The Nation Newspaper

Category: THE CEO

  • ‘How to revitalise real sector’

    ‘How to revitalise real sector’

    Industrialists are not happy with the way the privatisation of some public utilities were handled. They believe it was poorly done by the Bureau of Public Enterprises (BPE). In this interview with OKWY IROEGBU-CHIKEZIE, Manufacturers Association of Nigeria (MAN) President Frank Udemba Jacobs says due process was jettisoned when the firms were being sold. He wants the government to revisit the exercise. He also slams the Central Bank of Nigeria (CBN) for frustrating the real sector with its policies.

    The Comptroller General of Customs, Col. Hameed Ibrahim Ali, recently visited members of your association.What did you take out of the meeting?

    The Nigerian Customs has indicated  willingness to work with manufacturers and protect the interest of the country in the discharge of their duties. That means   the interest of the nation remains paramount in their scale of duty.The Manufacturers Association of Nigeria (MAN) believes the present administration under the leadership of President Muhammadu Buhari, has been moving in the right direction and needs time to complete ongoing efforts at resolving some of the challenges facing the country.

    The government is yet to unveil its policy direction. How has this affected the real sector and the economy at large?

    There are high expectations no doubt, however, many investors are cautious and are watching the direction of government. Manufacturers are still producing and are desirous of what government intends to do as regards addressing the major issues such as energy, security, funding and multiple taxation all of which add to cost of production and are making Nigerian products uncompetitive.

    How has government’s  policy through the CBN, especially the one that has to do with domiciliary accounts, affected manufacturers?

    In the first place, we appreciate the intention of the CBN to raise local productivity through the use of monetary policy. However, we think the apex bank needs to also take suggestions from stakeholders. The issue of domiciliary account should not be a blanket policy, as there are companies that may wish to access their essential raw materials, which currently are classified as not valid for forex. They may want to do so through recourse to their export proceeds that may have been lodged in the domiciliary accounts. It is our considered opinion that they should not be technically hindered.

    How has the policy that shut out importers of 41 items from accessing forex through the CBN window affected manufacturers?

    We are not totally against the CBN policy; what we are saying is that there is need to carry the key stakeholders along. However, we are already engaging CBN with a view to resolving the issue around the 41 items. We want the essential raw materials of our members removed from the list. At MAN, we believe the policy is an ad hoc solution to a bigger problem. Barring 41 items that we believe were not thoroughly studied from accessing forex is not the way to go. Indeed from our findings, we identified over 900 items that CBN should bar from the forex market and not what we have seen. It’s our belief that CBN will see reason to allow manufacturers to  import essential raw materials.We forwarded a letter to the CBN governor to allow our members have access to foreign exchange for the  importation of all inputs required for manufacturing.  The repercussion of the insistence of CBN on the 41 items will lead to job losses.

    Why are manufacturers opposed to the European Union- ECOWAS Economic Partnership Agreement (EPA)?

    There is no doubt about the importance of economic partnerships as tools for economic cooperation and development. However, in a situation where such cooperation is on unequal basis, there is need for caution. The Economic Partnership Agreement (EPA) between Europe and Africa, Caribbean and Pacific (ACP) countries is an offshoot of the Cotonou Partnership Agreement (CPA) and is essentially designed as an instrument of economic and trade cooperation between the European Union and the ACP countries.

    The purported goals of EPA are to promote economic growth and development, reduce poverty in the partnering countries, expand and diversify trade and increase domestic and foreign investment. However, the process, structure and perceived contents of the EPA negotiations have raised serious concerns about the impact EPA would eventually have on ACP countries and their efforts towards poverty eradication, regional integration and economic growth.

    We are asking for the development implication of this agreement in the belief that if Nigeria signs the agreement, most industries will close down; our local manufacturers cannot compete favouarbly with goods from Europe and other developed economies due to cost of doing business occasioned by the paucity of infrastructure. We believe that what they are looking for is our huge market for their products but if they can help us deal with the challenges of  poor infrastructure and multiple taxation, we will have no choice but to support the government to sign it.

    We also called for the diversification of the Nigerian economy because any country that is largely dependent on a single source of revenue runs the risk of operating an economy that is dictated by external market forces. The nation’s economy still depends heavily on the oil and gas sector, which contributes 82.9 per cent of export revenues; 70 per cent of government revenues and 11.2 per cent of the gross domestic product (GDP) in 2013.

    What  is the real sector expecting from government in terms of policy?

    Some of the issues we have presented in the past have centered on cost of doing business. These include inefficient energy distribution, high cost of funding, multiplicity of taxes and levies, over regulation from regulatory agencies and trade malpractices resulting in faking, counterfeiting and smuggling. Some of these issues have been addressed partially, but we need a holistic approach that will resolve the problem and free manufacturing to a level that the sector would achieve its full potentials.

    The real sector expects an efficient and regular power supply; a single digit interest rate, harmonisation of taxes and levies, re-alignment and redirection of regulatory framework. We also expect strong regulation  in terms of supervision and enforcement, strong policy and instrument to address trade malpractices through combination of fiscal and monetary policies and policy support that will elicit patronage of ‘Made-in –Nigeria’ products, all of which will go a long way in diversifying the economy. Funding issue remains a challenge to the manufacturing sector as credit by banks to the manufacturers is below expectation. The current situation where manufacturers pay double digit interest rate is not manufacturing-friendly.

    What are the things needed to grow the real sector and the economy?

    Government needs to put in place relevant policies that will encourage backward integration in the real sector. Government needs to take the real sector into confidence and have targeted policies that will grow the manufacturing sector. That is the only way we can keep our factories going and also create jobs.

    Is it expedient to continue the oil subsidy regime in view of free fall of oil price at the international market?

    In the first place, Nigeria does not have business with having subsidy regime.But we are where we are today, due to the fact that we have mismanaged our oil sector, both in terms of upstream and downstream sectors. Therefore, the issue of subsidy does not arise.Now that we are having challenges at the international market as regards the price of crude oil, it is expedient that we discontinue the oil subsidy regime and address the issues of our refineries and refine our crude oil locally.After all, it has been proven that the whole arrangement is laden with corruption. Nigeria cannot afford to do the business as usual (thing), we have to address this issue frontally and take a firm stand on it.

    How competitive are locally manufactured goods?

    Nigerian products are not competitive. For instance, energy cost constitutes about 40 per cent of production cost. This is because the average number of power outage per day across MAN industrial zones in 2014 was five times more than previous years, while the number of hours electricity is supplied per day was six hours in 2014. Over the years, the sector has been greatly constrained. We are faced with high energy cost which has and is still affecting productivity and profitability of investments.

    These challenges have resulted in a decrease in sales/turn-over as well as margins across the manufacturing sub-sector and rare cases of expansion, diversification and new employment, while importation of technical skills required by the industry affected the bottom line. However, it is pleasing to know that our interaction with the Nigeria Electricity Regulatory Commission (NERC) is also producing desired results. The monthly fixed charge has been reduced by a margin of between 17 and 50 per cent, depending on the Distribution Company (DISCO) servicing the area. It is also on record that members experiencing continuous or cummulative power outages for a period of 15 days in a month are no longer liable to pay the monthly fixed service charge.

    What is your take on multiple taxation?

    We have constantly spoken against multiple taxation, we believe that when taxes are harmonised, illegal taxes will be eliminated and cases of multiplicity addressed. It will also reduce production cost, making our products globally competitive.

    Some people have called for the revisit of the privatisation policy. Do you agree with this?

    We believe the privatisation policy did not follow due process and is tainted with a lot of irregularities and corruption. We are yet to witness a rebound in some of the companies privatised. We must not forget that government embarked on the privatisation because they wanted to turn around the fortunes of those companies but if it can’t be achieved then something is wrong. We advise the government to take a second look at the whole process. For instance, the nation has not received a commensurate fortune from the privatisation of the three paper mills in the country. The trio, worth billions were sold for peanuts that is why the  pulp and paper mill sector has remained comatose, whereas in other climes, it is one of the highest employer of labour.

    Do you see any benefit in the Federal Government’s Treasury Single Account (TSA)?

    The TSA policy is a good one. It will grow the economy if corruption is eliminated from its operation as government will know exactly how much it has and what parastatal is paying what. Unlike now where some ministries and parastatalsare known to have been running independent accounts not known officially or openly. In some cases, when the minister or chief executive officer leaves office, the accounts are lost as it was operated in the first place without altruistic reasoning. So, we are of the opinion that the policy should be pursued with all seriousness to curtail corruption in the public service.

    What would you say are some of the challenges confronting MAN?

    The manufacturing sector has been under the siege of fakers and counterfeiters for some years now. In fact, the Nigerian manufacturers are now big victims of large-scale product adulteration, faking and counterfeiting. Outright faking of established local brands, increased incidence of smuggling, dumping, illegal importation of unregistered products, under-invoicing and considerable evasion of duty payments. All these undermine the sector and its export potentials thus, eroding the revenue base of the nation.We are happy that the Standards Organisation of Nigeria (SON) raided some companies in certain parts of the country for producing substandard products and rather than taking correction they went on a smear campaign. But we came  out strongly and declared that the companies involved are not our members and must be made to face the full wrath of the law.We are calling on the government to strengthen and empower the operations of the SON and the National Agency for Food, Drugs Control and Administration (NAFDAC) to carry out their regulatory duties. We must get rid of fake and sub-standard goods from our markets.

  • ‘How Nigeria can attain greater industrial height’

    The economy has long been facing challenges. Despite the challenges, the Country Manager, HarvestPlus, Dr. Paul Ilona, believes in the economy, especially, the agricultural sector. He says the government’s initiative will substantially grow the economy. He speaks on the path to growing the economy and other issues in this interview with Daniel Essiet.

    How do you see the economy?

    The economy needs fundamental reforms to keep growing in the competitive global arena. The challenges confronting the economy in the 21st Century are diverse and enormous. However, given our huge endowments of natural and human resources, the fluctuating economic status remains unacceptable.

    As at 1965, Singapore and Malaysia with similar colonial heritage and attributes were at par with, or even behind, Nigeria. Today, these countries have recorded significant successes in the development of their economies, while Nigeria is ranked among the poorest in global economies. This notwithstanding, I believe Nigeria is in the process of making up for the substantial ground lost, especially in the last 20 years; and it must do so within the context of a world economy characterised by advancements in technological development.

    Investment in human capital to drive investments in agriculture and agro-allied industries should become more important. Similarly, agriculture should regain its prominence and become the main engine of economic growth. It should be made to displace oil, just as oil displaced agriculture and the steel industry in the second half of the last century, as the main engine of economic growth.

    What prospects do you see for agric in the new dispensation?

    I see a ray of hope in the face of recent developments. I see renewed commitment to  national development, coupled with the country’s natural and human endowments. This provides the basis for optimism that the new administration will succeed in its efforts to attract foreign investment to hasten the process of economic revival in Nigeria.

    ‘I see a ray of hope in the face of recent developments. I see renewed commitment to national development coupled with the country’s natural and human endowments. These provide the bases for optimism that the new administration will succeed in the efforts to attract foreign investment to hasten the process of economic revival in Nigeria’

    We, however, need to watch our growing debt burden to make our earnings useful for providing infrastructure, diversifying the economy and making the required investment in science and technology to enable the economy to be competitive in the 21st Century. In addition, those policies and practices, which hitherto hinder investment in the economy, particularly agriculture, must be removed.

    With the application of appropriate technology and production processes, promotion of linkages to add value to raw materials, I see the nation assuming greater industrial height. It is the continued lack of effective linkage between farmers and agro-industries, which has largely robbed the agric sector of its traditional first position on the economic radar. To promote this linkage, the administration should implement, as quickly as possible, its proposal to establish Staple Crop Processing Zones (SCPZs).

    Have we moved from rhetoric to solutions in agriculture?

    If we have made progress, statistics should prove it. Our progress in agriculture should be measured with statistics. Statistics should be real if any meaningful impact is to be reported. Unfortunately, I have problems relating quoted statistics to reality, particularly when you consider the deplorable conditions in which our rural poor farmers live.

    In my view, the only pragmatic attempt to reposition agriculture in Nigeria has been the Agricultural Transformation Agenda (ATA) of Dr Akinwunmi Adesina. It is easy to imagine what would have happened to the economy if the oil price decline came up without this massive agricultural sub-sector reform. Even with that, I think we need additional urgent actions to address food price volatility.

    Industry wide, there is broad agreement that policy measures should mitigate and manage the risks associated with price volatility of food and other agriculture commodities, with the aim of protecting the poor. The government should provide social safety nets for the poor. Social safety net programmes need to be better targeted so that they reach the poorest households. All of these call for improved budget allocation and execution. The under performance of the ATA against expectations is traceable to funding, which may have been inadequate, or poorly allocated to the different sectors or poorly disbursed. Between 2013 and 2015 the total allocation to agriculture fell each year and remained far below the African Union (AU) recommendation of 10 per cent of national budget.

    Despite the use of hybrid seeds, the prices of soybeans, corn and other staples keep rising. What is the cause-shortage or speculation?

    Well, increasing the yield potential of crop varieties is not enough to bridge supply and demand gaps as there are several factors other than genetic improvement that influence the market.You must realise that corn and soybean are common staples and are demanded both for home and industrial uses. From an economic perspective, the increasing market price of these staples should be an incentive for farmers to expand production.

    This does not seem to be the case, implying that the additional price paid does not get to farmers, but rather to other players in the value chain. In my view, the reason food prices have remained high despite strong gains in crop yields arising from the use of improved varieties, is the result of high cost of distribution wrapped around incessant fuel shortages and its associated hike in transportation cost. Even then, food prices have been on the increase in the Northeast before the fuel shortages due to rising input prices following continued unrest in the region for which reason most farmers have abandoned their farms and fled.

    Other factors driving up food prices include, poor rural infrastructure, inadequate power supply to boost shelf life of perishable products and to a good extent, climate change. We need to deploy suitable technologies to produce more food to keep up with the growing population and demand.

    In the current production system, success will depend on weather conditions and value-added techniques to manage supply chains more efficiently. Therefore, to increase crop yields significantly, Nigeria should as a matter of urgency, explore the possibility of having more than one cycle of these crops in a year. There is no reason why we should not harvest maize and soybean twice in a year. This requires that we develop capacities in irrigation to ensure production during the dry season.

    Agric start-ups are springing up across the country. Do you think we have the right business environment to support them?

    More than any other sector, I think we need  new startups in the agric sector to serve as models and inspiration to aspiring entrepreneurs, who hope to unleash their ideas and start new companies either in farming or  food processing. Young companies need encouragement and recognition at the earliest stages. We are witnessing the emergence of promising agro entrepreneurs, who will eventually generate jobs and spur economic growth within their communities. We need the right environment to support farmers thinking of diversifying, by adding new business activities to traditional farming.

    The agri-food industry is facing an exciting future. While there are many challenges ahead, I am confident that the industry is positioned for faster growth in both long and short terms. The truth is that we are not yet there in terms of the enabling environment. I believe with the right environment, including supportive rules, regulations and funding, there are opportunities within the sector that can be converted into good businesses, significant new employment and greater wealth for Nigeria.

    I hope the new regime will deliver an impacting and achievable national strategic vision and action plan that targets areas with  the greatest potential for growth, including the agric industry. Largely, agriculture is still considered to be risky judging from the enormity of challenges that confront existing investors. Farmers here continue to face challenges such as poor energy supply, inadequate input and service delivery, limited access to land, labour, finance, deteriorated farm roads and a host of others. We need to put in place a special fund to support rapid investment in the industry and support institutions financially to accelerate research and development and collaboratively uptake initiatives to make Nigeria a sub-regional leader in safe food production.

    As an  expert who has been  involved in crop  breeding, what does it  take  to run a functional food and agriculture system?

    There is no doubt that in a country like Nigeria, industrial growth will be less effective in reducing poverty compared with agricultural growth because a major percentage of the population live in the rural areas. Even though the industrial sector is important for boosting the economy, it fails to create sufficient employment for the poor and the unskilled. In this regard, a key strategic priority of the government should be to restructure the nation’s food and agriculture system.This involves improving food production and promoting agriculture as the strategic basis for overall rural development, and consequently guaranteeing the population a secure food supply.

    In the 1950s and 60s, Nigeria was a major exporter of groundnut, cocoa and palm oil, making agriculture to account for over 60 per cent  of our gross domestic product (GDP). The system functioned well until the crude oil era in the 1970s, which for many Nigerians has remained a doom rather than a boom, the Nigerian agriculture has not found its feet since then. I remember from history the impact of the Nigeria Cocoa Board, which was set up in 1947 and the Nigeria Produce Marketing Company, which I think metamorphosed into the current Nigeria Export Promotion Council. I think we lost it at some point, but we can get it back if we choose to.

    ‘We need to address markets right from the outset. If our agricultural systems make it possible for farmers to sell off their produce when needed, it becomes an incentive for farmers to invest their gains back into their business. We need to build confidence into our agricultural system by powering a market information system that farmers and agents who buy in bulk can easily access’

    A structured import substitution policy will help using trade and tariff barriers to keep and sustain local production. Under the ATA, a lot happened in this direction and I give a lot of credit to Dr Akinwumi Adesina. Why must we import what we can produce? Why should we continue to take coal to the coal-city? Nigeria with her abundant resources can produce rice, maize, cassava, cowpea, millet, fish, snail, plantains and banana as well as fruits and vegetables to feed Africa if we choose to. Conversely, we are importing common banana and even pepper and tomato from South Africa. I think this is a shame. We are importing tooth picks just as we are importing all forms of fairly used products. We need to encourage local production and protect investors from shylock international trade policies.

    The government needs to improve the range of support available to nurture agriculture, from credit and technical assistance to market access. Farmers need support in the form of necessary inputs and equipment, such as tractors and seeds, as well as training and technical assistance. For many farmers, the process of repositioning agriculture requires moving away from old and unproductive agricultural practices, embracing  new   crop varieties and growing techniques, improving agro-ecological knowledge and value chain techniques. What we all want to see is increased levels of food production, new processing plants, political will and community empowerment for food security. There is no doubt that oil export will surely decline as we continue to deplete our reserves.  We need to plan for the future. Although it may be difficult initially, but in the long run changing to an agriculturally based economy will help our economy to grow and prosper.

    The quality of products is a prerequisite for successful market access and is essential to enhance export potential. How would you describe the quality of agricultural produce here and do you think the country has been able to take advantage of the export opportunities inherent in it?

    Like every concerned Nigerian, I will say  we have not been able to maximise the international trade opportunities for the agricultural-food sector as a whole. Perhaps, we have not realised that agriculture is the engine for driving strong, sustainable growth in the economy. The potential for continued growth in exports from the farming sector is significant. The government must take it upon itself to work with partners to create   access to international markets for Nigerian  agric and  food products. Working together, farmers and producers, government  through the Nigerian Export Promotion Council (NEPC), Standards Organisation of Nigeria (SON) and the diplomatic service should canvass for the removal of trade barriers. We have to understand that we are operating in a competitive global food system, with high  safety standards that we must comply with.Apart from making sure our exporters have access to information about mandatory technical requirements and voluntary standards applicable in the importing country, we must collectively address food safety and quality issues that are hindering export market access for produce. The intervention must include the development of standards for export of specific produce, upgrading laboratory testing capacity, training in food safety systems for farmers and food exporters. We must conduct training sessions for producers and exporters on implementation of good agricultural export practices. We need to have mechanisms to keep track of upcoming technical requirements for export so that they can be taken into account and to disseminate up-to-date information to exporters. A public-private partnership would be appropriate. In the case of cassava, a book of standards was published by IITA for the export of chips, flour, gari, starch and other products. But in addition to this, you need to prepare an export marketing plan. This plan must also include details that will help you determine the best methods of delivering your product or service to your target market. You also need to develop a sound financial plan; and understand the legal aspects involved in international transactions.

    Overall, we need to support relevant research to boost the export sector and ensure that products exported out of Nigeria attract premium prices. One factor limiting the export of cassava is the cost of production, which is comparatively higher in Thailand, the largest exporter of cassava chips globally. Whereas the international market price per ton of chips may not be much higher than N50,000 the cost of producing the same one ton of chips is frequently higher than the offer price. We need to produce a ton of cassava at 50 per cent less the current market price to be competitive. In my own views we have a growing and vibrant industrial sector that can absorb our cassava and infact, I don’t think we have produced enough cassava  for the domestic industry.

    Why do we need staple crop processing centres?

    Agriculture in Nigeria has for a long time been characterised by disjointed efforts and investments in production, processing and marketing for which reason we do not have successful and functional value chains to encourage new investors in agriculture. It is common to find farmers, who complain of glut at the same time some processors are complaining of lack of raw materials. This lack of linkage among the different actors in the value chain has consistently crippled past efforts to commercialise agriculture in Nigeria. Most of our several agro allied industries operated at less than 20 per cent capacity during the past 10 years. In my view, this is unacceptable for a developing economy.

    One of the strategies to address this challenge lies in encouraging industries to establish where there is enough production of raw materials to meet processing capacities. This is the whole idea behind the Staple Crop Processing Zone (SCPZ) scheme and it is very encouraging to see that the government has shown a good vision and taken very bold steps in this direction. While researchers are expected to develop and deploy higher yielding and adapted varieties to such zones, farmers are expected to produce their crops more professionally, using the right inputs and on a sound business model that guarantees regular supply of raw materials.

    Large scale processors are expected to guarantee regular uptake of produce at a price that does not deviate too negatively from initial forecasts. Government is expected to put in place appropriate fiscal, investment and infrastructure policies including tax breaks on imports of processing equipment, power, irrigation, storage facilities, roads and perhaps rails to ease transportation. Much as this scheme looks very wonderful and has the potential to change the paradigm of agriculture and allied industry development in Nigeria, there is need to show increased seriousness so that it does not end up as another white elephant project. We have had too many already. My suggestion is that we concentrate our efforts and get one or two of the SCPZs to begin to function. Nigerians are good at copying functional models so if we can get only one to function then all the others will likely follow suit as many private sector interests will buy-in. It is also my view that we can start by strengthening some already existing agro industrial supply schemes to fit into the SCPZ model. Notable examples are the Thai Flour industry in Ijebu Ososa, AADL – ethanol in Agbara Ogun State, Nigeria Starch Mill in Ihiala and several others. We need investors in large scale processing, but they need guarantee that there will be adequate supply of raw material at the right price. I believe in the SCPZ model and I think it is our collective challenge to make it work.

    What does it take to do profitable cassava farming?

    Cassava production, just like any business, is ‘Garbage in, Garbage out.’ One of the primary challenges we have in today’s agriculture is managing unproductive cultures, traditions and norms, which we inherited from our forefathers. Although some of the cultures remain applicable under household food security models they are grossly inadequate in modern agriculture where there is a lot of attention on scale, environment and profit. Among the several factors that determine success in cassava farming, three have been classified as major. The first is yield, which should be higher than 20 tons/ha before you can start estimating any profit; the higher the yield above this threshold the higher the profit. The next is cost of production, which should be reduced below 120,000 naira per hectare. The lower it is below this threshold, without compromising yield, the higher your profit. The third is the operational scale, which is highly dependent on capital, land access and market. Theoretically, the higher the scale of production -above one hectare, the higher the economies of scale and the higher the profit on investment.

    Ensuring that yields remain above 20 tonnes/hectare (ha) requires good land selection and soil preparation, use of improved varieties and quality stems, timely planting and good stake orientation, soil nutrient management and effective weed control practices. Harvesting as much as 50 tonnes/ha is reasonably possible, but there are over 25 agronomic errors that farmers make for which reason they cannot harvest such yields. With training some farmers are now harvesting over 35 tonnes/ha on their farms. Provision of labour for agriculture has continued to decline as the industrial sector has become more attractive for labour supply than the agricultural sector. This has significantly increased cost of labour on-farm, making it difficult for farmers to scale up production. We have to think mechanisation now otherwise agricultural investment will become cost ineffective leading to food price increase or overall shortage in food supply. We need to develop and deploy inexpensive simple tools like brush-cutters for land clearing, small tractors or power-tillers for land preparation, motorised sprayers for herbicide application and hand lifters for harvesting. These simple farm tools will make it possible for farmers to reduce cost and at the same time scale up production thus making their investment profitable.

    We need to address markets right from the onset. If our agricultural systems makes it possible for farmers to sell off their produce when needed it becomes an incentive for farmers to invest their gains back into their business. We need to build confidence into our agricultural system by powering a market information system that farmers and bulking agents can easily access. Market volume, location, product price, seasonality and quality are basic information that need to be made available regularly to keep investors in agriculture.

    How wide is your partnership network and to what extent has your collaboration with relevant organisations helped the economy?

    Vitamin A deficiency is a serious health problem in more than 90 countries, but more acutely in Africa and Asia. The deficiency causes preventable blindness in children and increases the risk of disease and death from severe infections. It also causes night blindness and increases the risk of maternal mortality. We are working with over 20 partners in Nigeria including international and national research institutions, rural development NGOs and the private sector to develop and deliver vitamin A rich varieties of cassava and maize to millions of rural poor farmers in Nigeria. With vitamin A cassava our initial focus was on four states (Oyo in the southwest, Imo in the southeast, Akwa Ibom in the southsouth and Benue in the North), but we have now expanded into 18 other states.  With vitamin A maize now included in the nutritious food basket, we shall further expand our reach into all states in the northeast and northwest where malnutrition has been shown to have the highest burden in the country.

    Harvest Plus seeks to reduce micronutrient malnutrition among the poor by breeding and disseminating staple food crops that are high in iron, zinc and vitamin A. Working with more than 200 agricultural and nutrition scientists around the world, the organisation is supporting the improvement of   seven key staple crops that will have the greatest impact in alleviating micronutrient malnutrition in Asia and Africa – beans, maize, cassava, pearl millet, rice, sweet potato and wheat.

    What is your advice to the government?

    We need to get it right this time. We have had several summits and have come up with several road maps in the past. Our problem is not the paucity of ideas, but the lack of commitment to take an idea to the impact horizon. We should move away from finding excuses to finding results. We can reposition agriculture in Nigeria if that becomes our committed focus.

     

     

  • Fed Govt must buy insurance for industry to grow

    Fed Govt must buy insurance for industry to grow

    The insurance sub-sector of the financial services industry in Nigeria is not contributing enough to the nation’s gross domestic product (GDP). The new Group Managing Director, Standard Alliance Insurance Plc, Bode Akinboye says insurance could increase its sectoral contribution if the Federal Government shows leadership by buying and paying for insurance policies. He says the sector should take advantage of the telecoms sector to reach out. He also speaks about the acquisition of strategic shares of the company through Gemrock Management Company Limited; ongoing process to merge the life and its non-life companies.  Omobola Tolu-Kusimo met him. 

    How can the insurance industry be made to drive Nigeria’s economic growth?

    One of the areas of challenge for us is distribution and you ask yourself, what has happened to telecommunication companies which from nowhere just took over every area of the economy. Insurance practitioners have a lot of work to do. We need to engage and train the workforce particularly those people popularly called agents or quasi employees in large numbers all over the country. We need to use them as a mechanism not only to popularise insurance but to generate that large numbers in small quantities, little premium but wisely spent.

    We need to make plan on the telecommunication sector so as to reach out to customers thereby using mobile devices to support our service delivery. Employment generation is one major key area in the industry. If you create employment and you succeed by generating more income, then you would have been in a very good position to get huge pool of investible fund that can then be allocated to different investment from Treasury bill which is government investment. In other countries, insurance companies are major stakeholders in the industry and Nigeria should not be an exception. Insurance companies can exist in mortgage resolution in Nigeria by helping to create residential houses for people, not only by investing but by creating product by mortgage default insurance that will enable people that may not have enough contribution to go into mortgage. Insurance would give guaranty on their behalf to mortgage institutions. These are areas that would properly position the insurance sector. This way, members of the public and all of us would benefit through impactful activities of the institution.

     

    We have a new government in Nigeria and fortunately, we also have a new Commissioner for Insurance, heading the regulatory body, NAICOM. Incidentally, the regulator is also talking about change. What kind of sector do you foresee in the next two or three years?

    I foresee an industry that would be a significant contributor to the nation’s gross domestic product (GDP) and to national economic wellbeing. This could only happen if the change mantra from the Presidency trickles down to the industry. This means that first, government must become the number one customer of the industry and they must walk the talk. Government must buy insurance and pay for it and every other person will follow. One of the reasons why investible fund in the economy is low today is because insurance is not working. You can see what has happened to pension scheme. From almost nothing, they now have N5 trillion under management. It shows what government can do when its agents decide to go and enforce laws which is what the National Pension Commission (PenCom) has done. In our industry today, we have compulsory insurances such as Third Party Motor Insurance, Group Life and the others. Government should buy and enforce this policies and the industry will never remain the same. We believe in the quality leadership of President Muhammadu Buhari and that is why we voted for him. We believe he stands for change; he represents that change and we are expecting to see the change in the industry. We have a regulator who is very good and given that he will also key into the change mantra of the Federal Government; we expect that he would be able to encourage them as the main adviser to government to comply with the law. What makes insurance not to work today is the absence of law and order. We want government to deal with law and order in relation to enforcement and compliance with insurance laws and see what will happen to the industry. If these issue is taken care of, in the next two years we will have a solid foundation in the industry and leverage to begin to address the issue of service in new product on operation of investment capacity in the economy.

     

    The Commissioner for Insurance and other experts in the industry have identified market indiscipline and unethical practices among operators as part of the problem killing the growth of the industry. It is a fact that some insurance companies sell third party motor policy pegged at N5000 for as low as N1000. What is your take on this?

    The situation is like an industry that has engaged in self-destructive process. When you look at Potter five forces analysis that talks about value creation, there are different players in every sector. Where one side is taking much more value than the other, that industry is set to die. We want an industry where value creation is reasonably evenly well spread and that is not the case with us. Today Nigeria happens to be the only country in the world where we get the cheapest form of insurance for the poorest service. This is just a natural process. Nigeria is the only country in the world where motor insurance with the comprehensive insurance is based on one flat rate irrespective of the car you are driving, where you live, where you work and what you do. The issue of premium rating is a fundamental problem that is facing the industry and that is why we must commend NIACOM for wanting to look into some companies. The Commission has the authority under the law to approve rate for every insurance company and so it has asked the industry to agree on a rate and submit to the Commission to sign on. Once this happens, it becomes illegal to operate outside of that guideline. We must have a minimum flat rate that cannot be flouted because even the banks have interest and fixed rates approved by the Central Bank of Nigeria (CBN). This is why banks don’t run business anyhow. Our business is supposed to be scientifically driven. It is supposed to be based on the geography of data. This will help us when we are to pay claims and enable us pay the claims as at when due. NAICOM has said each company in the industry should appoint people that will scientifically determine this rate and recommend to them for approval. My submission is that there must be minimal rate for us to survive as an industry.

     

    It is more than two years now that the ‘No premium, No policy cover’ became effective in the industry. How is it working for the industry?

    It is one of the best things that has ever happened in the industry. Before now, companies lends premium and they barely collect 40 per cent of it. Insurance company’s balance sheet was carrying large amount of unpaid premium that are never paid for. Yet claims were coming from customers and they insist that you must pay. In order to bridge this gap, the regulator decided to go in accordance with what the law says which is no premium, no cover and it made sense. Insurance is a line of pulling of risk and this means you must pay your own part of the whole rate of the premium. So what the regulator wants is that before you issue any cover, premium must be received. It is good for the industry; it is good for the customer. The customer can now demand for the payment of their claim and get it as at when due while the underwriter also has the money to invest ahead of any casualty. The industry can now really defend the income they have been paid unlike what we used to having the past.

     

    You were out of the insurance industry for a while and now you are back sitting as the Group Managing Director of Standard Alliance Plc. Can you tell us what brought you back?

    I worked here in Standard Alliance from 1997 to 2009 and that was almost 13 years of non-stop activities and at that point, I thought I needed to go and refresh myself. I went to school and was also working to look at the industry. Five years after, there was an opportunity to come back as an investor manager and so I took advantage of the opportunity and came back.

     

    There is board change in the company and you are a new investor. There has also been shakeup among workers which led to some them being laid off. Can you shed more light on this recent development within the organisation?

    Basically, we came in here with a lot of investors and the objective was to put money in the company and have strategic interest that must be able to influence the direction of how the business is going to be managed and that involved the board and the management composition. Today, we have a new board of directors that is more or less made up of predominantly new members and we also have a new management which I am heading as a result of the new investors. There is a transformation going on and so we needed to look at people we inherited. We have met with people on ground to redeem the system. We also employed more people. We tried to inject the change mantra into the system to achieve the transformation. We are also trying to attract new workers within the financial service sector and other related sectors to help in positioning the institution. Presently, new senior hands have been hired in retail, investment portfolios, corporate strategy, quality process and technology.

     

    How are you dealing with the issue of profit making which is critical to the shareholders of the company?

    We have dealt with the issue of people which is the most important asset that can be used to drive any system in the insurance or banking sector. So how do we service our internal customers first? How do the departments relate to one another in order to be able to collectively service their external customers in streamlining their processes and documenting their processes? Having dealt with the issues of processes and product, we had to look at which product do we take out to the customers and the medium channels of getting to them. This company is almost 20 years old. We have customers that have remained in this institution through both the thick and thin and are still very satisfied with the company no matter the challenges. Presently, we are going back to the basic which is our customers. We have reassured them that we will continue to delight them. We have also backed up our return with action by paying claims mostly inherited. Confidence has being restored and business has started in the top line because we have dealt with the issue of processes. It means we have also streamlined these stages and minimised the cost of running the business. The natural thing that follows is profit when your top line is still relying on growth and you manage your cost at the barest minimum.

     ‘The issue of premium rating is a fundamental problem that is facing the industry and that is why we must commend NIACOM for wanting to look into some companies. The Commission has the authority under the law to approve rate for every insurance company and so it has asked the industry to agree on a rate and submit to the Commission to sign on. Once this happens, it becomes illegal to operate outside of that guideline. We must have a minimum flat rate that cannot be flouted because even the banks have interest and fixed rates approved by the Central Bank of Nigeria (CBN)’

    You are in the process of merging the non-life company to the life company. Why did you take the decision?

    Standard Alliance Insurance has a subsidiary which is the life insurance company, SA Life Assurance Limited while we are also doing general business. These two businesses are similar with different focus. Life is more on long term and non-life general is more on short term business and we believe that if it means combining the two businesses together to bring stability, then it is the way to go. By bringing the two businesses under the same balance sheet, you will have a structure of one board instead of two different boards and one branch per location instead of multiple branches for each of the branch. Perhaps management team is marginalised because you will have one managing director instead of two, we can have the life team, technical team and the general team. At the end of the day, you have one person coordinating the two sides of the business and you also have share facilities, shares support services, share technologies, share administration and this brings massive savings which goes straight to improve the Company. This is why we are merging the businesses together. We believe companies that are doing pretty well in the market today such as Leadway, AIICO, Mansard have this kind of structure.

     

    Can you shed more light on the merger? At what stage is it now?

    We have commenced the process of the merger. It is a process that regulatory authorities must approve. The Securities and Exchange Commission (SEC) has approved it and our regulator, the National Insurance Commission (NAICOM) has given us a no-objection approval and we are moving to the next stage which is to submit our application to Corporate Affairs Commission (CAC) to get approval for the merger.

     

    What should customers and shareholders expect from the company going forward?

    Going forward, you will see a combined force with a team that is ready to offer customers so many products from life to non-life. There will be a more coercive force out there giving quality service and with improved top line and bottom line. We expect to see a more progressive and prosperous company by the end of the year, an investment that would be worth the while for our shareholders. We want to be a dominant player in the insurance sector. The sector is still at a developmental stage in Nigeria and is contributing less than five per cent to the nation’s GDP. In South Africa, the contribution of insurance is about 15 per cent of GDP while the United States and others are between 20 and 25 per cent. So you can imagine if we can move our contribution from 0.5 per cent to 10 or 5 per cent, companies that have performed well can become number one which is open to everybody because the room for growth is massive. So only those who are ready to run the race will be able to determine in five or 10 years’ time. We are working hard, we are here with the new energy, new team that is focused and committed to do their best. This is the time for people to look at insurance stock because penny stock will become mega stock. Historically, when a sector is at the kind of level that insurance is presently is the right time and only those who can take the risk will bear the reward.

     ‘We believe in the quality leadership of President Muhammadu Buhari and that is why we voted for him. We believe he stands for change; he represents that change and we are expecting to see the change in the industry. We have a regulator who is very good and given that he will also key into the change mantra of the Federal Government; we expect that he would be able to encourage them as the main adviser to government to comply with the law. What makes insurance not to work today is the absence of law and order’

     

  • ‘Our environment not conducive to aviation concessions’

    ‘Our environment not conducive to aviation concessions’

    Airport terminal management is a money spinner. But in Nigeria, it is not so. Many are watching their investments become a liability. Bi-Courtney Aviation Services Limited (BASL) Chief Executive Officer (CEO) Mr. Christophe Pennick, in this interview with KELVIN OSA-OKUNBOR, speaks on the prospects and problems of managing concessions in the domestic aviation industry and how investments in airport infrastructure can be a catalyst for economic development.

    Can you assess airport concessions in Nigeria?

    An airport concession is an interesting concept in infrastructure development. But, airport concession in Nigeria, seen from the point of view of public-private partnership (PPP) is still a novelty. The reason is very simple. Nigeria, until about eight years ago, has not been involved in any form of public-private partnership in airport development through the model called concession. To a large extent, it is still very new in this part of the world. Interestingly, both parties, that is, the government through its agencies and Bi-Courtney Aviation Services Limited involved in the concession agreement are still learning the rules governing airport concession; in this case, the concession of the new domestic terminal two of the Lagos Airport. The parties are still learning what to do about the concession and how to make it work. Although there is a document called the Concession Agreement that ought to guide the contracting parties, it is very clear that government is trying to pull the blanket under the feet of Bi-Courtney Aviation Services Limited. This is despite that the terms and conditions of the concession are very clear in the agreement.

    How does this affect the implementation of the agreement?

    For us in particular, there are few issues still left unresolved as it affects the supposed hand over of the General Aviation Terminal (GAT), at the domestic wing of the Lagos Airport, because it is covered in the scope of the concession agreement, government through the Federal Airports Authority of Nigeria (FAAN) is making it difficult for us as a company to use that aspect of the agreement, which is clearly expressed in the scope of the concession agreement. The agreement was very precise in giving us as a company right to manage the terminal, which in this case refers to as the MMA 2 and GAT, and not one of the terminals as the other party to the agreement is claiming. There is a big difference. People will say this is unfair completion, but in many parts of the world, airports are supposed to be a quasi – monopoly.

    ‘Why should government look at the agreement in a way that suggests that if this concession it has signed with any firm succeeds, it should be looking for any way to take it back from the concessions because it is successful’

    For instance in the United Kingdom, with particular reference to London Heathrow Airport, which has a much more developed traveling market, it was only recently that the British Airport Authority was mandated to separate and give the total management of  Gatwick Airport to another company. Until recently it was one company. Do not forget that Gatwick and Heathrow are not the same airports. They are two different airports. Here in Nigeria, the traveling market is not that developed, big enough, so I think it was an opportunity for Nigeria, without sufficient funds to engage the private sector to assist to build a decent domestic airport terminal in Lagos. I am convinced that what Bi-Courtney Services Limited has done in building and managing the MMA2, is an example of what is to done. The reason for this is very simple, because the terminal is the best handled the private sector in Nigeria.

    What about the controversies surrounding the airport concession and its terms?

    So going back to the concession and its terms, its scope, it would have been easier for government to say, Bi-Courtney you run all the domestic flights and FAAN run international flights and let us see who does it better. Unfortunately, things have gone very different today. But, thank God we have survived, through different attacks. And like the saying goes what does not kill you makes you stronger. But, I think that how is it to manage an airport concession and what I think about the way it has been done is to simply say we are still learning. I think we have gone very far, in our eight years of managing a private airport terminal in Nigeria. I am convinced we are going from strength to strength.

    Are there opportunities in airport concessions and management in Nigeria?

    I am optimistic that opportunities still exists to get involved in more airport concessions in Nigeria. The prospects are there. I think we are a perfect example of learning out of experience as a company to handle such business. Yes, we have gathered a lot of experience, not only from the operations side but, also from the legal perspective to do the business better, if we are approached for another concession agreement by government. A few concessions have gone wrong in Nigeria. The Bi-Courtney Agreement to build and manage the MMA2 has been quite successful because as a company we have been able to defend ourselves in the various attacks. So, I will say that Nigeria could use a few other concessions, but I would say to anybody who wants to endeavor into any concession concerning airport infrastructure or reacted areas must have the experience and deal with the ignorance of some parties involved the writing and signing of concession agreements and for foreign companies that want to date into such ventures must endeavor to have a strong Nigerian partner.

    Why do you think airport concessions in Nigeria are problematic?

    The reasons why airport concessions in Nigeria has gone the wrong is for many reasons.  If any public private partnership concession agreement must be signed, it should be based on the clear understanding that government and other contracting parties must see the concession as an opportunity to develop private enterprise. The terms should be very clear, and this should not be handled with suspicion. For instance, why should government look at the agreement in a way that suggests that if this concession it has signed with any firm succeeds, it should be looking for any way to take it back from the concessions because it is successful. That is very important. What we have concerning the Bi-Courtney concession is that we are successful, it is an airport on its own, it should be a success if we’ll managed. Places like Abuja, Port Harcourt and Lagos can be profitable as airports and it should not be fight between government and the private sector.

    ‘In the beginning it was difficult to attract more people to do business at the terminal because of the seeming hostile relationship between tenants and landlord. But, we have gone steps further to forgive our relationship as being more than that. The existing tenants and future tenants understand that we are here to make their business thrive’

    Government ought to say you have done it better than me and let us together reap the benefits of a successful private public partnership agreement by helping to develop air transport infrastructure. This would have also led to the development of the region where the airports are located and also make it an attractive point for airlines and investors to come into the country to do business and see how this could attract further investment. But, in the case of Bi-Courtney’s concession, with government it is sad that, rather than commend the firm, many people are jealous of what the company is doing in managing a private airport terminal. We are successful, we are probably the only airport terminal in Nigeria that has invested a lot in technology, we have also invested a lot in passenger facilities, escalators and other operational equipment. We have a very strong maintenance culture, and people are looking at us that this is success. This is an airport that is properly working, making money, why don’t we try to take back what we have them, and ride on that success without investing in it. So, for us as a company, this concession has been interesting, and also a reason for people to be jealous.

    What is your take on the policy thrust of the aviation sector?

    I think the terms of the concession and the policies around it are clear. They cannot be interpreted in many, many ways. Still, if there is disagreement among the parties to any concession or any policy guiding any agreement, as stated in the contract, there ought to be a dispute resolution mechanism. Such mechanism must state how to move forward with the agreement in resolving whatever dispute that may arise and a dispute committee should be set up to examine any such grey areas in the agreement with a view to reaching an amicable solution. If such mechanism does not work, there could be suggestions of going to court. The courts are not the ideal places to discuss misunderstanding over airport concessions. If we must go to court, all parties to the dispute must respect the authority of the courts. This is perhaps probably, what is should be. If we are a country that is law abiding, we should just respect what the courts say. We have been to court several times concerning our airport concession, we have been to court more than ten times, and the problem is, whatever is decided in court it is not binding, or enforced by parties to the concession agreement. How many times have we been to court? The courts have decided many times, but government will want to abide or enforce what the courts have decided. So, the policies are clear, the policies are clear to both parties, but the real problem is that it is both scary and uncomfortable that government is looking at the bright sides of how public private partnership could develop infrastructure. It is clear globally that concessions have as dusted countries to develop infrastructure, but in Nigeria, the few concessions that have existed have all been bumpy. Now has had a smooth ride.

    Any government that wants to attract foreign investment, must look big examples of concessions are ads the vital questions how have they fared. Yes, it is learning curve, if you have to always go to court to seek for contractual enforcement, then it is not good for the country.

    What is the scale of operations at the terminal?

    The MMA 2 terminal is running very well for aeronautical and non – aeronautical operations. The activities are related but different. We have utilised eight years of the concession agreement and we still have twenty eight more years to go, because the concession is for thirty six years, looking at what we have achieved in the last eight years, many good things have happened. We hope for increased activities in the next twenty eight years and we are steadily growing. For now, we have five domestic carriers operating their flights from this terminal, major airlines operate from here, but a few airlines have challenges and we are supporting the carriers with difficult times. We are looking forward to growth in the terminal capacity and we are recording about 10 per cent growth which is above the global industry average. What we do as a terminal operator which is part of a major airport is to try to assist the airlines that are flying to achieve better partnership to assist the domestic airlines to grow. We support all domestic airlines by constantly building on our aeronautical sources to boost the non aeronautical sources because the activities are related and interdependent. The growth of ten per cent at the terminal has assisted us to attract non aeronautical revenue sources.

    How do you source for non-aeronautical revenue?

    We have been working hard at this commercial offering by reaching out to shop owners, who are our tenants, banks, car hire, and other service providers. We also get revenue through our outdoor advertisements. While our aeronautical revenue has grown by 10 per cent, the non aeronautical source has grown by thirty five percent. We have done this for two reasons. One is because as a private sector company, we are profit driven. That is why we as many customers as possible and that are why we offer quality services as a terminal operator. We have concentrated our efforts on both sources of referee with a team dedicated to pursue that. We have people who look for brands to attract more people into the terminal. Very soon, a big super market will open at the terminal. From these increased number of clients, we are looking for how to expand the terminal despite the limitation in land. That requires a lot of innovation. My team has been quite good at that. Many things will change and I think the terminal should have international airport standards. Why don’t we then make the airport an international airport? If we have the standards of international airport terminal, we are working hard to attract more airlines to come in here for international flights. This is more than just domestic flights.

    Are there plans to operate international flights from MMA2?

    Although, we are not yet at the final stages, we have almost done everything to do more than domestic flight. There is still a bit of work on that. We are working towards having current airlines operating from this terminal into regional routes in West Africa to operate from here. I can assure you that this is covered in our concession agreement. It was covered from the onset, because of some issues; we ensured it is totally covered now.

    What plans do you have to upgrade and expand facilities at the terminal and what is the cost implication?

    In line with global standards, we have embarked on upgrade of technology at the terminal, its facilities as well as service. The easiest one is just to go and buy an equipment, yes it is capital intensive we went ahead to replace all escalators at the terminal. It was a headache, a big challenge to do it, with huge financial implications, and the customers have shown understanding. We have also upgraded and changed generators at the terminal, to have more capacity in terms of electricity and changed nine lifts, we did this in the heavy equipment category. The other things we have done is changing all the checking in counters to have more capacity, we also changed the check in system, to the latest technology you find in any airport in Europe, in particular Paris Airport, we are looking at a terminal that could handle fifty to sixty million passengers annually. We are looking at check in counters that are the same design as you will find in Europe, and we increased the check in counters from thirty one to thirty five counters. We have made the counters and terminal more comfortable to be user friendly and ensure that other stakeholders are trained how to handle the technology.

    Why did you invest so much in facility upgrade?

    This is very simple, because we are service providers to the public and we want to demonstrate the same quality of service you could find in other countries. This is only a first phase of facility upgrade; we are going to improve on investment in human resources.

    What about investment in personnel?

    We have trained our security staff up to the international civil aviation organization (ICAO) standards. We have over four hundred and thirty security personnel. We have trained over 120 that have undergone ICAO certification in aviation security. We have organised two classes with the international air transport association (IATA) on customer service and development of the airport. We have also sent some of our personnel to Dubai, France and other countries to train on what is obtainable in the industry, in airport development and management and technology management. In software and other areas. We have done more that what we should do in training of our personnel compared to the level of competition in the terminal and industry. We have trained them both in Nigeria and around the world.

    What is the relationship between your firm and financial institutions?

    We have embraced the strategy of engagement with the financial institution and others. It is the strategy of looking at others as partners. In the beginning it was difficult to attract more people to do business at the terminal because of the seeming hostile relationship between tenants and landlord.  But, we have gone steps further to forgive our relationship as being more than that. The existing tenants and future tenants understand that we are here to make their business thrive. So, it is a partnership, we engage them, we have doubled our team on customer relationship to bring in more people into the terminal, we have dedicated managers that discuss without internal tenants how to growth due business and resolve challenges. That has helped us foster good relationship. We have used different models to attract more tenants to expand the business by ensuring that our terns are reasonable and the product the clients want to offer is appropriate for the environment. It is relationship model we have evolved to attract customers as a team builder and facilitator. It is being in good relationship with your tenants.

    Should Nigerians expect from Bi- Courtney in the years to come?

    Despite the huge challenges we have encountered as the first private airport terminal manager in Nigeria, we are seeking fresh opportunities into other areas of airport management. As for the opportunity to venture into other airport, we will take the opportunity. Why not? But, for in this company, as investors in aviation, the sky is not the limit. We will take maximum opportunity from what the sky has to offer. I think that the public should judge us by what we have done. We could ask that a poll be carried out to ask passengers which terminal they would love to travel from, whether in Abuja, Lagos or elsewhere. Would they like to travel through a terminal run by Bi-Courtney or other airport managers? Why can’t government say Bi-Courtney you have done well in managing an airport terminal in Lagos, why don’t you handle such project in Abuja. Let us try the same experience in Port Harcourt and let us see what happens. It is not only about building an airport terminal. It is about management of the airport and investment in terminal facilities. You could build a good airport terminal and not maintain it well. It good that you build an airport terminal that would endure for the next thirty years. In aviation, you have to constantly invest in technology, constantly know what is happening around the world to do it in your facility. I will say, if everybody will be honest and look at, what this company has done in airport development and give them another opportunity to do same in Abuja or Port Harcourt. I think that government should stop give airport terminal managers like Bi-Courtney the opportunity to manage major gateways into Nigeria to give a good impression to visitors. From there, we see weather other airports are viable and necessary.

    Should government throw such opportunities open in form of a bid for prospective investors?

    It should not be thrown open to all. It should be done in stages so that we as a company could come in. There was no bid thrown open when airports like Abuja under construction was started. Everything happened in a fast pace. Airports should not be built in a hurry; it requires more time and careful planning. If called upon Bi-Courtney will be interested in building and managing more airports in Nigeria. We could even manage airports already built by government, if it is built the right way. It is not just to build and after a few years everything falls apart and the company called upon to manager will have to replace everything inside. We were never asked to come and bid for any new airport under construction let alone being called upon to manage it. Neither were we called upon to supervise how the new airports are being built. I mean new airports in Abuja, Kano and the others. Concerning the airport in Port Harcourt, the construction is not in good taste some of the facilities even in Benin, Enugu, have major issues because these airports were built in a hurry. If we are called upon to manage Port Harcourt and Abuja airports we will be interested, but the terms of engagement have to be sorted out clearly. We will need to see what is in ground. Concerning Abuja airport, there is no escalator; it had only one boarding gate for flights. This is not ideal, in MMA2, we have ten boarding gates. As you can see there are structural issues with such a terminal. Why should it be that way? These are the specifics we are talking about. So, we are careful about every detail.

    What is your relationship with airlines operating at the terminal?

    We have excellent business relationship. We relate very well and we try to understand the operational challenges they have and we advise them on how to achieve better relationship. Though they owe us some money, but not to the extent that we would not want to do business with them.

     

     

  • ‘Our metering scheme ‘ll address estimated billing’

    ‘Our metering scheme ‘ll address estimated billing’

    The management of Ikeja Electric Plc was at the headquarters of Vintage Press Limited, publisher of The Nation newspapers, on a visit. The power distribution company’s Managing Director, Mr Abiodun Ajifowobaje, during the visit, spoke on a wide range of issues in the power sector and the menace of pipeline vandalism. EMEKA UGWUANYI and AKINOLA AJIBADE were there.

    What is your company doing to address the meter problems in your network?

    The challenges are many. However, the two major problems, which power firms are experiencing, are scarcity of meters and failure to meter all the consumers.  At Ikeja Electric, we identified the problems immediately; the current owners took over the unbundled assets of the Power Holding Company of Nigeria (PHCN) in November 2013. Since then we have been trying to proffer solutions to the problems in order to satisfy our teeming customers. We are doing this, in line with our goal of becoming a customer-centric or focused institution. In order to address the meter problems, we have conducted a pilot scheme with 2,000 customers. The customers were randomly selected from the six business units in the company – Abule-Egba, Akowonjo, Ikeja, Ikorodu, Oshodi and Shomolu. The two months pilot scheme ended in August and the aim was to determine how quickly the overall implementation of our metering programme would be, and also discover the loopholes and at the same time address them.

    We have invested $160 million on meters to meet the needs of 300,000 customers that we are targeting for the metering programme. In many areas or localities, we have introduced an idea known as ‘Energy Accountability’ to make customers accountable for the units of energy they consume, and we are checking sharp practices such as tampering or bypassing of meters, among others.  By and large, we have gone far in addressing the problems outlined above and that will address the problem of estimated billing.

    Why is it that many consumers are yet to get meters, in spite of the efforts you have made to address the problems?

    Solving problems associated with manufacturing and provision of meters is not one day job.  The Nigerian Electricity Regulatory Commission (NERC) knows this, hence its decision to give the 11 Power Distribution Companies (DISCOs) a five-year mandate to supply meters to their teeming customers. The five year covers 2013-2018, when we consider the fact that DISCOs took over in 2013. All the power distribution companies are required to meet the metering needs of their customers within the stipulated period.  We are working within the timeframe given by NERC. In fact,  Ikeja Electric has shortened the five years to three years  in order to provide meters to its customers early enough, and avert a situation where they would continue to pay estimated bills. And to make good our promise to provide meters to our customers, we have concluded plans to do a massive roll out this September.

    How prepared are you to meet the meter demand of your customers in the next three years?

    We hope to supply meters to customers on our database within that period. We have done our home work well in this regard, and we would not disappoint our teeming customers, who are waiting patiently for us to solve their metering problems.  We have promised to satisfy our customers by attending promptly to issues they brought to us. We would ensure that we do whatever they request for. That is if their requests are within our powers. We want our customers to be free with us, ask us what they need, and we would attend to them.  Those needs we can meet immediately, we would not hesitate to give them. Those ones that we cannot meet, we would explain to them why it would not be possible for us to meet them.  For instance, if a customer, who is looking for a meter, says he cannot exercise patience and wants to jump the queue, we would accommodate him or her. Since we have promised to be customer-centric, we would try as much as possible to respond to the needs of our customers, but such customer will pay for the meter and the cost gradually deducted from his/her bills.

    What are the sanctions for customers who tampered or bypassed meters?

    There are different sanctions for meter tampering offenders. The first sanction is that customers who tampered with meters will pay a fine of N50,000 into designated financial institutions.  The second sanction is jail term.  People found bypassing their meters would be arrested and handed over to the Police for prosecution. We are working with the law enforcement agencies such as the Police and the Nigerian Security and Civil Defence Corps (NSCDC) to arrest, prosecute and charge those who tamper with meters to court.  We believe that when meter bypassing offenders are jailed, they would serve as deterrent to others that want to commit the crime.

    Before applying sanctions, has your organisation warned customers on tampering with their meters?

    We have employed different methods in order to stop people from tampering with meters. The methods include organising forums, and sending our officials to enlighten consumers on how to use their meters (prepaid or analog), credit their bills in the event that they are using prepaid meters, among carrying out other activities.

    What are the modalities for implementing the idea known as Energy Accountability?

    Ikeja Electric has deployed what it referred to as AMR Infrastructure in order to ensure that customers are responsible for the units of energy they consume.  Through this, every operation of the meters installed in the homes and offices of our customers is recorded and known to the management of Ikeja Electric.  For instance, if customer A bypassed his meter, there would be a signal to that effect, and the company would know immediately. Also, if a customer has not paid his bills by way of crediting his meter, the management would know.  We carried out a pilot study to detect customers, who bypassed their meters. The study revealed that as early as 6.00 am, 10 customers have tampered with their meters because we saw everything that happened on the meters in the system installed in our office. This is a futuristic metering system introduced to check some fraudulent practices.  More worrisome is the fact that people, especially Nigerians are fond of disobeying laws made to check fraudulent practices.

    Beyond detecting fraudulent customers, what other things is Energy Accountability going to achieve?

    By energy accountability, we want to make sure that consumers pay for every unit of energy they consume. We are not just giving power or electricity; we want to make sure that consumers pay for every second of energy consumed. The Global Satellite Mobile (GSM) operators such as MTN, Airtel, Glo and Etisalat charge subscribers every second they make calls with their phones.  That is what we want to happen in the power sector. We want to be fair to our customers, while at the same time our customers should be fair to us.  It is a case of consumers using our power and paying us our money.

    How much do distribution companies (DISCOs) charge for prepaid meters?

    The DISCOs are not required to charge any fees before giving meters out to consumers.  All the meters are free. We are not taking a kobo from anybody. If any of our officials goes out to demand money from consumers, who want meters, that person is a thief. We say the meter is free because any money you pay to obtain a meter, we would pay you back over a period of time, usually 30 months. A single phase meter costs N30,000, while a double-phase meter costs N50,000. If a customer bought a single-phase meter at the rate of N30,000, what we do is that we deduct 38 per cent of N30,000 for two and half years (30 months) to cover his fixed charge. What this implies, is that such a customer would not be paying fixed charge for 30 months.

    ‘The DISCOs are not required to charge any fees before giving meters out to consumers.  All the meters are free. We are not taking a kobo from anybody. If any of our officials goes out to demand money from consumers, who want meters, that person is a thief.  We say the meter is free because any money you pay to obtain a meter, we would pay you back over a period of time, usually 30 months’

    What is the timeframe for giving out meters to applicants or consumers?

    We only give out meters to consumers whose areas or localities have been metered by our company, based on the Advanced Metering System introduced by the Nigerian Electricity Regulatory Commission (NERC). For instance, we at Ikeja Electric would finish our metering system in 2017. If a customer wants his meter in 2017, it shows that the customer would continue to get estimated bill.

    Why has Nigeria not been able to improve power supply, using renewable energy sources such as solar, wind, coal and biomass?

    The country depends on two traditional sources of generating power, the gas power plant or turbines and hydro or water. While hydro plant is the cheapest means of generating electricity worldwide because water, which is the major ingredient, required to generate the power is free, the gas powered plant is not. Findings have shown that the cost of setting up three hydro plants would provide one turbine. Altogether, the two are veritable means of generating electricity since they can provide thousands of electricity megawatts (Mw) needed to move the economy forward. They function optimally by generating the quantum of electricity megawatts that would bring the desired socio-economic growth provided there is no infrastructural gap.

    Should the Federal Government not be thinking of generating power through renewable sources since gas and hydro plants have not been able to generate enough power due to  pipeline vandals?

    It is not proper for the government to use renewable energy as the major means of generating electricity, when one considers the fact that they produce minimum megawatts of electricity. Besides, each of the renewable energy sources has its own drawbacks. For instance, one needs acres of land to generate one megawatt of electricity, through solar. Also, when a man installs solar power in his house, he cannot use it to power his electrical equipment such as fridge, freezers, and air-conditioners.  Based on this, it is not economical to use solar energy.

    Is the same thing applicable to other renewable energy sources?

    Yes, all the sources of renewable energy have one problem or the other. For instance, wind generates few megawatts of electricity, aside the fact that it not predictable.   Wind is a natural product, and as such, it is unpredictable. Wind can provide electricity, let say for five hours, and refused to work in the next two or three hours. The moment the wind stops, this means that it would take some time before one can access power. Even, Japan that has the biggest wind power cannot generate huge volume of power from wind. The biggest transformer installed for wind energy is about 20 KVA, and how much electricity would that provide for a country like Nigeria with 170million population? This is a question we must ask ourselves.  Like any other natural product, wind is unpredictable.  I can install wind energy here, and in the next five to six hours, the light would stop due to weather.

    But institutions, such as the Redeemed Christian Church of God (RCCG) and Katsina State Government, use wind to power part of their areas.

    Cuts in: That is not true. I have been to the Redemption Camp in Mowe, Ogun State and I can tell you authoritatively that 75 per cent of the electricity used in the Camp is from the gas powered plant. Under the rural electrification scheme, introduced by the Federal Government, in order to light the rural areas, wind equipment were installed in Katsina State because the state enjoys  wind a lot. But the equipment stops working the wind stops, and that is the end of accessing electricity through that means. The issue of using wind energy for 10 hours, 20hours is not possible.

    What about using coal and biomass to generate power?

    To produce one or two megawatts of power from biomass, you need to pack all the wastes in Lagos to get that figure. And that may take you three months or more to do.  What I would use to produce one megawatt of power from biomass would produce 10 megawatts of hydro or gas power. The same thing is applicable to coal. The cost of building one or two coal power plants can get you one big gas plant. When you consider all these, you realise that the renewable energy sources are not economical, besides the fact that they provide small quantum of electricity megawatts that is barely enough to meet the energy demands of a country like Nigeria.

    How come South Africa generates over 40,000 megawatts of electricity, relying on coal to generate the bulk of the power it consumes?

    Truly, over 60 per cent of power used in South Africa is from Coal.  The country started generating electricity from Coal when it was cheaper and easier to do. I’m talking about decades ago, precisely in the 50s. But it is not possible now. Cost of generating power through Coal has gone up considerably. If you go to South Africa now and you tell them to set up a Coal power plant, the first question they would ask you is whether you are crazy or not. They would tell you that it is not economical to generate electricity through Coal, despite the fact that they have Coal in abundance. It would be better if we concentrate on how to improve electricity generation through hydro and gas, than generating power from renewable energy sources, that we do not have the required expertise for.

    What is your take on the differential costs of gas?

    This is a free economy where you sell your product to the customer who can give you the right value. For instance, if you have gas to sell and the law says that I s must sell to customer A at $50 per cubic feet and customer B at $46 per cubic feet.  Let’s say Customer B is not ready to pay even if I bring the price down from $46 to $10, while Customer A paid me for 12 months at a go, is there anything wrong in selling to such a customer. That is exactly what is happening in the sector.

    What is the cause of pipeline vandalism?

    I do not know exactly the causes of pipeline vandalism. In the olden days, gas was flowing well and the turbines were accessing it for generation. Then power was stable. During that period, when Electricity Company switches off power, it would restore power few minutes after. That is why you can hear children and adults shout ‘Up NEPA’ the moment there is light.   But today gas is no longer flowing, making you and me wanting to find out the cause. Some people alleged that companies that were importing generators into Nigeria were given vandals money to break gas pipelines. Others said the people residing in the riverine areas were behind the criminal activity.  I do not know what causes pipeline vandalism. But what I know is that without smoke, there would be no fire. I do not know what people would gain from breaking gas pipeline because gas is air. If it is crude pipeline, I would say they can sell it and make money from it.

  • 35,000mw realisable by 2020 if…

    35,000mw realisable by 2020 if…

    The National President, Senior Staff Association of Electricity and Allied Companies (SSAEAC), Comrade Bede Opara, says the improvement in the power generation capacity that peaked at 4545 megawatts is as a result of improved supply of gas to the thermal stations. In this interview with TOBA AGBOOLA, he insists the country can generate more than 35,000 mw by 2020 if the government does the needful.

    What is your union’s po-sition on the Federal Government’s renewal of the management contract of Transmission Company of Nigeria (TCN) with Manitoba Hydro International (MHI) Limited of Canada?

    Well, we read in the national newspapers about the extension of the contract awarded to Manitoba Hydro International Limited (MHI) to manage the Transmission Company of Nigeria (TCN). This extension is, according to the report, was for one year, that is, it will expire on July 31, 2016. This was after the expiration of an initial three-year contract under which the company managed the transmission arm of the power sector.

    We are not comfortable with the renewal of the agreement because there is more to it. We are of the opinion that before the extension, the government should have carefully and clearly evaluated the assignment and job carried out by MHI in improving transmission and the wheeling capacity of the transmission lines with measurable milestones as contained in the contract.

    We wonder why so much emphasis was placed on the contract renewal rather than an assessment of the impact that the MHI has had on improving and strengthening the operational capacities of TCN.

    It is not enough to lay claims to improving the power generation capacity that peaked at 4545MW recently, which was as a result of better and improved supply of gas to the thermal stations. It is necessary to ask how to raise the wheeling power of TCN to accommodate and sustain increased/improved generation.

    It is also necessary that we know the structure the MHI has put in place to accommodate this increased generation in the nearest future because we are aware that a lot of generated mega watts are lost due to the inability of TCN in some locations to evacuate them into the grid.

    We note that during the last contract period of three years, there was a glaring lack of coordination between the expatriate and Nigerian teams in TCN. There was no team spirit among the management contractors, and also, between the management contractors and their Nigerian counterparts.

    We expect the TCN as a technical arm of the power sector to be independent and insulated from partisanship political interests and influence to meet the nation’s overall target for the power sector of installed power generation capacity from 6,000MW in 2009 to 20,000MW by 2015 and 35,000MW by 2020.

    We expect a better-coordinated work regime, which regrettably, is absent. We also expect, among other matters, serious and committed training programmes for Nigerians – an assignment that constitute part of the MHI contract.

    There is an urgent need to look inwards to identify any challenges that might negatively affect the schedules and plans by Nigerian operators or the management contractors.

    We expect the TCN as a technical arm of the power sector to be independent and insulated from partisanship political interests and influence to meet the nation’s overall target for the power sector of installed power generation capacity from 6,000MW in 2009 to 20,000MW by 2015 and 35,000MW by 2020.

    We, therefore, call for an all-inclusive stakeholders’meeting to re-evaluate and design a practicable work plan that will ensure that the TCN plays its assigned role and achieves desired objectives.

    What is the realistic power generation Nigeria needs to drive the economy?

    We are around 4545MW now, but if, for instance, we generate 20,000 MW, by tomorrow morning, we will consume all. We shall leak up the 20,000 mega watts. Why do I say so? It is because we have a lot of suppressed loads.

    Let me explain what I mean by suppressed loads; the loads exist. But we cannot feed them now because there is no power to feed them. That is why we do a lot of load shedding or rationing. In other words, we ration the little we have. Whenever we are generating, for instance, 4,500 mega watts, we normally give Lagos about 1,000 mega watts. When that happens, it is not unusual to hear many people saying the light is improving, not that they have enough. Even at that, it will not serve Lagos beyond 10 hours on the average.

    The moment people see more light, they connect more equipment. Those running their generators, for instance, will switch off their generators and connect into the system. The loads they were carrying with their generators are called suppressed loads. The moment power comes, they will leave their generators and come into the load again. Nevertheless, I think that if we can make up to 10,000 mega watts, Nigerians will be happier, but it will not be enough.

    Our population is 160 million. South Africa has a population of 46 million and that country is generating 40,000 mega watts. Against this backdrop, therefore, it will not be out of place to suggest that we also need to generate 160,000 mega watts to fully stabilise our economy. But it is not realistic for now.

    I want to say that if the projects on ground, like the NIPP stations and some others stations that are undergoing rehabilitation, if they can be completed on schedule, between now and December as scheduled, may be by December, we will be close to 7,000 mega watts. The question is: will they be completed on schedule? Those that failed to meet their mandate, that is, completing the projects on schedule, were they sanctioned? We cannot be sure of what they are going to produce by December because there is no sanction for those who defaulted in the past.

    What is the way out of the crisis in the power sector?

    I said in my earlier answer to your question of our call for an all-inclusive stakeholders’meeting to re-evaluate, and design a practicable work plan that will ensure that the TCN plays its assigned role and achieves desired objectives.

    We urge the Federal Government to implement a critical infrastructural and economic project by building a national gas grid that is Nigerian-owned or executed in partnership with credible private sector players within a public-private partnership.

    The grid can be put in place within four years, and should have capacity to handle gas volumes far in excess of the present limited domestic and regional demand. Such gas infrastructure will stimulate further domestic demand for expanding electricity requirements and various industrial purposes as well as facilitate domestic gas competition.

    This is because the Nigeria Vision 2020 Economic Transformation Agenda has it that the overall target for the power sector is to grow installed power generation capacity from 6,000MW in 2009 to 20,000MW by 2015 and 35,000MW by 2020.

    What is SSAEAC’s take on the agitation for a downward review of salaries and allowances of political office holders, especially the National Assembly?

    We still subscribe to the issue of the review of our constitution. If you look at the political structure of a country like Switzerland, the governor is far more important and more popular than the President of Switzerland.

    This is so because that is where the resources are. So, people would rather vie to become the governor of a state or a member of the legislative arm of a state rather than going for the position of the President of Switzerland.

    The point I am trying to make out of this is that we need a political reform that will reduce the resources concentrated at the centre.

    The moment you do that, you create an economy where if you don’t work, you will not eat. Then it will be very difficult for lawmakers to appropriate to themselves a larger share of the cake that must have been baked either at the national level or state level.

    Take Lagos State as an example, over 75 per cent of the state revenue comes from Internally Generated Revenue (IGR). If the private sector in Lagos State should grind to a halt today, that will be the end of governance in the state.

    The amount that the state governor will get from the Federation Account will be inadequate for him to continue to be a performing governor; in this case, the survival of the state government is tied to the survival of businesses in Lagos State.

    For the state government to continue to have access to the taxation of these people, they must invest in their environment to keep those businesses running. But, we do not have that model, whether Cadbury pays its taxes or not, or Guinness pays its taxes or not, the legislators will earn their fat pay.

    ‘The only way to address this is to take the yam away and let them hold on to just the knife. So, it is not something we should just be advocating a reduction in the salaries and allowances of political leaders because nobody will want to reduce the level of income he is already used to’

    Why? For as long as Niger Delta is at peace and government can export crude oil, there will be enough money. But if that money is not there, very few people would want to go to the National Assembly. So, they have the knife and the yam now.

    So, what is the way out?

    The only way to address this is to take the yam away and let them hold on to just the knife. So, it is not something we should just be advocating a reduction in the salaries and allowances of political leaders because nobody will want to reduce the level of income he is already used to.

    All they will do now is to exercise control and caution in increasing what they are already earning which as you observed, is among the highest in the world. So, there is need for the review of our constitution that would give more power and resources to the federating states.

    The moment you do that, they will not be able to sustain that level of pay again. This is because what the federating states will be contributing will not even be enough to run the National Assembly.

    SSAEAC has been partnering some organisations on technical and vocational trainings to empower its members. What should the government do  to training institutions to boost manpower?

    The response from the Federal Government regarding the issue of technological and vocational training for Nigerians needs improvement.

    There is need for the Federal Government to identify those organisations that have started wonderful proggrammes that are yielding results and get them into national initiative that can be able to triple the outcome so that we can drive the government’s manpower development scheme for actualising the Vision 20:20:20

    Why are there increasing cases of strikes and agitations by workers and how can they be addressed?

    The agitation for payment and increment in salaries by workers and the high incidence of strikes  have been more in the public sector than in the private sector, but the structure and policy for managing industrial relations and collective bargaining from the national perspective is the same whether you are operating in the private sector or the public sector.

    So, the question we should ask ourselves is, why has it worked in the private sector and it has not worked very well in the public sector? The answer to that is first, the government has to demonstrate responsibility and respect the agreement, which it signed with the unions.

    This is because quite a number of past strikes had to do with the failure of government to honour agreements, which it signed. The second issue as to why there is a higher incidence of strike in the public sector is the failure of the parties involved to respect the structure which they have agreed upon for engagement.

    I give an example, the current structure of collective bargaining in Nigeria is anchored on industry-wide collective bargaining, and just as we have industrial unions in the private sector, we have sectorial unions in the public sector.

    In the private sector, it is the industrial unions that negotiate with the employers but in the public sector, the employer is the government. The third question is: why are those unions in the public sector not engaging their employers in collective bargaining on regular basis.

    One reason for that is that quite unlike in the private sector where you have procedural rules of engagement that are very clear as to when you are going to negotiate, in most public sector organisations, you do not have rules of engagement.

    If the rules are well-structured, they will know that there is a time when they can do that and when that time comes; there will not be any reason to engage government.

    The government structure comes out of the dynamics in your environment and your strategic objectives. The current structure we are operating has been in existence since 1970s and there have been a lot of changes in our economy. Whether you are talking about the public sector or the private sector that is where the reform issue comes in.

    How do you think the problems of manpower needs in the country can be addressed to make the nation’s economy competitive?

    It is imperative for capacity building organisations in the country to be supported by the government to shore up the quality of the human capital for the real sector in Nigeria, to prepare the nation’s economy to outshine other economies in the world.

    The best option is only on investing in massive skill acquisition programmes in these capacity building organisations that will address the lingering manpower and skill deficiency that has plagued the manufacturing sector in the country because the three tiers of government, the federal, states and local government investing in people-centered innovation is essential to Nigeria’s developmental needs.

    We have made it clear to the government, not only to be in the vanguard of the rush to develop Nigeria economically and technologically, but also must be aware that its future can be determined by the ability to support the capacity building organisations in reducing unemployment and developing the critical manpower that is much needed to move the nation forward.

    We also made it clear that the government need to concentrate on the constant development of vocational and technological capacities of its trainees, so that companies would be more encouraged and willing to absorb them on completion of their trainings.

    This is because there is urgent need for Federal Government to initiate policies that would develop the human resources capacity needs for backward and forward integration of the Nigeria economy

     

  • ‘Nigeria needs quality statistics for proper national development’

    ‘Nigeria needs quality statistics for proper national development’

    After several years of relentless efforts to ensure that statistical quality is given appropriate attention in national development agenda, the Nigeria Statistical Association, NSA, has secured the National Assembly’s consent with the passage of the Chartered Institute of Statisticians of Nigeria (CISON) Bill. In this interview with a select team of Business Editors, the National President of the Association, Dr. Mohammed Tumala, speaks on what the country stands to benefit by professionalising statistical practice. SIMEON EBULU was there.

    Nigeria’s developmental strategies appear not to have placed much em-phasis on statistics as a tool for national development until recently. What has the country lost for relegating statistics to the background in the past?

    You cannot measure and monitor national development without statistics. You cannot also possibly get the right mix of policies that will work if statistics is not used in planning. For coming to realise at this hour when nations have moved forward far ahead of Nigeria, that we need statistics, the country has lost an important ingredient in human activity and that is time.  Unfortunately, it is not only time that we lost, knowledge and technology has moved far beyond our comprehension, our people are poor, our society is not cohesive. It has really left us at the bottom of the rung of human development.

    The World Bank has taken much interest in supporting the country’s statistical development through manpower and institutional capacities building. How have these impacted on the quality of official statistics in the country?

    The National Strategy for the Development of Statistics was implemented with support from development partners. The involve-ment of the World Bank has affected the fortunes of statistical infrastructure in the country positively. It unified the National Databank and the Federal Office of Statistics; it resulted in the provision of legal backing for a system with clear demarcation of responsibilities for the production of official statistics. In particular, the production and dissemination of macroeconomic statistics like output, prices, monetary and international trade data has improved in terms of methodology, frequency and timeliness. However, more work is required in the areas of social, sanitation and environmental statistics, and some aspect of financial statistics, particularly public and private corporate finance.

    What is your assessment of the performance of the National Bureau of Statistics (NBS) and how can this be improved on?

    The NBS has transformed the Nigerian statistics environment. As earlier mentioned, national output is now produced on quarterly basis, prices are available on monthly basis, and many more other macroeconomic variables. These are now released electronically to all users impartially. It is complying with international standards in the production of data. However, government seemed to be gradually withdrawing its support for the new agency in terms of financing. Governance responsibilities were also assigned to persons without technical capacity in data production, while routine surveys necessary for data production remained unfunded. At the helm of affairs and the clearing house of the Nigerian Statistical System is the Governing Board of the NBS, Government needs to appoint technically competent persons on the Board to manage technical responsibilities. Government needs to understand clearly the processes of the NBS and fund data production as a capital project or as an investment.

    The CISON Bill has been passed by the National Assembly. How would it impact on the practice?

    The time has come for statistics to have its way. There is the growing demand for data in the country. The National Assembly has realised that its functions become more effective when statistics is available. Quality statistics can only be produced by professional statisticians who are guided by documented code/ethics of practice and adore their profession. Indeed, many of the members of the National Assembly we interacted with wish to see the statistics profession practiced like the accounting profession in the public service where the Statistician General recruits, trains and posts statisticians to all ministries under a unified condition of service. That will be the next step we shall take as soon as Mr. President assents to the CISON Bill. For now, we have been challenged to produce quality data for Nigeria.

    What does this portend for national capacity building for Nigeria’s statistical system?

    Presently, those who wish to practice as statisticians can either go through one of our educational institutions or attend the NBS statistics school with campuses in three locations. And, in almost all MDAs, we have people who found themselves posted to PRS departments and are not statisticians by training. CISON will provide training opportunities for non-statisticians and retraining for statisticians for enhanced professional practice. This will go a long way in complementing government training programmes. CISON will also provide avenues for knowledge sharing and professional interaction that would bring about professional bonding. This has the potential of growing public confidence in the statistics being produced, and hence its use.

    Getting the enabling law is one thing and mobilizing members for bodies like yours is another. Do you have strategies in place to make NSA more visible in the public domain?

    CISON is ready for take-off from day one. The Bill has provided for transition from NSA to CISON. The NSA over the years has been collecting CISON development levy from members specifically for the smooth take-off of CISON on establishment. In addition, the NSA is an old organisation that I, for instance, have known before graduation. The level of awareness is high, active participation in NSA activities give statisticians advantage in recruitment and promotions. Students of statistics look forward to becoming members on graduation. I may be right to say that we have a very high level of awareness within the statistics and allied professions.

    In most professional bodies, examinations are conducted to admit new members while old ones are elevated to Fellows or other positions in recognition of their contributions to the development of their bodies. Is NSA likely to adopt this approach?

    Sure; that is the appropriate way to go and we shall adopt it. What makes the statistics profession different is the need for close monitoring of practice. The data we produce and publish are aggregates of numbers collected on individuals, firms, government agencies, etc. High professional ethics and compliance establishes trust and confidence in those who provide the numbers. If such trust is not there, they give you wrong numbers and you have no way of knowing.  If the numbers are wrong, aggregates will be wrong and consequent policies inappropriate. In addition to examinations, CISON will also monitor non-disclosure and sincerity in data collection.

    National Planning is at the heart of nations’ development globally. What is your advice to the present government on national planning for development?

    First, the National Planning Commission, NPC, should be the focal point for economic management playing the role of coordination of fiscal and monetary policies, and development plan implementation. As the custodian of the nation’s strategic plans, the NPC should play a leading role in the budget process since the budget is the cost component of the national plan. Secondly, over the years the level of monitoring of plans/budgets implementation has become almost absent. The NPC and state planning offices should be empowered to monitor and evaluate the implementation of strategic plans and annual budgets which are short term components of the plan.

    What is your take on the belief that the time for Nigeria to prioritise statistical data development is now, especially when revenue is dropping fast, causing concern for the socio-economic transformation of the country?

    The dimensions of human behaviour are becoming more complex by the day. Populations have become so mobile, economies are becoming service driven and so dependent on IT and global information. No economy can therefore be possibly insulated from vulnerabilities from global markets developments. The way to go is for policy makers to understand all sources, detect early emerging vulnerabilities and take counter cyclical actions. Statistics is possibly the only scientific way of understanding sources and timing of shocks to economic growth. I think the present government has taken the right step so far in its consultation with the national planning commission and we hope that this is sustained.

    What roles do you think your association could play in improving fiscal efficiency?

    Statistics plays a leading role in public or national finance. Economic theory anticipates leakages in the circular flow of money, either within the domestic economy or between domestic and other jurisdictions. It is statistics that provides an idea on the size and direction of leakages. When government spending is high and human development measures are deteriorating, that statistics indicate leakage. When the country’s exports are consistently far more than its imports, and its external reserves depleting, that statistics indicate leakage. We know that easiest way to fight financial corruption is through data mining. As a country, we have invested in infrastructure that are currently producing huge volumes of data like; the BVN registers, national ID, driving licenses, international passport, bank transactions, phone calls, social media usage, etc. Organisations like the DSS and EFCC should develop their capacities to use information from these sources and take proactive steps to curb financial corruption. Financial corruption can be reduced to the barest  minimum by mining banking data alone. Most countries have gone beyond data mining and have migrated to the so called “big data”, which is data large in quantity and diversity, and high in frequency of availability to understand human behaviour. Analog methods cannot fight crimes anymore.

    Do you have plans to take statistics as a course of study to universities and other tertiary institutions where it is not being offered now? If yes, how and when?

    CISON will work with training institutions on curriculum development, assist in improving the skills of teachers and retraining of practicing statisticians in data production. Statistics as a course has become more popular with students than most physical science subjects because of its cross-cutting content.  Most universities will therefore on their own establish a course in statistics or mathematics and statistics. CISON will focus on improving the learning environment in existing departments rather than establishing new departments.

     

  • ‘We’ll save Nigeria $50b in capital flight’

    ‘We’ll save Nigeria $50b in capital flight’

    The Nigeria Shippers Council (NSC) has its job cut out for it. It is to make the seaports the hub for Africa. To do this, it must ensure that goods are not diverted to neighbouring countries’ ports. Can NSC succeed in this task? Yes, says its Executive Secretary, Mr. Hassan Bello, in this interview with Maritime Correspondent OLUWAKEMI DAUDA. NSC, he says, will end primitive cargo clearance procedure and stop capital flight.

    Why was the Nigeria Shippers Council (NSC) appointed port economic regulator?

    After the implementation of the Federal Government’s port reform, which led to the concession of terminals to private operators, the government noticed a disturbing vacuum in the maritime sector. The gap included absence of an economic regulator that will act as a referee in the industry. The government also noticed the inefficiency in the procedures and operations of agencies, service providers and users which were affecting and undermining Nigeria’s competitive advantage in international trade.

    These were what prompted the agitation for the appointment of a commercial regulator to oversee the activities of stakeholders, including providers and receivers of shipping services. Freight forwarders had, on many occasions, gone on strike to protest against service providers increasing charges arbitrarily and the deplorable system. They had argued that it was so because there was no regulator to check the activities of terminal operators and shipping companies, most of which are sister companies of the terminal operators. It was based on this that stakeholders applauded the Federal Government when it named the Shippers’ Council the Economic Regulator.

    What is your role as port economic regulator?

    Our role is to consult, coordinate, moderate and harmonise the various processes and procedures with a view to achieving operational efficiency at our ports. Where there is unreasonable resistance, we shall not hesitate to apply appropriate sanctions to ensure compliance. We shall remain open, independent, neutral and consultative; and all decisions will be based on the buy-in of stakeholders. We are also to assess options for competition; to decide on entry rules; to regulate. As a regulator, we are not lords, but coordinators. The ports will regulate itself with competition. It is important to ensure that quality service is affordable and in accordance with world standards. There should be a scientific way of setting up tariff and measuring quality of service. Specifically, our new role includes assessment of options for competition, deciding on entry rules, regulating pricing freedom and monitoring the outcomes through the competitiveness and efficiency in our ports based on a new port order and port community system we are introducing.

    How do you intend to discharge your new functions?

    That is why we are building capacity internally and restructuring NSC. For you to carry out your assignment and have effective structure, you must build capacity and that is what we are doing to be more educated, and more knowledgeable than the people we are regulating.

    What was the situation at the ports before NSC became the economic regulator?

    There were impunities and arbitrariness at the ports. People just woke up and increased their charges then. But now, you cannot do it. Many attempts have been made by the Nigerian Ports Authority (NPA), the shipping companies, terminal operators and others to increase their tariffs but they have not been able to do it because of our new role.

    Although we are not against increase in tariffs but our position is that we must look at it vis-a-vis the service being rendered and what is obtainable in other climes. There are scientific ways of doing it and that is the process we must follow. The freight forwarding charges are with us and we are looking at it with the aim of seeking the best way to implement it.

    What other steps are you taking?

    The NSC is looking for ways to improve the economy as far as port services are concerned. We are collaborating with the CBN, checking impunities, blocking revenue leakages and we are also blocking capital flight to attract Foreign Direct Investment (FDI).

    We will save the economy about $50 billion. We have confirmed the real amount people are paying for freight from Tin-Can to Apapa ports. Whereas the amount is “X”, but people will say it is “Y”. People inflate it and look for foreign exchange. This is waste. It is capital flight. This is not helping our ports.

    How do you think our ports can be restructured for greater business and efficiency?

    We need to boost export. If we boost export, you will see that the cost of doing business in our ports will go down. When ships are coming to the country, they are laden, but unfortunately, they go back empty. We must also reduce the dwell time of cargo and ensure that it is less than what we have now. We also need to strengthen the cargo clearance procedure, which to say the least, is primitive presently. The clearance procedures in our ports must be technologically driven, such that an importer would not need to go to the port to clear his goods. We must develop a system where goods can be tracked from the port of origin to the time it arrives the importer’s door step. This is our focus. By the time we implement all that we are doing now, Nigerian ports will never be the same again.

    What is the responsibility of NPA in that regard?

    The NPA as the landlord has some certain responsibilities to perform so that the terminal operators and the shipping companies will not transfer it to the shippers. This include the provision of tug boats, pilot cutters, dredging of the channels and the berth. NPA must provide common facilities leading to the terminals.

    How has NPA fared in the process?

    NPA, to be honest, has done well, and we are proud of the NPA. They have started implementing automation. We like their e-payment system. Before, it takes like four days before you can make payment. But now, it is done in a few minutes.

    What about Customs?

    We have to commend Customs for introducing the Pre Arrival Assessment Report (PAAR). This step has set the Nigerian ports on the path of better efficiency. But we need to do more.

    In what areas do we need to do more?

    The Federal Government needs to provide a conducive environment for the private sector to build new ports. These new ports to be built should be made to have capacity to accommodate larger ships than what the Apapa port can presently accommodate. This is because the bigger the ships, the better it is on the economy of scale. If we make our ports the center of activities, then we have arrived. But despite that, we need to be careful and that is why we have called on the operators of these ports to access the situation so that we don’t create another problem like the one we have in Apapa.

    What is your take on effective regulation?

    Effective regulation requires much more than just competent economic and financial analysis; it must also manage often complex interaction with the regulated firms, consumers, politicians, courts, the media, and a range of other interests. As a regulator, we need to be independent, transparent, legitimate and credible, bearing in mind that the transition to a competitive market is a major regulatory challenge. It is also necessary for us to ensure that the regulatory process is fair to all parties, by not taking arbitrary decision and by balancing the needs of stakeholders.

    What do you intend to achieve with the new port order and port community system?

    The objective behind the new port order is to reduce congestion at sea ports. We want a situation where over 70 per cent of in-coming cargoes are to be examined at off-dock terminals to end diversion of cargoes to ports of neighbouring countries. The planned new order will promote efficiency and reduce cargo dwell time and the ports’ cost of doing business. Under the port community system, ports business would become more attractive and boost our relationship with other agencies to generate more revenue for the Federal Government. The new port order is for service providers, users and all stakeholders in the maritime industry to enable them operate in line with global best practices and generate more revenue for the government. The order entails making the nation’s sea ports competitive, efficient and cost effective in delivery of services as well as making the ports user friendly. It will also lead to improvement in marine and terminal handling services delivery that will lead to reduction in the turnaround time of vessel and reduced cost of vessel operations.

    Based on the new port order, we are working with the CBN, Customs and other relevant stakeholders so that every payment made in the maritime domain is reflected on the platform. In doing this, we have designed a template and standard tariff system that will ensure 30 to 40 per cent reduction in cost to achieve harmony in tariff. This involves all service providers. The system harmonises every transaction in such a way that transfer of containers to off-dock terminal does not attract extra charge in terms of payment of royalty to the terminal operator. This new port order will eliminate all the wastages in the system so that the cost of doing business is reduced. Part of the arrangement is that the owner of the cargo should know when his cargo arrives to prepare him to make arrangements to clear his goods in good time. The new port order involves a situation where the cargo is scanned before it is stacked. As the ship is discharging, the cargo is also being scanned, and the image is used by the Nigeria Customs Service to commence clearing process in terms of segregating the cargo for whatever line of inspection, such as: green, yellow and red light, as the case may be.

    What are the benefits of the port community system?

    The port community system involves every player, what he does, timing of activity and cost of such activity. It is a command and control centre, which creates a nexus between all existing systems in the industry. It is a means of integration among all players to boost efficiency and transparency at ports. The objective of the system is to establish a framework that will promote the competitiveness of the nation’s sea ports beyond its neighbouring ports of Cotonou, Ghana, Togo, Cameroun and other ports in the sub-region. We are determined to enthrone an efficient port system that will facilitate trade, reduce the cost of doing business and lead to increased revenue generation for the government.

    What was the reason for the port reform and concession?

    Government’s reform agenda for the sector was targeted at improving; enhancing management capability of enterprises; creating a conducive institutional, legal and regulatory framework and developing private sector participation in financing, management and operations of port facilities. Other related objectives of the reform are to increase the efficiency of port operations, decrease the costs of ports services to the users, decrease the costs to the government for the support of a viable port sector, boost economic activity and accelerate development, and make Nigeria the hub for international freight and trade in West Africa.

    The ports concessioned to private terminal operators were to reduce cost. Cargo dwell time and the cost of doing business must come down for our ports to be competitive; it must be relative to operation and services that are being rendered by the terminal operators and the shipping companies. That is the mandate given to NSC as a port economic regulator and that is what we are trying to enthrone in our ports to boost the nation’s economy. Today, there are investments in our ports and things have improved since the concessioning.

    How do you assess port concession?

    We have had tremendous improvements in the port system, the indicators are there for everybody to see it, the turn-around time for ships has improved, we have more throughput and more tonnage. This means that Nigerian ports are efficient, and we are slowly gaining a competitive advantage. We must not forget that we are competing with other ports, the more cargo throughput we get, the more advantageous it gets to our economy, revenue to the concessionaires themselves and everybody. We are putting things in place at the Nigerian Shippers’ Council to ensure that the ports are competitive; our terminals must be competitive, and this means efficiency, cost reduction, less hassles, and friendly ports, so that they will be the preferred destination for shippers

    Almost nine years after port reforms, how far has it fared economically?

    It has fared quite tremendously, and I think the port reform is not short of being revolutionary. We have had so much achievements in the way we do things during the public monopoly; things have changed drastically, and there are indicators to show that the terminal operators, the shipping companies and other privatised sector of the economy have really pushed the maritime industry forward towards positive gains.

    The NPA has been able to supervise effectively as a landlord by providing common user facilities and even enhancing port operations through technology and automation and this is in the right direction. The Nigeria Custom Service is the leader in automation and technology, what is needed now is just a coordinator so that all these efforts could be harnessed towards the contribution of the maritime industry to the Gross Domestic Product (GDP) of Nigeria.

    This means economic realisation of transforming the gains as far as the economy is concerned; it means more revenue, more labour content and employment, provision of modern infrastructure, especially transport structure. This is the next stage and that is why the Nigeria Shippers’ Council is placed to co-ordinate, supervise, moderate and superintend all the efforts so that we can harness all the positive changes to the national economy. The terminal operators have threatened that reverting to 2009 tariff is the same as reverting the salaries of workers back to what is obtainable back then.

    What are you doing to reclaim over 300,000 metric tonnes of transit cargoes that were hitherto lost to ports of neighbouring countries?

    The plans to reclaim lost transit cargoes have begun to yield result as some landlocked countries are ready to transit their imports through Nigerian ports. We have always emphasised the issue of competition and efficiency. So, transit cargoes are won and lost through efficiency of a port. Long before Nigerian ports were concessioned, they were really inefficient; leading to some landlocked countries that patronised our ports had to resort to neighbouring countries to transit their cargoes. Even though the movement of their cargoes through ports of neighbouring countries does not make sense to them in terms of proximity, cost and other economy of scale factors, it is preferable that they have their goods imported through Nigerian ports. About a year or so ago, the Nigerian Shippers’ Council led a trade delegation to Niger Republic together with terminal operators and some shipping companies where Nigerian ports were marketed. We were able to convince the Nigerian private sector that it makes more economic sense to import through the Nigerian ports.

    What is your take on cargo dwell time?

    We are concerned about the dwell time on cargo. We don’t want cargo to stay very long in the port. Port is not a place of storage. As soon as cargo comes in, it is cleared. We encourage terminal operators to take their cargo away from the port for examination. We are happy we are getting cooperation from the Customs, the terminal operators and NPA. We commend NPA for introducing e-commerce, which means that payment which used to take five days is now done in minutes.

    How can the Apapa traffic gridlock be tackled?

    The solution to the issue as it is being canvassed is the multi-modal access to the port. Presently, there is only one significant mode which is the road mode, but a port should be linked with railway or rail lines; it should be linked with inland waterways, and pipelines; but here we rely heavily on the road, if we had tracks running, we wouldn’t be having all these problems. I think the management of the Nigerian Ports Authority is conscious of this and they are making deliberate efforts to solve the problem. However, you have to appreciate that the ports in Apapa are really over-stretched and they are city ports struggling with other road users that is why the Federal Government is deliberately encouraging another public private partnership in Greenfield development of deep sea ports in many places like Lekki and also in Badagry. When these things are done, Shippers’ Council will ensure that the mistakes of Apapa would not be repeated, we must ensure that these ports are well linked through road, inland waterways, through rail lines and so on.

    Importers and terminal operators are saying that cargo throughput has dropped; do you think the situation will improve?

    Yes. Things will improve, more so, now that we have new government that is trying to put the country in the right direction in place. With policy of the new government to block avenues for revenue leakages, the economy will grow strongly.  The drop in cargo throughput, I think these are part of the initial pangs of the foreign exchange fluctuations, and volatility in the oil market, but I believe these challenges will be overcome by the new government with all of us cooperating. Therefore, our concern now is for us to make our ports users friendly and have an export based economy whereby the ports will play a central role in the international trade.

    What are those things you want to see at our ports?

    We want to see a port that is friendly, a port that makes it easy to do business in Nigeria and make it competitive to other ports. We want to see a port where there is no human contact, we want to see a port, which is technology-inspired, we want to see automation, we want to see a port that is transparent, that is efficient, that is going to be the preferred destination for cargoes internationally

     

  • ‘We’ve redefined standardisation ’

    ‘We’ve redefined standardisation ’

    Until recently, Nigeria and indeed, Africa had no clear and coordinated approach to standardisation of products. This made the continent a dumping ground for substandard products. But the trend begun to change two years ago when the Standards Organisation of Nigeria (SON) Director-General Dr Joseph Odumodu was elected African Organisation for Standardisation (ARSO) president. Under his watch, over 800 standards have so far been harmonised. There are plans to harmonise a total of 1,500 standards in the next one year before he leaves office. In this interview with Assistant Editor Chikodi Okereocha, Odumodu says ARSO is using standardisation to break down trade barriers and build a more robust economy for Africa. He spoke on this and other issues. Excerpts.

    What stage are you are in terms of harmonisation of standards across the region, and enhancement of intra-African trade.

    In 1991 there was what they call the ‘Abuja Treaty’. And it was in that treaty that African countries talked about the creation of African economic community. In that treaty also, they identified the importance of quality infrastructure in the development of the African continent. There were also other issues that they highlighted issues of the fact that we are not talking to each other enough. Africa was not trading with each other. Africa was trading with other economic communities. What was also identified as a major cause of it was the fact that we were already used to the quality of products that were coming from other continents, but apparently we did not trust each other about the quality of products we were circulating amongst ourselves. ARSO was actually formed about 50 years ago by the Organisation of African Unity (OAU). But I must say that not much was done after the formation of ARSO in terms of using it as a vehicle for creating economic development for Africa because just like Nigeria, nobody talks about how we can use standards to create or to develop our economies. Today, at least in the last four to five years, everybody is talking about quality infrastructure and the fact that even though we have lived with measurements, standardisation and all that, defining them in the context of how they can help to facilitate trade was not there; I don’t think we’ve created that linkage. Standards Organisation of Nigeria (SON) was there developing standards; sometimes they go to the industries and harass people for not complying with the standards and all that. Today, we now know that if I want to trade with Ghana or South Africa, we need to speak the same language. I gave an analogy at a conference that a standard is like our mothers who know how to cook and somehow if they want to cook Egusi soup, they didn’t need to read from any standard book, but they knew how to get the right measures of salt, pepper and everything and it comes out wonderful in taste. It’s also the way that standard is. You cook for yourself; maybe you don’t need a standard or you put the standard in your head. But if you have to cook for somebody else, you begin to look at how we can cook for everybody so that we all can accept the same taste. And then think about cooking for another country and that’s where the harmonisation of standards comes in. It is that harmonisation that creates a basis for you and I to do business. So, harmonisation has started happening, but we also have limited ourselves to where we have what we call comparative and competitive advantage.

    What are the areas?

    In Africa, we are reputed for exporting agricultural products to other parts of the world, and that has also defined where we have developed competences. So, if you look at cocoa, cotton, etc those are the areas where you can see African countries have done business in and that’s also what we have tried to do to begin first of all to deal with each other because we have cocoa in Nigeria, we have cocoa in Ghana, but because of agricultural and geographic differences the cocoa in Nigeria may have certain advantages over the cocoa in Ghana or vis-versa. I will give you an example. Cocoa has a tendency to take what they call heavy metals from around it like lead and mercury. So, in defining a standard for cocoa you must define the limits for some of those heavy metals that have impacts on health. So, today, in Africa we have actually harmonised like maize, garri; there are lots of products in the agricultural area that we have harmonised. We’ve also defined in the area of engineering, in the area of chemicals. Those areas, as I said where we have the ability to develop products. There we have about 800 standards that are already harmonised. However, in some areas, you know what we are doing is we do within Economic Community of West African States (ECOWAS), we do within East Africa, we do within the Southern region; we also do within the Northern African union (Egypt, Tunisia, Morocco and others). There’s a lot of work that has been done within ECOWAS now; there is a lot of work done within East Africa. In fact, the East Africans have already started harmonising with the Southern Africans through their Common Market for East and Southern Africa (COMESA). So, they have already done a lot of work. But even at the auspices of ARSO what we’ve done is to select some of them and harmonise. Somehow I tell people that Africa seems to be blessed with strong countries within each of those groups such as Egypt, Nigeria, Kenya and South Africa. Those are the countries that are leading the process of harmonisation. Have we achieved where we should be? No we haven’t. Have we started redefining intra-African trade from 10 per cent to 25 per cent? We haven’t reached there, but I think we’ve created enough bases for those businesses to happen. But we also realised that apart from quality infrastructure there are also other forms of infrastructure that are required. For example, we want to create some geographic linkages. If you want to travel to Cameroon it may actually be easier for you to go to London and come back to Cameroon. Because it is how the goods will move that also people will be able to move. But what is good is that the Heads of States of African Union defined the Continental Free Trade Agreement (CFTA) to be promulgated by 2017. Some people say it’s too early. We don’t think it’s too early because we are working towards it; we believe that we can cross the bridge when we get there. So, we are creating an opportunity for the Heads of States to make the decisions. In fact, I am headed to South Africa and at that meeting we are all standardisation, metrology, accreditation; all the groups in Africa I am meeting because we need to summit the paper to the AU Heads of States meeting and it is all in furtherance to the realisation of the 2017 CFTA. You know you cannot force everybody to do it; it’s a kind of moral suasion. If we do this it will be beneficial to us as Africa. If we do this we can industrialise Africa; Africa has a huge population and our population is growing. In fact, when I look at Africa and I look at Nigeria I say Nigeria is just a microcosm of all the African challenges because we are saddled with invasion of sub-standard products. We are saddled with poverty, disease and all that. But I think what we can do is using standardisation to break down trade barriers and then to ensure that we can build a more robust economy for Africa. If we do that and keep away bad products, because what we are doing now is how can we support our weaker African brothers. Some of them don’t even have standards bodies. Those of us who are developed in standards give standards to them and then we do what we call bi-lateral agreement or mutual recognition agreement so that we can trade seamlessly in such a way that we can support them, we can learn from each other about what is done successfully and then we can build a better Africa.

    To achieve this there will be need for capacity development across various countries. How can you make this happen because it is one thing to have the standards and another thing to implement the standards?

    When we do ECOWAS harmonisation, it is led by Nigeria, because some of the countries are not endowed with what we have so, we are the one who lead the process. Today, West Africa has what we call Quality Policy for West Africa. It was championed by Nigeria. So, we are actually providing technical support to smaller countries. I know, for example, we’ve done something for Cameroon. We’ve trained some other countries like Liberia where they set up their standard bodies and we helped as Nigeria to train them so that they can all come to the same level. The reason why we are also doing that is not because we know too much, but because apart from being our brother’s keeper, we need to build everybody to come to the same level. If we don’t come to the same level how can we trade? We can’t speak the same language and all that. So, those are some of the things that are being currently done. Nigeria and Kenya, for example, have actually done a lot in capacity building. And at the last meeting too, we were mandated by ARSO to provide capacity for lesser endowed African countries for free because at the end of the day, like I said, we are doing it for Africa and Africa’s growth.

    It seems West Africa is being left behind in the implementation of the CFTA agenda. How do you think you can use your office as ARSO President to drive the agenda?

    I don’t know if it’s an accident, but yes, ECOWAS appears to be at the tail end of the progress that we have made so far. But I must say that we have made so much progress in the last two years. But our lack of appreciable progress is also as a result of our historical antecedents. We had two ECOWAS basically, and there is this tendency of us not speaking enough with each other. So, we have the French-speaking and English-speaking and even among the English-speaking we don’t even speak with one voice. So, there are a few challenges, but what we have also done is to provide the leadership that we can use to drive it because today I am president and I don’t want a situation where we will be the regional economic group that will keep Africa behind. So, like I said we have made so much progress in the last two years, but East and Central Africa are so far ahead already. There are also reasons why they are far ahead because there is geographical, language and there is a lot of traffic among them already. And most of the multilateral agencies somehow, whether by accident, reside within those two communities. For example, we have United Nations Economic Community for Africa. But like I said we are making better efforts. Let me look at Nigeria. When we started in 2011, Nigeria did not have metrology, no accreditation, but today Nigeria is showing strongly. We have actually within two or three years built enough grounds to level out with countries like South Africa and Kenya. In the next two years, I can assure you, we will be clearly at par with all of them. That parity is also what will help to accelerate the process of integration in Africa.

    A lot of products have been harmonised. Is there any common product within this region that has refused to be harmonised?

    I am not actually tracking what is not being harmonised. Let me give you an example. Garri has been harmonised in Africa and if you see garri in South Africa or in Nigeria or anywhere it is the same garri, it has the same specifications anywhere. You know when we are harmonising at the level of the international community that because of technological advances you will now begin to see products that are being dropped, but in Africa we have not attained that level. We really need to put efforts to harmonise before we begin to dump products.

    How many more products do you hope to harmonise within the next one year?

    I don’t have the figure off hand, but in the next one year, because I have just one year to go, we will make sure that we would have done up to 1, 500 in total. But like I said harmonisation is also driven by the market need; we don’t want to harmonise for the fun of it, we want to harmonise what we can trade on with each other. And what I’ve also found is, for example, in Cameroon they have a factory that does intermediates for cocoa powder and all that. So we have cocoa in Nigeria, crude, and we can harmonise with them so that we can also feed into that industry that they have there. But one good thing about harmonisation is that you can use what you have done partly to continue to do some work elsewhere and in a very seamless way as if you are running one factory.

    ARSO came out strongly during the meeting against the issue of dumping in the region. How does ARSO intend to go about checking dumping?

    In our meetings we agreed on the fact that Africa seems to have one big enemy, because if you look at Africa in the context of industrialisation it does appear that Arica stepped back in the last 10 or 15 years and if you investigate that you find out that the growth of certain Asian economies also resulted in decline of industrialisation in Africa. That’s not a challenge. I think what is a challenge is that because of the weak regulatory framework in Africa it is easy to bring those products; maybe that’s what you are also referring to as dumping. There is nothing wrong with bringing products into economies once they attract the right price and there is quality, but the point is when you are sending sub-standard products into African economies. It’s not fair; it’s actually inhuman as far as I am concerned. So, what we have done also is to work with our colleagues first to share our best practices. But one thing I found that shocked me was that every country we went to they were going through the same challenges as Nigeria. So, I think they must have found out that maybe there were certain initiative that we introduced such as issues of registering the products, issues of consumer education; because the reason why these products come into Africa is because African consumers are very ignorant. So, we are sharing best practices; we are sharing experiences, and we are also helping our weaker colleagues. Remember if Africa forms a continental free trade area the weakest point will be the weakest countries that those products can come into and then they can get to the rest of Africa so, everybody must be at the same level and that’s what we have committed ourselves to.

    You visited some Asian countries identified as culprits in the business of bringing in substandard products. What motivated you to do this?

    We are engaging those people at another level. We are engaging them now at the level of the African Union. Like I said I am going tonight for a meeting and those are the initiatives that we are also canvassing. The point is that if Nigeria fights with a big economy Nigeria may not be too successful, but if Africa fights there is going to be somebody listening and that is the basis for our strategy now that let’s fight as Africa because we have the critical mass. And if Africa for example says if you don’t do this we will ban products coming from you they will listen because I am sure Africa constitutes maybe over 50 per cent of their manufacturing output.

    Can you pick out some segments of the  economy that are beginning to feel the trickle down effects or benefits of these actions?

    I think one that sticks out is the cable manufacturing area. We’ve done a lot of interventions within the cables and I am happy that the cable manufacturers are now giving testimonies that things are getting better for them. I must also say that if you go to some of them like Coleman Wire and Cables, they’ve actually made huge investments in recent times. There is also Cutis Cables in Nnewi, Anambra State. So, there are actually exciting testimonials. We also can talk about the galvanised metal products, the one we call zinc. When we did some review of standards we actually found out that almost 30, 000 employment positions were filled within the industry and now those people are able to export their products outside of Nigeria. The most astonishing for me though is in the re-enforcement bars. If you go and ask the big construction companies especially the multinational ones in Nigeria, way back in 2011 they bought everything, they imported everything from abroad. Of course, it cost them more because you have to put money down to be able to import products like bars that they use for their buildings. Today, most of them are importing less than 20 per cent of their requirements. Why? Because they found the local re-enforcement bars are now competing at the same level with the internal products that they are buying. For example, for the re-enforcement bars, we told them that we needed to create some traceability. So, today if any building comes down or you go to the market I can tell you who made what. So, you cannot hide in the crowd. Even if a building comes down, during the investigation we are able to tell where and who made what because there are identity marks. When I came I found out that most of them do not have quality assurance systems; we insisted that they must have, they must buy equipment and those equipment must be calibrated and people who must work there must also be people who are well trained. And these are also showing in the kind of the outcome of the quality of the products. I think what is critical on this job is having the passion and a single-minded approach to pursuing it. I think what we have seen in Africa is that if you look away people turn round and want to make profits because the consumers are largely ignorant. And then don’t lose concentration; if you lose concentration they will go back to their old ways.

    In the area of SONCAP is there any window of opportunity or concession to manufacturers to fast track their import process?  

    The SONCAP is a scheme to keep away products that do not meet the standards especially when they are coming from outside. What we have done is to single out manufacturing, maybe because of my experience in manufacturing also, that these people need their materials when they need them. And two, they are already challenged with a lot of infrastructure issues, even delays at the ports. So, what we’ve done also is to facilitate and to make sure that there is a small window that we have created for manufacturers to obtain permits to bring in those products without having to pay an arm and a leg as against those who are importing finished goods and I think the manufacturing industry is better for it.

    How far has SON gone in reducing the preponderance of sub-standard products? Also the destruction of seized substandard products amount to economic waste, you indicated the possibility of recycling. Is that arrangement still on course?

    Yes, but you know we are not government, but what we have done is to encourage businessmen to invest in recycling plants. For example, when you seize tyres, tyres contain some metals. The rubber can be used by other heavy industries for providing energy basically and then the other part goes to the steel industry as raw material. But generally, the level of sub-standard products in Nigeria has reduced in the last three years. It may have been constant in the last two years; I mean whatever level it is has remained constant and the reason is obvious. I said to somebody yesterday government in its wisdom removed SON from being at the ports and that singular action now hampered the drive for reducing substandard products in Nigeria because today we are not at the ports so, we do not even know what is coming into Nigeria. As an organisation we devised another alternative. We went to the markets. The markets are risky, they are more difficult and we are also limited. There are 1, 400 people in SON. There are over 1, 400 markets in Nigeria so, I can’t even send one staff per market and I don’t know how effective one person will be in a market. So, it does appear that we have slowed down in the drive to reduce those products in Nigeria, but what we have done now is also to segment. Today, for example, our statistics show that electrical/electronic products constitute over half of the substandard products. So, what we’ve done now is that within one month we are launching a campaign on what we call ‘Operation Flush’ and we are going to focus on electrical/electronic products and you will hear because if I am running a campaign or if I am doing something people will hear because I will do it in a way that if people don’t complain then you are not effective. People are going to complain even to the president that this man is disrupting our business, but actually we must disrupt businesses of people who do not want to do the right thing. So, we are going to hit them, we will actually hit at all levels; we will go to the markets, we are reviewing the SONCAP certification for those products. But we are also going to be talking to the consumers. So, it’s going to be a three-pronged approach, that’s why we call it operation flush. The consumers must also be tutored on what to look out for when they want to buy electrical or electronic products. The more people stay away from those products the less they will bring them in. And I can tell you watch out before the end of the year you will see a new lease of life for industries because there is an inverse relationship between reduction of substandard products and the health of the manufacturing industry.

     

     

  • ‘Naira devaluation bad for businesses’

    ‘Naira devaluation bad for businesses’

    The effects of devaluation of the naira and falling oil price have permeated key sectors of the economy, including the PayTV industry. MultiChoice Nigeria Limited Managing Director John Ugbe speaks to COLLINS NWEZE on his company’s operations, the business environment and how naira devaluation is raising business cost.

    How will you describe the business environment and the economy?

    It is unique, in the sense that it is not like any other in the world. That’s what makes us Nigeria and makes those of us who live here Nigerians. And a lot of people would say the situation is very tough and rough. No, we don’t say that. We see it is unique. We believe that to be able to succeed in business here, you can’t be one of the briefcase carrying firms. We believe you have to be a Nigerian business like we have been. If the environment is unique in its way, the only way to succeed is to understand and know how to take advantage of the opportunities that the environment throws up.

    So, there’s a lot of traffic in Nigeria, especially in Lagos. This influenced our decision to launch a mobile TV- the first of its kind in Africa. So you have your TV screen in your hand, in your car and we were able to solve the problem where most people will be rushing to watch the Champions League by 7:45 pm and be stuck in traffic.

    That shows you we took the local environment into consideration. Did we try to stop the traffic? No. Did we try to move the matches? No. We couldn’t but we came up with a solution that was able to adapt to the lives of Nigerians. That’s how we have treated what people perceive as challenges in the local market. When we started out, you needed to have a very big dish, 2.4 meters. But we knew that couldn’t work too well in a local environment, we pioneered the launch of a satellite to cover Nigeria. We were able to reduce the size of the dish into smaller ones that are now prevalent everywhere you go.

    Does the Mobile TV service come with additional cost?

    No. If you are a premium subscriber with us, you get the Mobile TV at no additional cost. And now, we have got an application on the iPhone, android phones for the same principle: as a premium subscriber you get additional content on the move while using local data to connect.

    Tell us some specific challenges you face in this market?

    The challenges we face are the challenges everyone else faces. So, infrastructure could be better. I believe there are some initiatives now to improve power. You need power to be able to watch TV. So, I think there are a lot of changes going on with privatisation of power. I think we can see some positives coming out of it. So, as with everyone else, we hope that this becomes more positive and we can see an improvement in infrastructure and this can affect and grow the local economy. For us, we are very proud that for the first time, the impact of entertainment on the Gross Domestic Product (GDP) was identified and it was identified when Nigeria’s GDP became the largest in Africa.

    This is quite significant given that at over five per cent, we think that there’s an opportunity to grow that into 40 per cent especially with what is happening with oil price today. We need more of investment in entertainment industry and also more capacity building. That’s what we are at the forefront of doing.

    It is difficult to discuss business in Nigeria today without speaking on the impact of the falling oil price. Are there specific issues being faced by your industry because of oil price slide?

    Look, the oil price decline has put pressure on the naira. It is something that affects everyone who is in business. Obviously, we would have loved to have a much stronger naira because it gives us the opportunity to manage our cost better.

    What is the biggest challenge you are tackling in this industry?

    I can’t think of a bigger challenge. Like I said, it is capacity building. In the past, we couldn’t even find programmes to buy. They are available now. We move on to the next thing which is quality of programmes. There are lots of master classes, a lot of development of sound and lighting  that are going on.

    When we wanted to drive a lot of quality, our sister company, Africa Magic, came up with the African Magic viewers’ awards. Now we are rewarding excellence and this has led to producers striving harder to do better movies. When we started with content, everybody laughed at it, but now they are beginning to take it serious.

    I foresee a future where this industry will be bigger than Hollywood. There is more content being produced here. With much more content being produced here that are of better quality, we will have the opportunity to grow bigger than Hollywood. I think we try not to focus on challenges, we try to focus on how we can turn them around to becoming opportunities for all.

    What has led to the high acceptance level of MultiChoice Nigeria services within the local market?

    It is our ability to remain in business; not just remaining in business, but to keep providing entertainment. That’s primarily what we want to do, putting smiles on peoples’ faces. It is also a fact that as a Nigerian company, MultiChoice Nigeria has always understood the local market, remained innovative and evolved with services. It has always remained ahead of the curve to ensure that we know what people want and provide such services.

    When we started, there were lots of emphases on international content, but we believe that the best content will come out of Nigeria. And when we say the best content, I am referring to the music industry which we started supporting very early when Nigerian music was almost dead.

    We are the strong foundation for the TV Content Business, popularly known as Nollywood. We were also expanding to sports. Last weekend, I saw a  lot of people on Twitter talking about football match in Aba, which when you look back, you will ask when was the last time people talked  about a match in Aba? When you look at that, it comes from us investing very early in the sector. There is time for developing. We have to continuously adapt, trying to provide the best as far as entertainment is concerned.

    Are there some specific steps you have taken to develop this market, which you would want to mention?

    We have invested over N30 billion in developing content in Nigeria. I think that alone tells you how much we believe in this market.  It is our market. It is where we do business. It tells you we are in it long term. We are not into buying and selling. We are into working on backward integration.

    Where this content did not exist, we took the risk of investing and creating it. Even when nobody is sure that we are going to watch it. Now, we have these content being appreciated internationally. Nigerian artists are performing everywhere in the world. We are proud to be the foundation of it.

    Since these programmes are being watched globally, how do you recoup your investment?

    Our business has always been to be able to recoup our investment. Sometimes, through subscription locally, and also internationally through partnerships, we are able to sell some of these contents.

    But also, as a proud Nigerian, the benefits are not only monetary, but are being able to fly into an airport in Zambia and someone walks up to me and say, how you are sir. Or when someone speaks Igbo, Yoruba or a little bit of Hausa, you are almost shocked initially. But something comes to your mind: you are in this position for people to be able to see us.

    How will you describe the broadcast industry in the country and regulation?

    There is robust regulation. We have been at the forefront. We have always partnered with the National Broadcast Commission (NBC). We like partnering with regulators. We want to ensure there is proper capacity development, and to stay within the regulation. I think that has been critical for us. That’s why we have been able to remain in business.

    Are there areas you think that the NBC should improve on, in the interest of the sector?

    There is always room for improvement.  The industry itself always does a kind of self regulation. Broadcast is very strong and important for every nation. So, we have to be able to look inwards ourselves and help the regulator ourselves.

    You have embarked on some projects in line with your firm’s Corporate Social Responsibility. What motivated you to do such?

    We have always believed in investing in our communities. The MultiChoice Resource Centres are at the forefront of what we do as CSR. We go to public schools and instruct teachers on how to use audiovisuals to teach, install equipment and provide DSTV Learning Centres in those schools and help the students learn better. Recently, we went back to some of the schools, and we were able to meet some of the students who are now in the university, some of them in medical schools. We asked them what the impact was. It was great impact that one can learn, and be able to learn from what he sees. We have learning channels, which are very powerful on this channel and we have been able to bring that into the classroom for public schools.

    We are also very active in supporting the Sickle Cell Foundation, we have worked with the Lagos State Government, adopt a school, and a lot of other smaller initiatives that we do to support the communities where we do business.

    Your tariff was increased recently. Why did you take that decision at this time of economic hardship in the country?

    I think in as much as we want to remain responsible to our communities, societies, and also to our shareholders, one thing you see in PayTV is that the cost of your content keeps going up. For instance, when Manchester City Football Club in the United Kingdom signed a player at £49 million  from Liverpool and Man  City Fans are cheering, I say, you know at the end of the day, you are going to pay for this because the club needs to generate money somehow.

    And you know, one of the ways of generating money is TV rights and almost every year, you must be sure what TV rights will cost you. So, that’s just one example.

    Again, you will never hear that an actor is earning less than he was earning two years ago. No, he will always earn higher. Every new movie, actors are paid higher than they were paid, the last one. So, unfortunately, all these cost inputs grow overtime. It is just the reality that we will have to sometimes, or once in a while, increase those rates to be able to pay for those wonderful content and remain in business.

    Do you agree that your near monopoly status in the industry has influenced your tarrif increase even against the peoples’ wish?

    Well I don’t believe that. I have always asked people: how do you define monopoly?  We are not one and we are not even close to being one. We wouldn’t want to do anything that would damage our own business. Don’t forget we are into entertainment. So, I think the core thing is to be able to offer that service; to be able to continue to be in business, we have to be able to cover those costs.

    It is not an easy thing for us. And then we have the devaluation of the currency which also makes it even more difficult for us to do business.

    Don’t forget you have to pay your satellite costs and for contents. So, not only is that price increasing, but we also have a case now where we are spending more in naira in order to afford  the same thing we could afford last year.

    So, it’s quite a complex mix and we have to try as much as possible to absorb a lot of it, to be able to offer something that’s affordable. But also, what we have done over the years is that we made sure that we created different subscription bands. So, till today,  we still have  subscription that is for N1,000.

    So, for N1,000, you can still subscribe  for our GOTV service. We don’t take our service out of the reach of the average Nigerian.

    How much does it cost to buy content for the Nigerian market?

    I can’t give you that figure. It means telling my competitors how much to get content. Your content deals even with the local industry are confidential deals. So, I will be flouting that confidentiality if I put a figure to it. But what I can tell you is that we invest billions of naira every year including through our sister company, Africa Magic. They produce some content and I think that has really aided the growth of the Nollywood industry.

    Some people are thinking that the tariff in Nigeria is the highest in Africa. Can you give us insight into what happens elsewhere?

    It is not the highest. In as much as we always insist that this is MultiChoice Nigeria. So, I have to take my local environment, my cost of buying content into consideration to determine the pricing locally. However, I always challenge anybody who has told us we are the most expensive in the world or in Africa that we are not. I believe that with the advent of the internet, everybody can check that we are not. We are very well priced and that takes into consideration what we do locally.

    Take a look at the African Magic Channels and see how much of Nigerian contents are on it. That will show you clearly that we do buy a lot of contents locally. We have two major Nigerian languages having full 24 hours dedicated to them, at a big cost to us.

    Why can’t you let subscribers pay based on time used as done in the telecom sector?

    Unfortunately, like we have explained this in a couple of fora, our business is not the same as the telecom business. Telecoms are not selling you any content, you dial and make the calls, you originate them. You are the content. So, we unfortunately have to buy and broadcast. So, broadcast media is one to many. It is not a one to one communication.

    I don’t even know where to begin to bill you. But also, that’s how the entertainment industry works. If you buy a ticket to go and watch a football match and you decided to leave after a half time, do you get a refund?

    What you paid for is a football match. So, imagine how I would have to pay the man who makes a movie, how would I pay him for that movie if I tell him that in the middle of watching the movie, maybe half of the people stopped watching the movie. It makes buying content almost impossible because there is no agreed way I would get revenue and how I would end up paying for the cost.

    Tell us something more about the competition. What gives you an edge?

    We are always focusing on ourselves despite what the competition is doing. We have a long term plan for the business and even if it means investing ahead of the curve or forgoing profit at a certain point to develop the business. We focus on what we do. We try to do things much better than we did it in the past.

    We are really committed to Nigeria as a country. We look at Nigeria, we know we are here to stay and we started local content. I look forward to the day we would see people going back to wear an Enyimba T-shirt or Stationery Stores jersey because that’s where we want Nigerian football to go.

    We have eight outside broadcasting vans in this country. If I tell you how many people it takes to cover one football match, it would take a crew of sometimes 50 to 60 people travelling 10 hours on the road, staying days. That’s what it takes to cover one football match and we have to do that often.

    If Warri Wolves is playing we have to cover that, then we go and cover another one at Asaba. These are all being run by Nigerians. We have Nigerians trained, developed and this are people right now invited to cover games by Federation International Football Association (FIFA) and Confederation of African Football (CAF) around the continent.

    They are the best in the business. That’s not something you wake up in the morning and just hire people. It takes time to train and make sure you have the best. That is the  focus and it is what we believe in generally.

    What is your projection for the company in the next five years?

    I think it’s a very difficult one. What we see is growth. We see a bigger local content offering coming out of us. There will be lots of investment in football, basketball; we are taking on boxing now and few other sports. And then, we are looking at movies, there is a lot of commissioning going on. So, I see a lot of growth, not just from subscriber perspective, which we definitely believe and hope we will grow, but also content which we dish out to our subscribers.