The truth is that we will have a deficit that is much higher than what we have in the budget.

    On the other side, when you look at the expenditure profile of government, the government has informed Nigerians that its priority this year will be to tackle unemployment, insecurity and improve infrastructure. Now, let us look at the infrastructure which include road networking and power. Government said in one year, it will improve on these and that accounts for why about N1.3 trillion was set aside for it in the budget. But the truth is that there is higher infrastructural deficit in this economy and the provision in the budget is just 30 per cent of the total expenditure. We don’t think that government will be able to effectively address this. With just 30 per cent to address infrastructure, it won’t take us any where, but it is a step in the right direction.

    How do you expect government to address this?

    We believe government should structure and rationalise its system in such a way that there will be significant reduction from the oil expenditure which then will be channeled to improve capital expenditure.

    Government says it is now focusing more on the non-oil sector. Do you think that is the answer?

    Yes, it is but this is coming too late. This is something the previous governments should have started long ago. Given our current situation, non-oil sector will not take us far. Agreed that the non-oil sector will generate revenue to address the recurrent expenditure,  we are not going to use naira revenue to import. Even, our non oil products will not start producing overnight. Our only saving grace is to hope for upward turn of the crude oil price.

    Government seems to have embarked on aggressive revenue generation. What is your take on this?

    As I have said, you will not use your naira to import. You don’t spend naira abroad.  So, aggressive action, either through Treasury Single Account (TSA) or any other means, to generate more naira is not really helpful. But as I said, it will solve for instance salary payment to some extent. But when it comes to capital expenditure which is very significant, you cannot use naira to finance it.

    There is panic in the job sector. More employers said they will disengage more workers. What is NECA’s position on this?

    If the revenue of an organisation is affected and you don’t want to incur salary arrears, the best option is to disengage. For instance, I disagree with the position of the Labour and Productivity Minister, Dr Chris Ngige, on his directive to private sector employers, especially the banks, oil and gas companies, not to sack their workers. Even in the face of dwindling oil prices in the international market and massive loss of profits by the companies, how do you expect them to cope? The reality is that retrenchment is not a palatable option for any business. No employer will take pleasure in declaring redundancy, employees that it has invested in developing over the years. An employers’ expectation from the Minister of Labour and Productivity is that he will work hand-in-hand with other government ministries in the creation of the desired enabling environment that will ensure business sustainability, competitiveness and job creation.

    Given current precarious situation, what is the policy option for the government?

    We are looking for policy options that will ensure unfettered access to foreign exchange by the private sector, not policies that will further constrain the narrow fiscal space. After assessing government’s current policy options, one can conclude that we are not on the right track. Given the situation of things, we can’t expect tangible and meaningful outcomes now, but we should be able to have hope in terms of policy options such that if there is no respite in the short-term, we can hope for respite in the medium and / or long-term. We want policy options that will show clearly that in the next two years, we will start seeing improvement in our infrastructure, in our road and rail networks. We are looking for policy options that will be consistent and ensure that government means business in terms of diversification of this economy away from outright dependence on revenue from the sale of crude oil. It should be noted that in a crisis situation such as our economy is in presently, there are two broad types of policies that must be embraced. These are policies that must be embraced and allowed to stand the test of time. An example of that is the case of importation of rice into a country that has all that is required to plant rice. Must we continue to use our hard earned foreign exchange which is diminishing to import the product which we can produce locally?

    The issue of fuel subsidy presents another good case of policy option. Do we have the fiscal space to continue to sustain that policy? The answer is No! While we might not be able to build up the domestic capacity to be self-sustaining as far as petroleum products are concerned, we should be able to block the leakages and make Nigerians pay the economic price for petrol. That decision has been taken and we hope that such policy decision will be allowed to remain. But there are other policies which we need to examine almost on a weekly basis to determine if these policies are giving the desired results, especially where the outcomes are more in the short term than in the long term. If in the short term they are not giving the result expected, then they can be tinkered with. I think that informed the decision of CBN on the reversal of domiciliary account. In that context, I won’t see it as policy sommesault, it is simply wisdom. I think what the CBN did was to tweak the policy to ensure that it gets the maximum results from there and I don’t think there is anything wrong in that.

  • DISCOs are frustrating availability of meters 

    DISCOs are frustrating availability of meters 

    One issue that has pitched power distribution companies (DISCOs) against their customers is meter, due to its unavailability. In this interview, the Chief Executive officer, MEMCOL Nigeria Limited, a meter manufacturing company, Mr Kola Balogun (an engineer) said metering problems have remained unresolved because of the deliberate action of the DISCOs to continue milking consumers through the estimated billing regime which is more rewarding for them. Balogun spoke with AKINOLA AJIBADE on this and other issues. Excerpts:

    What is the state of the metering industry in Nigeria?

    The situation in the industry could be likened to happenings in the country. The industry is a reflection of the inconsistencies that has characterised the polity called ‘Nigeria’. These inconsistencies have helped in slowing down the growth of the nation’s economy.  In order to contribute to the industrial growth of the country, MOMAS Nigeria Limited started investment in metering business about twenty years ago. The idea has paid off as the firm has manufactured and deployed a lot of meters to consumers, prior to 2013 when the power sector was privatised. Not done yet, the firm wants to increase his production in order to deepen the growth of the sector. To achieve this, the company has invested in meter facility in the West Africa sub- region.

    What is the capacity of the metering industry, vis-a-vis the number of meters, which local manufacturers can produce?

    The industry has capacity to absorb several millions of meters. In fact, it would be difficult for the country to exhaust the volume of meters produced locally in view of the fact that many new houses are springing up annually. Presently, five meter manufacturing firms are operating in the country, albeit at lower capacity. They are MEMCOL, MOJEK, UNISTAR, EMCON and SWEDEN Nigeria Limited. MEMCOL has the capacity to produce 50,000 meters monthly, while each of the remaining four companies can produce between 20,000 to 30,000 meters.

    What is the major threat to the growth of local meter’ manufacturers?

    Lack of patronage is the major threat to the growth of local manufacturers of meters in Nigeria. The power distribution companies (DISCOs), which by law are required to buy meters for onward distribution to their customers, hardly buy from local manufacturers. Usually, the DISCOs buy meters from manufacturers abroad.  They go outside the country to open credit facility, buy meters there and bring them to Nigeria.  Whenever the DISCOs buy meters from local producers, they do so on credit. This has made it difficult for local manufacturers to survive.  However, Ibadan power distribution company (IBEDC), its counterparts in Abuja and Port Harcourt are buying meters regularly from MEMCOL Nigeria Limited. It is sad that meters that are manufactured by local companies are not well patronised.

    Beyond this, what are the other problems facing manufacturers of meters in Nigeria?

    Electricity is another factor inhibiting the growth of the manufacturers.  The worsening power situation and its attendant poor supply in the country is taking its toll on manufacturers of meters, and other products. In MEMCOL Nigeria Limited, access to power from the grid has not been encouraging. The reason is because power is not readily available in Mowe-Ibafo business corridor where the company is located. Many industries would have sprang up in that corridor, but for the poor electricity supply in the country.  And to stay in business, we decide to run our factory on generator, albeit with pains. It is difficult for a business that is run on generators to be cost-effective. That is why I said earlier that the development of industries is a function of a nation, and not an individual. It is the nation that is expected to protect industries from collapsing.

    What is the level of capacity utilisation in the industry?

    The capacity utilisation is dropping fast. The reason is because the metering companies are operating at optimal capacity. The firms are keeping huge stocks in their factories, due to patronage. Our company has a large quantity of meters in store. Since we are not producing optimally due to problems such as poor patronage, electricity and others, we decided to cut down our workforce, pending the time when situation improves. We cannot afford to keep the human resources (personnel) that would help in producing meters, when it is obvious that the micro and macroeconomic environment in which we operate is not favourable. We cannot continue to keep, having realised that they would be idle because it would be difficult paying their salaries.  So this has made capacity utilisation to drop drastically. In the event that the five companies approved by the government to manufacture meters are well financed, they  would not only produce a lot of meters monthly, but would assist in bridging the supply and demand gap in the industry.

    The low patronage of your meters by electricity distribution firms, may be due to their low quality?

    To the best of my knowledge, meters that are produced in the country are of good quality. The meters can compete favourably in terms of quality, with those meters that are being imported from countries like China, South Africa, among others.

    For instance, at MELCOM, we produce intelligent meters- meters that provide more than ‘two-way communication. We are designing meters that have higher integrity and standards. We manufacture meters that allow users or owners to communicate with them easily.  From a distance, owners can communicate with their meters by knowing what is happening to them. We produce both pre-paid meters and smart pre-paid meters. The former can be easily by-passed by criminals, while the latter cannot be by-passed.

    What efforts are you making to convince DISCOs of the quality of your meters?

    What other convictions do the power distribution companies need from us again? We have been producing meters that are not only of good quality, but can compare with the ones produced abroad.  The DISCOs are aware of this. They know that our meters are good.  However, the issue of poor patronage suffered by indigenous manufacturers of meters is beyond quality. Two reasons suffice in this regard.  First, the craze for products produced in foreign countries by Nigerians has affected the sales of meters manufactured in the country.

    Secondly, the decision by the DISCOs to continue to charge consumers estimated bills make them to buy meters abroad. The DISCOs know that local manufacturers have capacity to meet their metering needs, and that once they fully patronise indigenous manufacturers, they would not have any excuse of not providing meters to customers under their jurisdictions. When this happens, it would be difficult for the DISCOs to charge estimated bills.

    Can you substantiate the claims that DISCOs refused to buy meters from local manufacturers because they want to continue to collect estimated bills?

    It is not an allegation. It is a fact. We have found out that estimated bills are the easiest ways of generating revenue by the DISCOs. The power firms are hiding their love to make money through estimated billings.  The investors, who bought the assets of the Power Holding Company of Nigeria (PHCN), borrowed money to acquire these assets. They need to refinance the loans they got from banks. And the safer and easier way to do this is to make money, by collecting outrageous or crazy bills from customers overtly or covertly.

    What is the solution to problems such as low patronage, and poor funding facing local manufacturers of meters?

    The solution lies in the ability of the Federal Government to support local meters manufacturers with funds. The government should try and provide intervention funds for manufacturers of meters, the same way it provided funds for the power generation companies (GENCOs) and power distribution companies (DISCOs) in order to subsidise their operation. If the government can provide funds for power generation companies, it should also provide funds for companies servicing them.

    The government should intervene in order to prevent metering industry from collapsing. Also, the government should compel DISCOs to buy meters from local manufacturers since they are producing quality meters. Doing this means that the government is killing two birds with one stone. By this, the government is promoting local content initiatives, introduced to promote the growth of indigenous business operators, while at the same time, helping in conserving foreign exchange. This means that monies that are spent on importation of raw materials and finished goods, would be domicile in the country. When we make do with what we have, we are saving the country from brain drain. The multiplier effects are industrial growth, technological advancement, unemployment generations and others.

    How will provision of intervention funds, by the government, solve the problems of meter’ manufacturers?

    Yes, the funds would improve the conditions of the manufacturers. Once the Central Bank of Nigeria (CBN) makes the funds available to manufacturers at a single-digit interest rate, the pressures on firms that produce meters locally would reduce. The loan portfolio of local manufacturers is too bad, because they are borrowing money at commercial rate of about 25 per cent. This is against a situation, where foreign companies are getting loans at less than five per cent. How do we compete with our foreign counterparts? The government needs to intervene urgently in the metering industry, by supporting it with funds.

  • ‘NICON on slow path to progress’

    ‘NICON on slow path to progress’

    The acquisition of NICON Insurance has continued to generate controversy. In this interview with Deputy Editor, Nation’s Capital, YOMI ODUNUGA, NICON Managing Director and Chief Executive Officer Mr. Bayode Samuel speaks on how the firm has been grappling with challenges and how it is being re-energised to serve customers better. He also speaks on the insurance industry and the path to profitability.

    NICON Insurance used to play a critical role in the sector but one hardly hears about it today. Is this  a mere perception or the real story of a good firm gone bad?

    I would not say it is perception. Of course, NICON after privatisation was meant to be agile and move at that fast pace expected of a private sector entity. Do not forget this company was a government corporation for more than forty years before it was privatised. As a business entity working under government bureaucracy, you would not expect anything less from what had happened to the company at that time. After privatisation, it is natural that a lot of patronage, a lot of account will leave NICON Insurance. And so, it became an open place for everybody to partake. There were some accounts that were being run by NICON that were not profitable, so NICON exited some of them. With the premium of N17 billion in 2005, NICON declared a loss of N5 billion. Compare it with the premium income of 2006 after privatisation which was N12 billion but we recorded a profit of about N5 billion and we were able to share dividends too to shareholders. Just after this, the government came to say it was taking over NICON Insurance. It was a turbulent period for the company and things were quite rough due to extensive political interference. But all that is over now and we were able to bring the company back into the market. The re-structuring of NICON actually started in 2013 and we are gradually getting back to our feet. You could not have seen much visibility of NICON Insurance but now, we are gradually moving to where we belong by re-strategizing and having a roadmap to get us out of the mess. We are going to be there possibly within this year.

    Can you tell us how much claims you have paid since 2013 when the re-structuring began?

    On claims, the whole of the industry was given a timeline of September 2015 to exit all claims. While I cannot talk about other firms in the sector, we at NICON paid all outstanding claims. As I speak, we do not have any outstanding claims on our books apart from those that are subject to litigation. Apart from that one and those that have incomplete documentation on the part of the insured, we do not have any other outstanding claims, I can confidently say that.

    In terms of figures, what does that come to?

    In a day, we paid N350 million as claims. We have been paying these outstanding claims before the final figure was approved and exited.

    You talked about injecting N17.5 billion into operation. How has  NICON exploited this to promote and support corporate/social responsibilities?

    In the first instance, we were asked to inject money at that time because there was a huge hole drilled in the finances of the company by those who took over. At the time, the liabilities were almost exceeding the asset of the shareholders’ fund. There was a review of the account by KPMG at that time, although there was contention between our auditors which is De’loite and KPMG on the side of government which recommended that, in order for the company to take care of the liabilities, it must inject N17.5 billion. It is only when you run successfully and get back to profitability that you can begin to talk about social responsibility. However, it is not as if we have stopped our corporate social responsibilities for one day, we will continue to sponsor events. We have a long list of proposals which NICON is involved in as far as public-social responsibilities are concerned.

    What share of the market is NICON holding at the moment?

    We are just in about 2.5 per cent of the share of the market right now. Even our budget shows that and our last year’s performance gave us the claim of that. Like I said, the restructuring and rebuilding have started so much that we have said that before the end of this year, we should take over 5 per cent of the market. Those of you that are familiar with the structure of NICON will find out that everywhere is wearing a new look, what is left is to focus on the external aspect. The restructuring is not only at the Head office alone, it also cuts across our branches nationwide. As I talk to you now, there are about two or three of our branches going through total renovation.

    At this time of financial crisis, how feasible is the insurance sector?

    We still think there is room for insurance companies that are innovative and responsive to their environment to make profit. Though, it may not be that kind of profits you were accustomed to in the past. I must say insurance is a global business with linkages all over the world, I can file my risk in Tokyo for example or any other place of the world. Our capacity as an industry is so poor that we export 95 per cent of the risk through re-insurance programme. Some time ago, it was JFT but they have joined AON now, the biggest re-insurance group in the world. We took 95 per cent of our own risk with the attendant premium out of Nigeria. But now, there is a local content law that says you should at least take up to 50 per cent of risk domestication in Nigeria. Secondly, we were free to take re-insurance treaties abroad. I doubt if there is any insurance firm in the industry in Nigeria that did not have a percentage of their treaties taken abroad. Therefore, there was a kind  capital flight to do this re-insurance. Government also made the law to increase the capacity of Nigeria’s market through the local content so much so that insurance companies will be strong like their counterparts in the world and that’s when the minimum capital for re-insurance was increased to N10 billion so as to expand their capacity to take risk in Nigeria. So re-insurance for life was 100 per cent domesticated, for non-life but if your market cannot carry it, you’ll need to seek a letter of no objection from the regulator. By and large, our insurance industry in terms of funds, market and income is almost fully domesticated. Like I said earlier, a proactive and responsive insurance company will still make profit.

    The industry in Nigeria is not really pulling its weight given that its contribution to the economy is insignificant. What are you doing to up the ante?

    All over the world, insurance controls the economy and insurance companies own banks including in Britain that we are close to. It is only because of our culture and the fact that you don’t have much to spend in terms of insurance policies. For instance, if you are employed today in the United Kingdom, you will get a letter from your bank offering you several packages that can go along with your salary,  such as mortgage, motor purchase, life insurance and the rest. Every aspect of life in the developed world, especially in the UK, is insured such that without soliciting, businesses flood your office. For example, if you take a mortgage, you are entitled to taking mortgage insurance, your health plan is also insured. What you find out is that, in the advanced countries, there is up to 90 per cent of insurance penetration amongst the populace. In Nigeria, I can confirm to you that insurance penetration is less than 5 per cent amongst the populace.  You cannot have any project in the advanced world that is not tied to insurance, you can’t have any credit that is not tied to insurance, therefore you have pool of funds coming to insurance industry that must be invested and these are funds you can term idle funds. So generally, you see volumes of funds coming in but the opposite is the case in Nigeria.

    Why do you think this is so?

    Here, if you are an Uncle to a young girl and you feel you should give her a car, you go buy a new car for N4 million, maybe you even give her the sum of N200 000 to celebrate the acquisition with friends. Once she drives that car out of the park, do you know where she would be going? She would probably go to the bank to first deposit that money given to her. Now the bank did not solicit for that business. The next thing you would expect her to have thought about is for her to insure the car in case of theft or anything. But what you will probably hear her say is; “do I need to do that? It will not happen to me or it is not my portion, God is in control”. So you now have insurance agents chasing her to come and insure, the next thing you hear her say is I’ll go to Road Safety or VIO. The Insurance industry does not benefit from that economic activity as it ought to, replicate her action to thousands of cars being bought and used daily in Nigeria, it is one of the challenges that make the banks to refer to the insurance industry as their poor uncle. This only happens in Nigeria, not even in Ghana. It is our culture that has made it so in Nigeria.

    But can’t insurance firms have other subsidiaries as back up for funding?

    It will interest you to know that most insurance firms in the world have banks. That is exactly the way the scenario is. However, a lot of things are being done to reverse that trend including awareness and government support. For the first time in a long while, insurance is being budgeted for. For instance in the 2006 or 2007 budgets, you will discover that even COT is budgeted for, you pay COT on funds you put in the bank, the bank has not solicited for that business in anyway, whereas when we tell them that you need to budget for insurance and all that, they tell you “forget about it”. But gradually, things are beginning to change and this was pioneered by the National Insurance Commission (NAICOM) two years ago. We have also formed the Insurers committee just like the bankers committee in order to have a say in the economic policies of government. I believe it is going to change gradually and then we are saying let us roll out our jingles for the world to see what insurance is all about. At NICON, we have a project to bring ourselves back to the psyche of the public and we will be going on air very soon. Other insurance companies are being seen on television now so this is the new awareness we are creating from the Insurers Committee to say, let people know about the products and services we are marketing so as to increase and deepen insurance penetration in our economy.

    What exactly is new about NICON’s Students Welfare Insurance Scheme (SWIS)?

    Yes, our Students Welfare Insurance Scheme was an innovation we developed when we came on board last year. The problem of insurance industry is that we are not as innovative as the banking sector, we don’t put on our thinking caps, we don’t think outside the box. For example, you hear that there is a programme going on at the Head of Service, everybody rushes down there and under-quote. Mind you, all these premiums were actually calculated. If you are of particular age, based on statistics and data all over the world, the insurance of your age per mil should be N14 per thousand. They are not magicians, it has been scientifically proven that in a group of this, this number will die, we don’t know who, that’s the basis at which premiums are calculated. All the Insurance companies are running to Head of Service to take group life insurance but everybody as low as N3 per thousand. Imagine me, a 55-year-old man, if I am to insure my life in Britain, I will be talking about N18 per thousand. Now, everyone was brought under the Head of Service Scheme and we are charging them N3, see the risk you are bringing to the table, see the premium you are charging me. That is the simple reason why they cannot pay the claims. There are circumstances that demand that we think outside the box and give government new policies. You know Federal Government College Buni Yadi was attacked by the Boko Haram. You are also aware of the floods at FGC in Abaji and other Government Schools as well as the risks to the lives and security of these kids. That propelled us to come up with a policy for the Federal Government, which caters for children in schools so much so that if they lose their breadwinners, we at NICON will continue to pay for the upkeep and school fees up until graduation. Also, nobody will be happy losing a child but anything can happen from incident of insecurity, flood or whatever, so what we do is to pay N500,000 on the loss of the child and burial expenses of N50,000. If students are involved in an accident to the extent that they are hospitalised, we pay hospital expenses of N50,000. That is the basic thing we thought of and the government took our advice at that time. But due to issues of culture, religion and ignorance, some parts of the country were not buying into the SWIS idea. We made a success of it to a certain extent and by the time they saw the claims being paid, more and more people responded to it. There is the case of a particular family that lost its breadwinner and has three children in one of the FGCs.  What we did and still do is the payment of N500,000 annually in respect of each of the children. The school fee sometimes may not be more than N200,000 but the rest will be for the upkeep of the child and then pocket money every month. That is the way the Students Welfare Insurance Scheme works. The public has also come to realise that it is very beneficial, those who are reluctant are now buying into the scheme. Also, competitors are now keying into it. That is why I said that we are not proactive in the insurance industry. We do not put on our thinking caps. You wait until someone develops a product and then you want to use your contacts and influence to scheme him out of the products.

    What is your projection for the year 2016?

    We are still early in the year but we are projecting something close to N5 billion. However, we have conservatively told the board that we will do N3.6 billion from all the comebacks we have done, from all the appointments we have had even from late last year. It may take time to re-engage the confidence of the public. One other noble idea we have put in place is the customer loyalty department. Businesses all over the world have customer loyalty department that analyse and see the movement of customers over the year. It also engages them when they chose not to do business with them again, this they will do by asking them questions on what actually went wrong, what they think we can improve on. All these are geared towards getting back our customers and creating new awareness. These are all the innovations we have put in place. We have also introduced Railway Insurance Scheme. For instance, if you are traveling from Lagos to Kaduna and your ticket is about N3,000, we are partnering with the Federal Government to introduce railway insurance scheme for the passengers. All you need do is to charge them the sum of N300 extra. Should there be loss of baggage, accident or death, we make sure those involved are covered under the scheme. Again, we noted that the Nigeria railway still carries the bulk of goods around so we have given them a proposal to cover goods on transit. A lot of products are underway to make sure that we expand our markets.

    Does NICON have assets offshore and what is the worth of those assets?

    We consolidate our statements so that may not allow me to say this is precisely what our worth is offshore. However, we have full-fledged subsidiaries in several countries like Sao Tome and Principe, United Kingdom and Ghana. In the UK for example, the value of our asset there is about £14 million, that’s our physical asset that you can point to, in Sao Tome we have about $2 million, the balance sheet of the Sao Tome Company is about $10 million now but the physical asset is what we are talking about here. London operation is just meant to be what we call representative or contact outlet in working re-insurances arrangement. It is just a walking distance to Lloyds which is like the headquarters of all insurance market where syndicates buy and sell insurance. We are hoping to expand our operations to many West African Countries but first, we want to consolidate on what we have.

    Since your appointment as Managing Director about a year ago, how would you rate your performance?

    We cannot be blowing our trumpet but we have made significant achievements since we took over. When we inherited the company, so many things were not in place. We have upgraded the structures and smooth operations of the company. Our customers now get up to date services and we are still improving on them. So also are the branches, we have deregulated so much so that we put General Managers in all the regions. They are small CEOs who collect information and data, take informed decisions on their own and inform us. We have also invited Oracle, the software giants, they are trying to pull down all our IT systems and install new ones. By the time we are through, we shall be on top of our game again before the second half of the year. You know the position of IT in management system in the world today. So, we are spending about $2 million on that. We have also restructured in a way that majority of the staff are now posted to the front line, marketing so as to increase the awareness and income generation. These are all we have been able to achieve since we came and we are building on them.

    In general terms, how much have you set aside to bring NICON back on track?

    We are thinking of re-branding the corporation by the roadmap and the Board has earmarked the sum of $10 million for the restructuring, re-branding and rejigging of the company. The money is already sitting down somewhere.

    Does it mean that, as we speak, NICON has not returned to profitability?

    Right now, no. In most cases, companies show paper profits but we do not want to join them in doing that because there is an International Financing Standard and NAICOM which watch all these. In calculating a company’s solvency margin, NAICOM will always take into account, N1billion in respect of all the physical assets you have. As at last time, NICON has N42billion. If you take our N42 billion into consideration, we should be the most liquid and most solvent company in Nigeria. When you now make a law that you will only take N1billion of my assets into consideration while you are calculating my profitability margin, that won’t work! Our asset is far above N1billion and it is backed up with correspondent liabilities, you now take my liabilities fully and take N1billion out of the physical asset, how can such a company be termed profitable? But the roadmap has shown us that we should go back to cash, most of these assets that we don’t need, we are disposing them more and putting the cash side into the balance sheet so in a short while, we will know who is solvent and who is not.

  • ‘We don’t collect subvention from government’

    ‘We don’t collect subvention from government’

    The Managing Director of the Nigerian Ports Authority (NPA), Habib Abdullahi, hosted a group of Business Editors. He spoke on many issues, such as performance, revenue and challenges faced by the authority in the light of the dip in oil prices and accompanying policies. Group Business Editor SIMEON EBULU was there.

    What are the challenges confronting ports administration?

    Any challenge I encountered when I came in is not new to me. There is change of government and with that, there is complete change of ideas. It is not like a similar government. It is a complete overall change of the system. There is challenge, not only in the maritime but in the overall economy. That has also made us to face some challenges. The sector is affected by the policies of the government and we are waiting for government to stabilise the system.

    How has the change impacted the policy direction of the maritime sector?

    Maritime is dependent on import and export of goods. There is less business now in the ports. That means less revenue to us. We are very much aware that there is challenge of foreign exchange. This is related to revenue of the whole nation. We are highly dependent on oil revenue which has dropped. The year has just started and it has not even started if you look at the fact that the budget has not been approved.

    … by what percentage compared to last year’s?

    If you look at the number of goods and services that we have, we are less by 10 per cent.  In ship tracking, the number of ocean going vessels has dropped to 5900, representing a decrease of 8.1per cent from 50000 in 2014. If you look at this tracking, you will see the effect on traffic.

    How are you trying to reverse the trend?

    We have to go with the government’s thinking, and that is diversification of the economy. What we are trying to do is to encourage export and be less dependent on oil. We have written to the Federal Ministry of agriculture and the Nigerian Export Promotion Council. There are quite a number of empty containers. If only we can encourage people to export, (people are exporting yam), and other resources. We can diversify into Agric. That is one of the areas I think we can diversify and complement the revenue we are losing.

    We have to work hand-in-hand with Concessionaires, at the same time, we are trying to work with the Customs. We are trying to see how to make Ikorodu an export terminal. This is just an example. We have the Ilaje Port in Ondo State. Quite a number of people are coming and showing interest.

    It would appear the Lagos port is always congested?

    A number of people don’t understand our operation and role in the maritime sector. I don’t tell people that when they are bringing goods that they must use Lagos ports. It depends on you the importer or exporter, not me. More especially now that all the ports are being concessioned. We are just landlord and we are only building infrastructure. We are doing that in all the ports. It’s left for government and concession-aires to encourage people to deal with them, but people just decided to use Lagos despite the traffic.

    Instead of people to use Calabar, (of course there are some problems there), but Onitsha is deeper than Lagos, and  we have Control Terminal there.

    The infrastructure – access road to Lagos port remains an issue. How are you dealing with that?

    I have to re-educate the public. It is not our responsibility to improve access roads to the Lagos port. I wish it were, but it is disturbing. Anything that happens it’s the NPA but access road is the responsibility of the Federal Ministry of Works and the Lagos State government, as well as the local government. Last year we spent about N500million in order to show our Corporate Social Responsibility. We did some emergency interventions to make life easier for port users, but it’s not our responsibility. The only thing we can do is within the port. We are trying to do similar works at Tin Can. Currently, the Federal Government is giving a contract for the Oshodi/Apapa road.

    Operators have expressed concern that the ports are nor served with railways. What is the position?

    That is our responsibility. Inter-modal transportation is one of the key issues. If the railway is working as it used to be, all these congestion will not be. You remember, the railway within the port, we did that and it is 93 percent completed. That of Port Harcourt is almost completed. We are developing that infrastructure. We are waiting for the Nigerian Railway Corporation to complete the rest outside the port. That is why the government is making it a priority.

    How are you reducing  cost of doing business?

    People say the cost of importing is high here but compare it to the rest of the world. Look at it and see it. The issue is not what a lot of people think. We have about five applications to set up port. Why are they applying if the port here is expensive! but it is not, it is because smuggling is going on?

    Shouldn’t NPA look for other ways of generating revenue rather than collecting rent?

    Who told you that it is easy to collect rent? Even to collect that rent is very difficult. It is not as easy as you think. Don’t forget, we have responsibility. We can’t go outside our mandate. It is not only rent collection that is the source of our revenue. We have cargo dues, shipment dues, pilot age dues, and we are trying through our own ways to see how we can expand and come up with few things. We have parastatals within the NPA. We need to have a reorientation.

    The Finance Minister said some revenue agencies are richer than the ministries but that they still wait for government’s subvention. Why?

    Let me correct this. We don’t collect subvention from the government. We are a self-sustaining agency and are expected to even give the government money. If you ask the  Minister of Finance, she will tell you that NPA is one of the agencies living up to its responsibility. It is not because we like to give the government money; it is because of Fiscal Responsibility Act. For the first time in 2012-2013, we remitted N15 billion to government. The highest that was ever remitted was N2 billion. I will give you the figures to see how much we have given to government.

    Are you exploring some dormant areas?

    People forget something. Seventy-five per cent of Customs collection is from the maritime sector, according to the Controller-General.Whatever we collect as well, is part of maritime. The revenue being collected taxes, somebody can sit down and see how much we are giving. People focus on very small aspect, but I agree with you we will do more. If you look at it from that end, Maritime sector is huge, but it cannot exist on its own. But the sector thrives on government policy, trade policy and transport policy, among others.

    Why is it difficult getting the rent from the concessionaires?

    First of all, business like this is continuous. Every month, every quarter, every year, we sit down and review and reconcile and collect the money. There are different kinds of revenues and funds you are suppose to collect from them. Now because of the challenges that we started with, the question of deposit at the initial stage of TSA, we had challenges; question of forex from those we have agreed to pay in forex, so there are all these challenges that we are trying to deal with. On the concession, some of these concessionaires when they took over have dual responsibilities. We have some responsibility and they have theirs. Part of our responsibility is port development which we have to do.

    For instance, some of them want their quay side which has been there for more than 60 years in Lagos, developed, some are even collapsing, but we can’t do everything at a go. But these guys feel why can’t they do it and when they do it, instead of them to wait but they will say, let’s do it and give us one-to-three years to collect back our money. And it’s because of that we write to the Ministry of Transport, the Federal Executive Council, to the NCP (National Council on Privatisation). So it is NCP that gave this exemption, based on our recommendation. They have to come and confirm, but in order for them to recoup their money, we had to extend their period to one, two to five years.

    Has the port concession arrangement paid off?

    Yes. Hitherto,people come in; they want to repair one thing or the other and it was not done as efficiently. That is the whole essence of port reform. By doing that, the government becomes more efficient. Your port of operation becomes more efficient. Yes, the problem has increased; people have to go out now to look for market, that is, the concessionaires. This increases the volume of business year-on-year. Even at this crucial time, what we collect is even much higher than what we collect before. To say that the concession is not a success I disagree with that, but we can do much better. I have written a letter for a review of all the concessions to address some of these challenges from our side and their side.

    The volume of containers that are still in the ports, we thought when the Inland Ports were established, it will reduce the volume, how effective is this?

    You remember the impact of the terminal port in Kano, Kaduna, Ibadan and Enugu. I could remember the impact of the port in the North because I grew up there.  Now that huge container terminal, it was the railway that was transporting the containers. Now, the place has been given out. People are building houses there. It is very unfortunate. Why? It’s because its responsibility is taken over by some agencies. It used to be under NPA that is the inland container. It’s no longer under us.

    Why?

    It’s the government’s decision. They said we are a technical regulator, that is what it is. The government has approved that. So, we are an economic regulator.

    What’s the relationship between the NPA and Private Jetties?

    There is a Presidential Committee on private jetties and NPA is a member of that Committee.

     

     

  • ‘Access to finance major drawback to exporters’

    ‘Access to finance major drawback to exporters’

    The slump in oil prices has made diversification of the economy imperative. Global Nigeria Limited Managing Director Mr Seun Olatunji believes the solid minerals sub-sector of the mining industry holds the magic for boosting revenue and creating jobs. Olatunji, who is also the president of Association of Metal Exporters of Nigeria (AMEN), laments the poor access to finance in the sub-sector. He speaks to Taofik Salako on the challenges and potential of the solid minerals industry.

    WHAT can solid minerals, especially metals, contri-bute to the Federal Government’s quest to diversify the economy?

    The potential of the solid minerals sector is so immense that I dare say that the country can survive comfortably with its solid minerals endowment alone. We are a blessed country when it comes to solid minerals and everyone can see that from one’s backyard to state. From a pragmatic perspective; of the 44 identified solid minerals endowment in Nigeria, at least 10 of these solid minerals in the metallic minerals category including manganese, copper, columbite, tin, tantalite, gold, lead, zinc, beryl, chrome and zirconium, alone can provide Nigeria with enormous foreign exchange earnings. These metals have accounted for at least 80 per cent of the export proceeds accruing from solid minerals in Nigeria. According to data from Central Bank of Nigeria (CBN), $1.742 trillion accrued to Nigeria as export proceeds from solid minerals between 2010 and last year. These figures were achieved without any serious government focus on the sector. When those individual companies and cooperatives whose solid minerals exports brought about this $1.742 trillion scale up their exports capacity by 10 times; it suffices to say that the proceeds accruable from solid minerals export would jump to $17.42 trillion. This would have come with taxes accruable to the Federal Government and creation of jobs along the solid minerals value chain as a result of the expansion. You can begin to imagine if we enlarge the net to capture the other solid minerals.

    So, everything that the government has laid out as its targets- foreign exchange earnings and diversification, creation of jobs and widespread national development across the states are all embedded in the development of the solid minerals sector.

    As an operator, what are the industry’s challenges?

    There are many challenges that one faces as an operator in the industry, although these challenges vary according to the level of operations and the position on the value chain. But they are mostly linked together and you can sum  them up under four basic headings- infrastructure, bankable geological data, standardisation and institutional finance. The poor infrastructure network in the country means high cost of transporting the metallic solid minerals from the remote mines to the nearest seaport, which makes it difficult for the  exporters to compete in global markets especially in the areas of pricing and export volumes. The global markets operate amidst fierce competition; therefore the federal and state governments must invest to upgrade and expand our rail network across the six geopolitical zones.

    Also, the absence of bankable geological data means that the industry cannot effectively utilise private sector opportunities including finance and foreign assistance as well as global trade agreements. Financial institutions cannot fund mining projects without knowing the reserves of the various mines in question. The federal and state governments might not be able to do most of these geological research; however, they are required to take responsibility for a chunk of the work especially since the Federal Government claims exclusive royalty collection from the mines operators. The government must come to the aid of the sector by way of underwriting exploration costs – there should be a mid-point. Government can use its other fiscal policies such as waivers, tax holiday, concession and guarantee among others to incentivise the development of geological data. We must work on standardisation if we are serious about competing globally, and this must be a national task, general standards that conform to global standards. The bulk of the solid minerals exported from Nigeria pass through procedures of inspection which are far below internationally accepted standard procedures. Therefore, exporters are underpaid and the government also loses revenue in the process.

    In a development process, there is always the need to support the fledgling industry with amenable finance to support active private sector operators and drive the critical mass that could propel the industry forward overtime without any necessary government intervention. As it is now, we have almost zero access to institutional finance, particularly from the CBN, which makes it virtually impossible for the metallic solid minerals miners and exporters to access structured finance at single digit rates. For instance, it is all over the media that the CBN has a N220 billion MSMEDF intervention, N500 billion export stimulation facility and all such funds but unknown to the general public and even the Presidency that the CBN in reality has got the commercial banks to sign off guarantees that these intervention funds and loans must not go bad, failure of which the commercial banks’ deposits with the CBN will be drawn to the loans amount that go bad. Therefore in practice, the CBN has not really intervened. The CBN must assist the banks to cover some risks. The more important thing is to ensure there is a genuine verification process to ensure that funds are disbursed to active and operating solid minerals operators in line with each operator’s track records.

    How can the government  unleash the potential of the solid minerals industry?

    Governments – at the centre and states – should rollout attractive business packages tailored specifically for the solid minerals sector. Incentives are a must for this sector to begin to contribute meaningfully to national development. When we talk about incentives, we don’t necessarily mean government should dole out money to the industry operators. We simply mean government policies for the sector should be reasonable, consistent and equitably fair with overriding objective of the nation’s  development. For instance, what has happened to the Export Expansion Grant (EEG) incentive? The government through the Nigerian Export Promotion Council (NEPC) says the scheme has been suspended. But to metallic solid mineral exporters; we say government is unfair by the sudden repeal of this incentive. How can a handful of companies who abused the incentive block the chances of numerous other exporters? The greater number of exporters shouldn’t bear the consequences for actions of some unpatriotic few. Good citizens deserve a chance and equal opportunity.

    The Minister of Solid Minerals Development has inaugurated a committee to develop a blueprint for the industry, what is your advice?

    Since the sector has become a national economic priority; it suffices to say that all things pertaining to it should be public and inclusive. The print media has a role to play here: the general public only saw two names-chairman of the 17-man committee – Prof. Ibrahim Garba; co-chaired by Prof. Siyan Malomo. In our company’s capacity as member of the Miners Association of Nigeria, our contributions have been communicated to the President, Miners Association of Nigeria, Alhaji Sani. The committee should be able to convoke a quick, holistic stakeholders’ meeting or conference to harvest the diverse opinion base of the industry.

    How has the foreign exchange squeeze affected operations in the mining sector?

    I would say the foreign exchange policy of the CBN needs review in order to further stimulate exports. For our company and indeed every responsible exporter of solid minerals; we remain profitable so long as there is an exchange rate between the dollar and naira. The parallel market rates simply reflect the pressure on the naira; and only exporters are insulated from the consequences of the exchange rate volatility.

    Against the backdrop of globalisation, what are the prospects of Nigerian exports in the global market?

    We must reposition our products to compete favorably in the global commodity markets. It is not enough to be richly endowed; we must aggressively pursue value addition across the whole value chain -from products source to final end users.

    What is AMEN’s role in the development of the solid minerals industry and the economy?

    We are at the forefront of putting the Nigerian metallic solid minerals on the global markets. We strike an acceptable trade methodology between the miners and the foreign buyers. We create jobs -both formal and informal for the economy. We are constantly seeking ways to improve the quality of products we exchange for the much desired foreign currencies. It is the exporters that mainly finance the operations of artisanal miners through advance payments and grants. No commercial bank will directly finance any artisanal miner. With these, you will see that we are the backbone of the mining industry.

    On access to finance, what are your experiences as individual exporters and as a group?

    Exporters have always been left to fend for themselves. Most of the metallic solid minerals exporters have little or no commercial bank support for their operations. Access to finance is still one singular most debilitating factor affecting growth of exporters.

    How can the government leverage on solid minerals to empower the citizenry?

    The Federal Government and state governments should develop empowerment programmes tailored to grant loans, take-off grants to start-ups willing to operate in the various solid minerals categories. Pairing exporters with proven track records with such start-ups to act as mentors, will be invaluable. This will not only have multiplier effect on job creations but also help to create a new generation of entrepreneurs that can help to grow the Nigerian economy. If well exploited, government can create at least 200,000 jobs per annum through a well-crafted empower-ment programmes for start-ups in 10 of the commercially viable solid minerals.

    Besides, existing mining and solid minerals export companies with year-on-year consistent and proven track records should be granted expansion facilities to scale up their operations. Such expansions would normally come with addition of more jobs.

     

     

  • ‘Agro allied export, cargo boost to economy’

    ‘Agro allied export, cargo boost to economy’

    If Nigeria needs to turn around its economy, it must rethink its dependence on the export of crude oil and diversify into cargo and agro allied export. Such paradigm shift will guarantee food security and create a window for Nigerian exports to Europe and the global markets where it could earn over $52 billion yearly, in addition to creating jobs. The Managing Director of ABX World, Captain John Okakpu, in this intervie w with KELVIN OSA-OKUNBOR speaks on these and other issues.

    There have been calls on the government to convert some airports to cargo airport; because of the availability of agro-allied products in the area where such airports are located. Do you agree with this?

    Who goes to Akure airport? It is not the government that would go there. So, the government can designate more than 100 airports, are they the ones that will fly there? It is the private sector. The government has a lot of role to play in this part, but as far as the 13 cargo airports are concerned, they are blue-sky projects that will not work. The only airport that I can say is fit for a cargo airport in Nigeria is Ilorin. Ilorin is at the entrance and the exit point of Nigeria. But the problem with Ilorin is the road network that will take you to other areas. There is no road network. It is easier for a cargo airline to come into Nigeria, drop its cargo in Ilorin, pick some of the produce and off it goes. If you start taking a European flight to Calabar, that is crossing the airspace, when they get to Calabar, what are they dropping there? Did they have enough cargo from their origin into Calabar to go and carry whatever you say you have there?

    What does Nigeria stand to gain if it invests in agro allied products for export?

    We have over 10 million Nigerians living outside the country. Do not forget that the market is geared towards Nigerians out there, who are looking for home food and products. So, if one Nigerian spends $100 on a particular food item for a day, multiply that by how many items he will need in a week, month and a year, all through, with the amount he will be paying for these food items if they are available. The amount will be unimaginable. Nigeria is a mono-economy country, depending on only crude oil to run its budgets. We need to wake up now that the oil price has fallen to low index. This is the time to diversify the economy and invest heavily in agriculture and agro-allied products. To focus on agriculture, you need huge number of well-trained farmers, who will in turn form co-operative societies. You also need the supply chain that will get the products to their destinations, as well as warehouses, storage and packaging facilities. Our goal is to create 20 million jobs in two years, while Nigeria will be able to generate $52b annually from the export of agro allied products alone. There should not be any reason Nigerians should suffer in the midst of plenty, especially as 70 per cent of all exportable farm produce comes from Northern Nigeria.

    What are your targeted farm produce?

    We have 75 products and out of that, one of the major and the top line product exported out of Nigeria is a leaf called Ugwu, (Pumpkin). You cannot believe that today if you bring a 40-feet container full of Ugwu, it will go on a daily basis. That is one of the high products out of Nigeria. The list goes on; Ugwu is there, bitter leaf is there, sweet potato, ginger, and garlic.

    How do you preserve them for export?

    We don’t preserve them, ours is transportation. We have experts who  do that. For example, ours is to take it from Nigeria to Europe. They get it fresh. If you go to SAHCOL, which is our processing centre, I can proudly tell you that today SAHCOL built first class world standard warehouse. And the cold room they have there today is only ABX world that is making use of it because of the dimension we are taking Nigeria to.

    Preservation is not our goal; our goal is logistics, bring in supply chain, get the farmers, put them together to be trained and certified.

    We all know today that brown beans is banned from Nigeria, you can’t take it into Europe because of the chemical used in preservation. Then in terms of cassava peel, nothing out of cassava is a waste, including the peel. If you bring 100 container of cassava peel, it will go the same day from Nigeria.

    Crude oil prices are failing and one of its spiral effects is the huge cut in revenue accruing to the government. How did we get to this stage?

    Fundamentally, as a government and a people we got it all wrong many years and decades ago when we solely depended on crude oil export as the mainstay of the economy. No reasonable government or a nation will do that considering that it would have attendant effects on her economy. Now, the reality has hit us economically and we are running around. It is time to stop complaining and strategise to move ahead. It is time government launched a serious return to the land campaign, by that I mean agriculture. That is why our firm is interested in the promotion of cargo and agro allied export.

    How does your cargo freighting and handling firm fit into this?

    My goal here is to bring Nigeria back to where we are supposed to be. To stimulate the promotion of cargo and agro allied export. It was a very painful task and journey; it has taken a lot of time and hard work, but the bottom line is that we are here now in Nigeria. In ABX world, our goal is to champion agro airline in Nigeria to create a revolution. Agro Allied has to do with agricultural products, in conjunction with transportation and logistics, mostly in aviation.

    Why did it take us this long to realise we have to go back to agro allied and cargo export promotion?

    You know the price of crude oil in the market today. Nigeria is one dimension economy, mono-economy, crude oil and import, that is it. God wants to redirect Nigeria. That is why we are now facing the issue of crude oil and falling price by the day. People like me will say let the crude oil be zero, one dollar per barrel because that will wake us up from the slumber.

    For Nigeria to balance its budget, crude oil has to be sold at a higher price per barrel. How do we make up for the difference?

    We have no choice than to go back to basics, which is agriculture. At ABX World, we have partners in Europe, around the world, we are here to make a difference, create agricultural revolution whereby we take agricultural products as long as they meet the international standard and requirements to the world.

    What strategies do you have in place to achieve good marketing of Nigerian products in Europe and other continents?

    First of all we have to engage a lot of supply chains around the world, especially in Europe because about 60 per cent of what is going out of Nigeria will target the market in Europe. What we do is to engage a lot of supply chain, bring in the supply chain, then try and liaise with the government, both state and federal and get the farmers, through their co-operative societies because most of these farmers have to be fully registered through their co-operative societies. And these farmers have to be trained on the dos and the don’ts involved in what they are into. When you bring in the farmers, you bring in the co-operative societies, then you put both of them together to be trained and certified to be able to supply the products they are into. Once you get certified you can be guaranteed about three years contract. So there is a need for the training and certification, which is the most basic.

    What is your take on efforts by the government to construct 13 cargo airport terminals across the country?

    There are some airports designated as cargo airports in Nigeria, but to me I will call that blue-sky project. What I mean by blue-sky project is that it will never work. I had some meeting with FAAN officials about two, three times in the past months and I gave them reasons why it will never work. Part of the reasons is that the projects were poorly conceptualised. The world is changing. Most of the aircraft manufacturers are changing their direction. There will be a time you will not have a cargo airline because of the new trend in technology in aircraft manufacturing. For example, Emirate is taking the lead in this direction. Some time ago Emirate ordered for a hundred and fifty Boeing 777-300ER. This aircraft takes over 400 passengers, takes their luggage plus their excess and still have the capacity to carry 30 tonnes of cargo on two engines. If you designate 13 airports in Nigeria as cargo airports, then you have to ask yourself if it is viable for cargo airline to fly there. The world is changing so much so that most of the passenger terminals have to be the cargo terminals because most of these agricultural produce have to be moved on daily basis. When you harvest them they are moved immediately to their destination within 18 hours. You cannot tell me you load a British Airways with full passengers then you tell them to stop at Enugu to carry five tons of cargo because Enugu is designated as cargo terminal. It does not make any sense.

     

  • ‘Why prosecution is key to anti-graft crusade’

    ‘Why prosecution is key to anti-graft crusade’

    How can the anti-graft war be won? It is by effective prosecution and conviction of looters, says Mr. Timothy Melaye, the Nigerian Head of Information Centre of the Inter-Governmental Action Group against Money Laundering in West Africa (GIABA). He speaks with COLLINS NWEZE on GIABA’s efforts to curb financial crimes by empowering agencies, such as, Economic and Financial Crimes Commission (EFCC) and Nigeria Financial Intelligence Unit (NFIU).

    To what extent do you think bureau de change operators aid money laundering?

    What I would say is this, GIABA has put a lot of resources and efforts in training financial institutions and non-financial businesses and professionals and therefore I expect that the financial institutions across the region are fully aware of their responsibilities. There is what is called the committee of chief compliance officers of banks in Nigeria. GIABA has provided series of trainings to these officers to be able to make sure financial institutions comply with their responsibilities. Financial institutions do not have responsibility to investigate or prosecute anyone. Their responsibility is to stand as the gatekeeper, the money comes through the financial institutions or goes out through the financial institutions and where there are suspicious transactions, they have obligations as a sole responsibility to report such as suspicious transactions. It must be reported to Nigeria Financial Intelligence Unit (NFIU) and if a bank notices any suspicious transaction or what can be termed as a suspicious transaction, they have a responsibility to report too. After reporting, then they have carried out their due diligence responsibility. Now they need to carry out customer due diligence, identify your customers, now we have people who are not the actual owner of money or people who come in a disguise or people who come to open account fictitiously, or people who come as third party to open account in support of someone else. The suspicious transactions report says if my name is linked to the name of a prominent person who is considered as politically exposed persons, then the banks need to do enhanced due diligence reports on that. The report will make them file suspicious transactions so that all those who are linked can be identified, their transactions gotten and be properly documented.

    The Central Bank of Nigeria (CBN) is accusing some bureaux de change (BDC) of money laundering. Some of the operators were linked to the arm-for-cash scam; how did things get to this point?

    You see, there is a threshold on transactions for the BDCs. They were identified before. Now there are so many BDCs that are not registered, that are not known and if anything happens, you cannot trace them, you just see them on the roadside and you attend to them but now, BDCs are forced to register. If you have any transactions with registered BDCs, it is easy to track the transaction because you are supposed to take receipts. By such receipts, you will be able to know if they are registered or not. This is not a fight for only the CBN, for only the banks, for only the BDCs. It is a fight for everyone. Those of us that transact business with the BDCs, do you ever ask for receipt? Do you ever find if the BDC you are transacting with is registered? If he gives you fake currency, can you go back to him? Can you go back to his office? If you met him on the road, do you just go and stand on the road looking for him? So it’s a responsibility for us all to ensure that the society will remove quacks from the business. One of the things society needs to do is to make sure it puts in systems to ensure that crimes are reduced to the barest minimum if not absolutely eradicated. So one of the things that is put in place is to ensure the BDCs are operating within the ambit of the law. Apart from being delisted, there are lots of sanctions that can be meted out to erring BDCs. When you don’t have the laws, you have set yourself up for failure. So it is simple. When there is a lawless society, it is even illegal to be abiding by any law.

    There have been many policies around foreign exchange (forex) by the CBN; how realistic are some of these policies? What are the consequences if BDCs stop reporting their transactions to the regulator?

    The CBN has the responsibility of safeguarding and managing the financial systems and those decisions will be taken based on certain information that is available to them. Now BDCs can get forex on allocation from the CBN. Whether they get the forex from CBN or not, they have obligation to report. If for instance in my domiciliary account, I have never seen $1 million before and today I put $20 million, the bank has responsibility to file suspicious transactions report. That they didn’t get it from the CBN is not a justification for them not to file such report, you understand. BDCs have a responsibility to file transactions returns. So in a case where the BDCs do not file a return or file what it should file, then such operator is breaking a law. And when he is breaking a law at the slightest provocation, if he is caught up with, he is out of business. So the fact that CBN is not providing forex for them is not the reason why they shouldn’t file what they should file because CBN regulates their operations and when you are a regulator, you take your decision based on what is happening in the market and the fact that you didn’t buy from them is not the reason why you should stop filing returns. If I come to a BDC now and I am a business man and I say I have $500,000 to sell to you, the person should be able to file transactions reports to Special Control Unit against Money Laundering (SCUML). The BDC is supposed to report to their reporting line, be it SCUML or CBN or even financial intelligence unit so that they identify who this person is, and if need be, investigation can commence .If it is a legal business without crime, nobody disturbs him, if crime has been committed then he will face the penalties.

    What form is the investigation supposed to take?

    It’s the responsibility of the law enforcement agency to carry out the investigation. One if I file a suspicious transactions report, if for instance a bank files suspicious transaction report to NFIU, the body will do an analysis. Based on the analysis, it will either send information to the appropriate law enforcement agency or agencies or not. The agencies now have a responsibility to carry out investigations and investigations can take any form. If someone works in a bank and his salary is N10 but today he pays in $500 million into his account, the responsibility of the financial institution is to file a report. We saw this transaction and think it is unusual, they have finished their responsibility. The NFIU will look at it and analyse it what is this money for, this money came into his account as a transfer for a workshop that is about to happen, why wasn’t it transferred to the official account of the organisation? After they do their analysis, they send the report to EFCC or special fraud unit of the Police or straight to Independent Corrupt Practices and other Related Offences Commission (ICPC), those people will carry out their investigation. If need be, they might invite you, if no need, they would do their investigation without inviting you. If you are cleared, they let you go, if you are not cleared, they call you to come and explain. If the explanation is not justifiable and crime has been committed, you pay for it and this is what the process is and it saves virtually the society.

    Does it apply in both public and private companies?

    It applies to everybody. It doesn’t matter today if you paid unusual account or paid into Abuja, they should report it. They are not saying the person has committed a crime, that is why its called suspicious transactions. Sometimes, it could be currency transactions, it could just be volume of currency, it might not be suspicious. It might be regular, maybe you just saw everyday from my account, N1 million is paid into a particular person everyday. It might just be this is unusual, the frequency is worrisome, somebody needs to file a report and this is the simple process. That is why we encourage that the financial system keeps their safeguards. All the non designated financial businesses and professions keep their safeguards. Even if you are an estate agent and somebody is coming to buy 600 houses or buy an estate and you know that this guy works as a civil servant, you have a responsibility to report.

    How would you assess the Nigerian situation, where there are visible allegations of money laundering activities and proliferation of small arms?

    Well, let me not say I want to assess Nigeria’s situation because I would require some parameters to do a thorough assessment. However, Nigeria as a strong country is a strong member of GIABA, and of course strong member of ECOWAS. And like other strong countries and as members of ECOWAS, of course it is our responsibility to protect the economy of Nigeria from the proceeds of crime, ensuring that terrorists financing do not take place by ensuring that Nigeria as a country does comply with the 40 recommendations of the FATF and put up systems to ensure the implementation of those recommendations to the letter. Those recommendations are to guide and ensure that crimes that we are working against do not get perpetuated in Nigeria. However, Nigeria is one of the countries in recent times that have shown commitments to complying with those recommendations in terms of enacting the laws. Let me say clearly that in a lawless society, it is criminal to be law abiding. When there is no law, you have set the stage for failure, so by Nigeria’s position to enact the laws against money laundering, terrorists financing, proliferation of arms, against all the required issues that have been laid out is the first step to ensuring you have put in place measures to stop that. Secondly, the measurement of effectiveness of those laws can’t be done in isolation. So, I would say Nigeria is working hard to comply with those recommendations. They have taken appropriate measures in enacting the laws and the stage we are now is measuring the effectiveness of those laws and GIABA will be embarking on second round of mutual evaluation of member states. Nigeria is in category of those that would be done.

    Basically, what is GIABA about?

    It is Inter-Governmental Action Group against Money Laundering in West Africa (GIABA). It is an ECOWAS institution, established in 2000 by the authority of Heads-of-States and governments of Economic Community of West Africa States (ECOWAS). It’s a specialised institution, and the Financial Action Task Force (FATF) regional body. The FATF is the global body responsible for building standards and recommendations to fight money laundering, terrorists financing and proliferation of small, light and weapons of mass destruction. Within the confines of this work, GIABA has a mandate to protect the economy and financial institutions of West African states from the laundering of the proceeds of crime and so work with the FATF recommendations to ensure that terrorists financing is not happening within the region and by extension across the world. That is the core mandate and responsibility of GIABA.

    How does it feel knowing that money laundering, proliferation of small arms, terrorists financing and all those things you are supposed to be fighting against still thrive in our societies?

    There is no society without crime yet. We do hope and look up to one day probably there would be but obviously there is none. With all the sophistication in the US, with all the sophistication in Europe, with all the sophistication across the world, you will see the activities of criminals. The efforts that we put in place are to build the system whereby we mitigate, reduce to the barest minimum these crimes. Today, we make a lot of discoveries, which have made it easier for us to know when a crime is committed. So, sometimes the things we see as increase in crime are actually discoveries of crimes. If for instance they say in one country in Africa or West Africa, somebody is being prosecuted for $20 billion or $1 billion, it is because this information is known, that is why the awareness is taking place. If it is not known, it will be as if there is no crime being committed. What we see now is more discoveries of those crimes, more pursuits to stop them or more prosecution of those who commit these crimes and that are what people usually term to be increase in crime. We see them as more detection of crimes and the more you detect, the more you punish, the more you prosecute, the more deterrent there are and the less crime that people are carrying out. You are dissuading them from committing a crime; when you discover, you detect, you investigate, you prosecute, and sanctions are appropriately carried out to those guilty and those sanctions, I must say, must be dissuasive, proportionate and adequate. When this is done, then, you will have dissuasion. People will not have the incentives to carry out the criminal activities anymore.

    Are there specific challenges you are tackling in Nigeria now?

    Of course everywhere you see issues of criminality, there are challenges. Not only in Nigeria but eventually in most African countries, corruption is high, trafficking is high, drug related offences are also high. We are trying to work with all relevant agencies, for instance, GIABA provided technical assistance to Economic and Financial Crimes Commission in Nigeria, and this is part of things to strengthen their capabilities to be able to carry out their duties and also encourage the leadership to provide the political will.

    What is your view on looters returning stolen money and being left to go; is it the right way to fight corruption?

    Well I am not aware of any official document saying some people pleaded and returned funds and if it does exist, I am not aware. What I have seen so far is that there have been arrests ,there are other issues, allegations and as I have said earlier, allegations are just allegations until proven by a competent court of jurisdiction and one is convicted of a crime. If you asked me to return one naira and I returned one naira, there is no court of law that have said I committed a crime; so it is probable discussions and negotiations between private people or public people. What I would say would be of interest is effective prosecution and securing conviction based on the court judgments, then we can now say fine this is a case established by a competent court of law of corruption on money laundering issues and what we see today around is still the process, there are allegations, there are investigations going on, until we see prosecution and conviction, we cannot say crime has been committed. So if people are having any form of discussion by the side, all of those things cannot go as conviction until we secure conviction in the courts. I think many of those cases are being filed in the courts and we are looking forward to see those cases probably prosecuted and if convictions are secured, we will know crime has been committed and appropriate sanction meted out.

    What is responsible for the ongoing increased activities by the EFCC in fighting corruption?

    Well, I won’t say EFCC is either being active or not active. What I use as a yardstick is the amount of conviction secured. GIABA, as I have said earlier, has provided technical assistance to many anti-corruption agencies in the region and part of that is to ensure that there is more conviction. From the report I have received from the EFCC even in the past, there is large amount of conviction. It might not be purely politically exposed persons but conviction has been going on. What we want to see is more conviction, what we want to see is if people have committed crimes, they should pay for their crimes. Now there are a lot of issues and noise because a lot of politically exposed persons are involved. Whether the EFCC has worked more or less should not be for us to pay attention to. What we want to see is that crimes have been committed and those crimes have been paid for which would be a deterrent to those who want to commit crime in the future. I would not say EFCC has been doing more or doing less than they used to. What I want to say is that convictions were being secured in the past, more convictions should be secured if there are more crimes committed. So we must measure first if in the past, where there are crimes committed, were these crimes investigated, was prosecution process instituted and conviction secured? When we have all of those yardsticks, then we should be able to measure.

    If everything goes on and you did not report, the law will catch up with you. So, these are the processes that have been put in place and that are part of the things that GIABA is ensuring that each member state has all of these processes in place. Until those processes are in place and well known and understood, then we will be able to mitigate and fight this crime originally because people now launder money via properties, via luxury cars, they buy all sorts of things. You see somebody has 20 houses, even if nobody is living there; they just lock them because they just want to launder the money. If you go to many cities within the region, you will see that many people have big houses within the high brow areas that are not occupied. If the estate agents are doing their work, when people are procuring, if lawyers are doing their work when people are signing agreements, all of those things supposed to come as suspicious transactions. If they file their reports properly and the agencies do their analysis properly, you will find out that some of these things would be discovered.

    Recently, I heard in the news that there is a civil servant whose account has almost N200 million, whose salary is less than 0.01 per cent of that amount. So the financial institutions have responsibility, they are well taught on what these responsibilities are. They understood it and I expect that they are doing their corporate reporting. If they are not, they would pay dearly for it. Sanctions are going on across the world. It is even increasing. PNB Paribas in the U.S paid in billions of dollars in sanctions; HSBC was sanctioned to the tune of $1.9 billion. Any bank that fails to comply, the sanction can kill such a bank.

  • ‘Local ad agencies should think global’

    ‘Local ad agencies should think global’

    It is a multi-billion naira industry, yet it is struggling for world renown. How can the advertising industry achieve global fame? One of the ways, says  Rosabel Advertising Limited Managing Director/Executive Creative Director Clement Omemu, is by growing local brands to international repute. He tells ADEDEJI ADEMIGBUJI, in this interview, that  when local brands compete internationally they will make an inroad.

    How has the fiscal policy and austerity measures affected advertising business generally?

    Realistically speaking, clients are beginning to cut down spending budget for their brands. Brands are suffering. If brands were human beings, they would have gone on strike. They will complain about what they are exposed to. Branding is what consumer takes. It’s like a mind game. So when you cut down budget, you also cut what you call  Top of the Mind Awareness or TOMA. That means you also deprive the brand of it expression. So, when government cuts its budget, business people want to cut their spending but in the end, it will affect brands. It is quite unfortunate. I always encourage people at this point that even if that is the case, please keep your brand in the mind of the consumer no matter the cost. In some parts of the world, advertisers spend more on their brands in this period because a time will come when others are looking for a space you already have in the minds of people.

    How will the industry cope with the policy?

    We like what the government is doing because corruption has eaten deep into our system. There are leakages everywhere, at the ports, airport and everywhere. This has damaged our international reputation as a nation and as a people. So, our industry agrees with government’s determination to block these leakages in order to build our economy and international image. We like what the president is doing. On one hand, we feel the impact because stopping funding of some government parastatals may affect spending of some brands but it’s for a short while. The industry will  bounce back, but at the moment the industry is really feeling the weight of that clean-up which will eventually help us. But we hope that they will be fast enough so that we can quickly bounce back.

    Can ongoing effors to regulate banking position financial institutions to fund projects?

    Well, you wouldn’t blame the banks. They have their stories to tell. They have their bad stories to tell about those they have done business with; how businesses have crashed, how they have not got their money given in form loans back. So, their lending power is weak. They want to lend but they are being cautious to lend money out except one is genuine. Banks are beginning to give grades. There are some companies they categorise as grade A, which means these companies will not mess up. There are some B, there are some C. So, C may mean don’t go near there, don’t do business with them. Again it boils down to credibility of companies and businesses. We hope that as things improve the banks will begin to come out boldly and begin to fund small businesses.

    There is an upsurge in new creative agencies competing with the bigger ones. What do you think is responsible for this?

    Firstly, some of those who started some of these agencies were disgruntled and tired of the norm. This young generation feels there are different ways of doing things. So they become restless and they are tired of doing things the same way because they feel doing the same thing the same way all the time is insanity. So, they are looking for new ways of bringing innovation into the business. Some of the old agencies don’t want innovation, they want to do business the way they used to do it. Globally, the trend is moving at a lightning speed and if you don’t change with the time, it becomes moribund. The young agencies, however, are bringing innovation and that is what separates the young ones from the old ones. So if the old ones don’t innovate, they will die. That is why they are booming.

    Does the new way of approaching creative efforts conform with advertising ethics?

    What you mean by ethics must be a responsible practice. When it comes to ethics, I think the young agencies are doing it. If they are not, clients wouldn’t go to them, although I’m not ruling out shady deals. A situation where brand managers are conniving with some of these agencies to becoming stakeholders instead of thinking of the brand is sickening. They are not thinking of the brand, rather they are thinking of themselves. Some of these people may get business based on that. But the real drivers are the ones who want to bring a new way of thinking into the business into our creative business. They are genuinely concerned about the way things are done and they want to bring some changes.

    Big agencies seem to be losing grounds to their small and foreign counterparts. What are the big agencies not doing right?

    Agencies just have to innovate or die. If you do things the way you have been doing things before, you will never grow. There is  need for agencies to look at their manpower, considering that some of them are using the same knowledge they have over 30 years ago. You can’t use the advertising knowledge of 1990 to run a 2015 advertising business. It is not the same thing. Changing new tools, new trends, and consumer lifestyle have changed and they keep changing, and you have to change with it as well. The way people think is changing. The media is changing; people are going online, personal media with their phones. You are still talking about traditional media, only you are still looking at paper work when things are online. So, most of these old agencies don’t want to innovate. Old agencies by now should be run by young people who are trending, young people who have been groomed for this time.

    Agencies are said to be owing media outfits, especially the print, huge advert debts. Has the industry been able to resolve this?

    Today, no agency should be owing media houses because agencies are not banks. In the past, we use to run on credit. That is old ways of doing business. You come up with a campaign and the client says go and run it, are you a bank? Companies that want to go to the media should pay the media. In the past, we were running on credit and they were enjoying it and agency counting money on paper, in the end they couldn’t pay. In the past, for example, a client would have a N400 million campaign and then tell an agency to go and run it, the media house collects it, and they ran it. Later, payment for such works become an issue, because the business may have folded up. There is no cash flow but today I think the only thing they can do is to sit down at a round table and negotiate the debt.

    One of the complaints has always been that the agency underperforms and yet wants to be paid an over-bloated budget for their poor services?

    How scientific is that? It is not something you measure. That is another old way of working. You don’t say N360 million will give you 60 million guarantees. That you want to use N10 million to meet 10 million people, there is no guarantee you will reach them. It is not science. You cannot come to meet me and say you want to reach 10 million people, so how many things will you do? How much will you spend? You start with how many people can you reach. If the people you want to reach only watch television and you put you advert there, you will reach them; but to now quantify that into naira and kobo would be wrong.

    If you have a bad product, there are many indices to measure profitability of every campaign, it is not just the campaign. The campaign is one aspect but if your product is not delivering, if you like spend a billion naira, you may not get return on investment, perhaps, because other things could be responsible. It could be channel of distribution, it could be product itself, it could be somebody sabotaging your product. So, there are many other things. If every part is played well, then you will reach your desired impact.  The product is good; the channel of distribution is good; the campaign as you plan to reach specific consumer base on insight and the synergy of this campaign all put together will give you the desired result. You may not get hundred per cent but at least you will get a percentage that is large enough to hit your bottom line.

    Foreign agencies are gradually taking over local advertising business concerns. Are investors complying with the APCON reform in doing this? 

    Why can’t a Nigerian agency become pan-African or global agency? Why can’t a local agency buy into other African market or even European markets? Why can’t they buy into an agency in France? It is because of our perception. We are not global in our thinking. Many agencies are not global in their thinking. It is not about funding, you grow your business. There are two agencies in South-Africa that I know- The Hardy Boys and King James. These are local agencies that are very big in South Africa. In fact, some of these big agencies have been clamouring to buy them but they refused. They want to grow their own business and the world is becoming a small marketing business where brands grow across the globe. So, it is not about them coming to buy us, it is about growing the market and growing the business. For example, if we have a local brand like Oluji Cocoa beverage drink, why can’t Oluji grow and end up in China and then if I am the agency handling it here, I will also travel to china. So, it is not about being in vogue it is about how do we think, how are we thinking about business? So that is important. So, it is not about APCON or no APCON. Although what APCON is trying to do is to keep us safe so that they don’t buy everything from us, that is why they insist on 70 per cent local and 30 per cent foreign equities. They are doing that to safeguard small local agencies.

    There was a time Rosabel was trying to affiliate with a foreign agency; what is the status of the relationship?

    In every relationship there must be mutual benefit. If you don’t have mutual benefits why should you go together? Everything is about compatibility; if were are not compatible we can’t go together. We look at the relationship and found out that we were eating from the end of the stick. Rosabel did not grow base on affiliated businesses, Rosabel grew local brands and grew in the process. Some of the biggest brands across this country today passed through Rosabel. I always say to people build your local strength, build your own brand. So, people will now buy into your business and not to buy you off.

    How is Rosabel trying to restrategise its business in this direction?

    We have come up with some wonderful strategy; we don’t want to eat from one basket anymore. The new Rosabel is divided into parts. One, we have Rosabel 360, the media, the digital, PRO and direct marketing. Two, we have Rosabel consult that trains not only staff but also clients and students because we just graduated some students last month. Three, we have Rosabel Content. Lastly, we have Rosabel Design. The design company design package, design logos for companies, brand identity and architecture while the content create content for TV, radio and all that. So, that’s how we operate now. That is the new Rosabel. So, in the coming months, the nation, the globe will start seeing a new Rosabel.

     

  • ‘Why govt should support local businesses’

    Government has a role to play in giving companies opportunity to thrive and create wealth for the economy. In this interview with Group Managing Director, Courteville Business Solutions Plc, Bola Akindele, said government’s reliance on foreign companies to handle sensitive contracts that can be efficiently done by local companies is not in the best interest of the economy.  He also speaks with COLLINS NWEZE on the Bank Verification Number (BVN) project and SIM Card registration, all awarded to foreign companies. Excerpts:

    You have not covered all the states in Nigeria, but you are going outside the country to provide your services, what’s the special attraction of those countries?

    Apart from diversifying our economy, you know forex regime is quite challenging now. Any wise businessman with opportunity to start business that won’t require forex, would be wise to do that.

    Aside that we have started moving into other parts of the continent for about five years,was not because we are not interested in covering the whole of Nigeria.

    I would tell you this, we have presented to every state in Nigeria but the ones that we work with are the ones that accepted the proposals.

    The good thing about the product is that from Lagos to Sokoto or from Oyo to Anambra , you can move and FRSC, police, anybody can confirm the detail of your vehicles. We still talking to states that are yet to embrace autoreg.

    How were you able to extend your services to foreign countries.  Are there specific advantages you have that other service providers in such countries don’t have?

    Every single item of our service is unique. We designed and develop them locally based on the challenges that we see within the economy.

    Nigeria is one of the most challenging environments to do business. We believe that when you are able to succeed here, you can take them anywhere and they become more than relevant. Whatever it is we have done, we have been able to patent them, not only in Nigeria but across Africa and everywhere.

    Everywhere we have gone, we have been able to surpass the objectives that we always set out to do. Now, we continue to strive, not only to broaden our business portfolios but also to expand the revenue bases of all our services.

    But in the countries outside Nigeria, I wont tell you that the challenges are not there. The challenges  are both the fact that we are Nigerians and the fact that it is a very difficult thing to go into any other sovereign country and attempt to work with their government without support of your own government. And that is what we are not getting much of and that’s not just us as a company. Its like you suffer being Nigerians when you go outside Nigeria and you come back to Nigeria, the same government does not give you the support that you need.

    So, we would continue to try to broaden our bases ,like in Zimbabwe, we are going to hopefully also start up very soon in Guinea, Senegal. We are already on ground in Kenya not with a lot of activities but we have found that the country is quite investment friendly for the kind of things that we do.

    Cross Border transactions now is a deep thing in the face of forex policy of the Nigerian government. How is it a factor in your business and how have you been able to mitigate the currency risks involved in these countries?

    What we do is to continue to navigate. We can only submit to  government so that this can be included in the policy, but the thing is that the current forex regime has actually, almost totally wiped off whatever  thin margins there were in those businesses including ours.

    I don’t want to call it naira devaluation but there is no way that would not impact on businesses, more so, when in the local economy, you are  unable to also  concurrently review up your own rates.

    I don’t blame the state government or any individual company, we are all in the same boat, the state government also has its challenges in not only paying salaries but  even to generate enough, so going to them to say you want upward review would really not make sense to them at this time.

    But are there no benefits that would come from the forex policy?

    The benefits would eventually come. We just pray it has a trickle effect on everything including presenting opportunities for people in business to also generate revenues. If  forex regime is settled and we know where we stand, prices would adjust themselves across all spectrum of business entities.

    What is the number if cars we have in Nigeria roads in the 23 states where you provide your services?

    We have over 10 million vehicles  and why its vehicles: the trailers, cars, including motorcycles as at 2007, our statistics showed about 14.4 million vehicles across  Nigeria and then this have been going up on the average every year by about 22.5 per cent. So you can project. We have close to 20 million vehicles now across Nigeria including motorcycles.

    That statistics in a population of 180 million, what do you make out of it?

    Let’s say 20 million cars to 180 million people, that’s one to every nine. Its not necessary a bad one but in view of the states and the availability of facilities and resources to actually accommodate this volume, you will find out that is why we have traffic all over the place.

    That’s why the pressure on roads are so huge, maybe that’s why maintenance is very tight for some people. That’s why government needs to also find infrastructure in other areas of transportation, aviation, rail, water, and that would allow you to say even if you have a car, I don’t have to drive around everywhere again but in areas of maintaining the infrastructure investment for us, government has to now be a lot more organized, a lot more focused.

    If you activate the rail system for conveying goods across Nigeria and it working seamlessly, that would reduce the pressure that trailers have on the roads. But for us, we need to improve the corresponding level of investment in our infrastructure. We don’t want climate to be totally covered with fumes of cars.

    How are you able to tackle fake vehicle documentation in the country?

    That’s what the Autoreg, our flagship product, came to stop. We would never get to zero percent, but what we do in our case is that we continue to evolve. Every two to three years, we come up with an upgrade of our applications.  But to a large extent, in all the states that we have been, because it’s a totally exclusive service, you cannot be running Autoreg in a state and there’s any other manual process.

    It is easy to determine what is fake and what is original and we have to a large extent, moved in this trend in all the states we have been. I am not suggesting that its zero per cent but they are easy, easy for the regulator, Police and other stakeholders to find out and confirm.

    What we have done is to make it unprofitable for the parallel marketers to stay in business and we make it unreasonable itself for the motorists to go and patronise the parallel market and once you combine those two, you know that service is available, its cheap it is easy and fast, it cannot be cheaper than that, so you have no reason to go anywhere else.

    The government pushing for increase tariffs for vehicles at the ports, do you think that we need it at this time and if the tariff stand, how can it affect your business?

    Well, I guess road taxes are part of the taxes that government collects and hopefully apply to infrastructure investment improvement and everything. So, across West Africa alone and everywhere else I have gone, we know Nigeria has the lowest tariffs generally on road taxes. The closest is about 50 per cent  of what happens in Togo or Benin, every other country has far higher road taxes regime and it would not be out of place for government to adjust.

    The last adjustment on any tariff happens around 2005 or 2006, 10 years ago and the Gross Domestic Product has changed since then. Everything has changed. Earnings has changed, car prices have gone up, naira value, so there is no reason why that should not change but it should be reviewed  in the context of what is available.

    Do you believe the tariff on Vehicle imports should be raised?

    Not on the vehicle imports but road taxes. The Nigeria Automotive Council policy, I think it would bode well eventually for the country. It should make vehicles a lot cheaper now as it is whether we like it or not, because of whatever regime it is at Customs, the beneficiaries are the economies of Togo and Republic of Benin because people don’t want to pay the kind of tariff no matter how small it is here, they divert all their vehicles to Togo and they drive them in through all the porous borders.

    It has been 10 years of operation. What is the biggest challenge you are tackling?

    Our biggest challenge is the need for the government of Nigeria to support us. Not just us, but the local business. I stated earlier that we suffer the consequences of being Nigerians when we go outside, they say Nigerians are dubious even though we try to project the country well without being paid for it.

    But we shouldn’t come home to be subjected to the same kind of treatment, because some foreign firms have some perceived advantages over us here.

    For instance, the Band Verification Number (BVN) capture, Independent National Electoral Commission (INEC) capture, SIM Card registration, National Identity Cards registration are the things we have shown we can handle successfully in other countries. But in Nigeria, if you are going to put out an expression of interest in these things, they would say you should come with a foreign technical partner that would be. I don’t need any. So, I don’t bother to bid for such jobs.

    If I have been able to do this in Nigeria and its working in other countries, you should give us such jobs at a fraction of what it cost others and we would do a better job because we know the terrain better. We also know the people and country a lot better and know the challenges a lot better than any foreign operator.

    So, we are in the best position as a Nigerian company to handle these things but we are not so visible to the government because when it comes, its only foreign companies that will get the contract.

    You should attempt to go to Ghana, its documented, official that there are areas you are not allowed to operate as a foreign company.

    I have told you that we have had successes in East Africa countries. If you have a value proposition and you take it there, especially when you not asking for anything from their government, they allow you to operate, follow their laws.

    What am saying is that the government should protect Nigerian businesses. There should be support. I am not advocating for protectionalism  but the point is that no body exposed his family to danger and now starts helping the enemies.  I won’t call them enemies outright but government has to know that this regional integration agreement thing is not beneficial.

     

     

    What exactly is Courtville all about?

    Courtville is a solution driven firm established 10 years ago. We have been listed on the Nigeria Stock Exchange since three years. We have operations both within and outside the country. We have over 200 staff as of date. Autoreg is an acronym for automatic registration and is our flagship product.

    It has made the documentation of vehicle particulars very simple, easy and quite popular. It has helped all the traffic on the road and also in controlling data. We have worked with state governments and ministries of transport in different states. Insurance companies are the biggest beneficiaries of the product and we operate at no cost to government.

    Are there other reasons while Autoreg was created?

    It was meant to help creation of a data base for motor vehicle owners and enhance vehicle revenue, removal and total elimination of touting and counterfeiting within the system, collecting fully, the revenues accruable to the state government in this regard and then making it easy for motorists to have access.

    Each of this objectives that we set out to achieve at the beginning ,we have more than achieved within the first year of operation of Autoreg in Lagos  state.

    Currently Autoreg is in 23 states in Nigeria, was in operation in Seirra-leone, it is starting operations in another format in Zimbabwe and its already working in some other ways in Jamaica as we speak.

    At least between every seven and eight out of every 10 cars you see on Nigerian roads are on Autoreg network. We cover almost 70 to 80 per cent of the population of vehicles in Nigeria.

    We have a very robust database of this. It has helped all the traffic on road and management agencies in Nigeria regarding the control of data of vehicles and motors in Nigeria. In this regards, we have worked largely with VIO’s and ministry of transportation of different states, and Federal Road Safety Commission (EFCC) to mention but a few. Database has come useful to all arms of the security agencies and government, talking about Economic and Commercial Crimes Commission, State Security Service, Police and even National Drug Law Enforcement Agencies to a large extent.

    The coming of Autoreg, has it been able to block some leakages?

    Of course it has. That’s why we are able to see in revenues from vehicles registration risen by over 250 per cent in most of the states. It means we have been able to block the leakages and people are now more comfortable and are able to give information on themselves and their vehicles to the states.

     

     

  • Adelabu: a quintessential banker, role model

    Adelabu: a quintessential banker, role model

    I was on the Internet, trying to get the names of successful Great Ife; those who attended University of Ife (now Obafemi Awolowo University, Ile-Ife) when I stumbled on his name. Again, I did not know he had any relationship with the late Chief Adegoke Adelabu ‘Penkelemesi’ until someone told me he is one of the grandsons of the late politician.

    For someone like me who has always been looking forward to seeing young people from my state doing great things, it was a dream come true. Our state has been tagged as a place that cannot produce achievers, not minding the fact great people have been produced here, in Oyo State.

    I have attended several conferences, seminars, lectures etc and all what I have always looked for is intellectually sound mind who are doing well in their chosen fields. Many times I was disappointed when they read their beautiful credentials and they are not from my state. To some people, why am I concerned with this ‘egoistic thing’? I love to be motivated by the achievements of young people, especially when he or she is from my state.

    Born on September 28, 1970 in Ibadan, the Oyo State capital, young Adebayo Adekola Adelabu, now Central Bank of Nigeria (CBN) Deputy Governor, Corporate Services, attended Lagelu Grammar School, Ibadan before proceeding to the prestigious Obafemi Awolowo University, Ile-Ife to study Accountancy. Just like his late grandfather who scored firsts in virtually everything he laid his hands upon, he graduated with a first class honours in 1992 and later went on to  pass his final qualifying examinations of the Institute of Chartered Accountants of Nigeria (ICAN). After two decades of joining ICAN as an associate member, he has rose to become a fellow member of the institute.

    Bayo’s grandfather, Adegoke Adelabu, was said to have displayed a rare prodigy in western education as he earned double promotions thrice consecutively in the elementary, primary and later in secondary school.

    In the centenary posthumous birthday celebration, Oyo State governor, Abiola Ajimobi was quoted as saying: “Today, we have not come to celebrate only his academic prowess, though, one of his immediate juniors of Government College, Ibadan, himself an erudite scholar, Professor Saburi Biobaku, had said in his book ‘When we were Young’ (1992) “Adegoke Adelabu was the brightest student that Government College has ever produced or is ever likely to produce”.  His activities as a grown up and his evolved political philosophy did not only threaten, but actually culminated in the abrupt termination of promotion of British Colonial interests and hegemony at the expense of the educated Nigerians.  He was a meteor, prodigy, wordsmith, an orator, peculiar and a unique personality.

    “It was Dr. Victor Omololu Sowemimo Olunloyo, himself a brilliant mind, and an old boy of Government College, Ibadan, former Executive Governor of Old Oyo State, who described Alhaji Adegoke Adelabu  as perhaps the most remarkable person that Ibadan has ever produced … a genius … better endowed than virtually all his contemporaries on both sides of the political divide … a deep thinker, widely read, philosophically accomplished strategist and master tactician,” Ajimobi added.

    For seven years, he worked with Price-Waterhouse (now Pricewaterhouse Coopers), an international firm of Chartered Accountants and Management Consultants where he earlier had his professional training. After leading and managing various audit and consultancy engagements for large banks and non-bank financial institutions within and outside Nigeria, he was also on secondment to the CBN for one year (in 1999) when he led the Finance team on the CBN re-engineering and corporate renewal project. In 2000, he left the firm as an audit manager and senior consultant to join First Atlantic Bank as the Financial Controller and Group Head of Risk Management and Controls. He also held various other positions while in First Atlantic Bank including the Chief Inspector of the Bank (2002) and Group Head of National Public Sector Business (2003).

    Before Adebayo was appointed as executive director of FirstBank of Nigeria, he was the bank’s Chief Financial Officer.  His choice, according to the bank’s Group Managing Director/Chief Executive Officer, Mr. Bisi Onasanya, was geared towards enhancing the capacity of the executive management and board. This, he added, was also to deepen specialisation and strengthen the corporate governance culture of the bank.

    Onasanya said: “Under his leadership, the existing performance management framework for the bank was set up while he was also credited with the successful execution of the bank’s medium term strategic plan targeted at profitable growth with respect to revenue maximisa-tion and cost optimisation. He also had a stint at Standard Chartered Bank between 2007 and 2009 as General Manager and the West African Regional Head of Finance and Strategy,” he added.

    Onasanya added: “As the leading financial services institution in Nigeria, the bank is keen on ensuring adherence to international best practices in the constitution of its board and management. We, therefore, continuously seek the most capable talents in-house and in the industry to fill vacant positions within the group.”

    A member of Ikoyi Club 1938, Jericho Businessmen Club and Ibadan Golf Club, the youthful banker once told reporter that he will be bringing to office initiatives that would rapidly move the bank forward when asked what should be expected of him as CBN deputy governor.

    Pledging to pursue a philosophy of productivity to achieve the desired result for the bank, he noted: “I don’t believe so much in activities. It’s more about productivity. I do more of the work than the talk. I don’t believe that we should talk too much. If you have a work to do, do it well and everyone will see that it is a success,” he said.

    The youngman who likes doing his things without the media noticing later said that his coming to the CBN was timely for him as several key decision makers around the world were within the 40s and 50s age bracket, the most productive years in the lives of the executives , expressing confidence that the vibrancy and energy associated with that age bracket, coupled with the experience he had garnered in his professional life would manifest in the discharge of his duties.

    “It’s not so much about age these days, but what you bring to the table. It has to do with your experience. When you have youth in positions of responsibility, you have the strength and vigour to face the rigours of the job.”

    Apart from being a member of many local, national and international associations, he has been bestowed many awards for his immense contribution part of which are the Distinguished Fellow Award of Central Council of Ibadan Indigenes (CCII) in 2010 and later honoured with a Chieftaincy title of Agbaakin Parakoyi of Ibadanland by the Olubadan of Ibadanland, Oba Samuel Odulana Odugade 1.

    These many achievements of the Ibadan-born banker is a good motivation for the youth of Nigeria, especially Oyo State. Despite his rich background, his grandfather a popular and affluent individual while alive, Bayo did not allow that to fool him, he went on to bag a first class grade at Africa’s most beautiful university, OAU, Ile-Ife. And twenty-three years after he left the great citadel of learning, he has etched his name in gold, leaving many tongues to wag as to how he made it.

    A silent achiever, Adebayo did not allow work to distance him from his Ibadan root as he is always in the state capital regularly and especially when his help is needed.

     

    • Akinola is of Abu Summaiya writes from Ibadan. He can be reached via sikiruakinola86@gmail.com.