The Nation Newspaper

Category: THE CEO

  • ‘Funding safer skies is key to AfDB’

    Funding and collaboration among African countries is key to delivering safer skies on the continent and for its air transport sector to deliver as a catalyst for economic development. The Chief Executive Officer/Commissioner, Accident Investigation Bureau (AIB), Akin Olateru, says to acieve this requires a mix of capacity development, right equipment, processes and systems. He spoke with select aviation reporters. KELVIN OSA OKUNBOR was there.

    What has changed in the agency since you came in 2017?

    I will start by saying this. Whatever you think, whatever you feel, all the actions you take in life are majorly influenced by two things: first, your beliefs and second, your values. These two components in a way shape our decisions in life and, in turn, shape our lives. That is life. When I came in, in January 2017, AIB was at its lowest ebb. I inherited disgruntled staff, a poorly-funded agency. An agency of government you can say, in terms of performance, scored below 35 per cent. Today, I stand tall because of our achievements since we came into government.

    When I came in, we had to work on our beliefs and values. On the human elements or human capital, we did a lot and part of the improvements we made in our human capital was training and retraining, changing the mindset of our investigators.

    We moved away from our individualistic way of doing things to a group way of doing things, training them to know the effect of good team work.

    How have you leveraged team work and collaboration to enhance capacity development ?

    These are one of the key things we concentrated on. In doing that, we needed the assistance and support of great institutions around the world. It makes sense to learn from the best and we approached some nations, institutions at that time. I stand today to tell you that the United States Government has been our greatest ally and greatest supporters through the National Transport Safety Bureau (NTSB). They have been in reality a major pillar of support. They have supported us with everything humanly possible through the Managing Director then, Mr. Dennis Jones, who has been to Nigeria to train our investigators with his team. The US government through the Safe Skies for Africa programme supported us immensely. We have other nations who didn’t believe in us. I really sincerely want to thank the US government, especially the NTSB and, most especially Mr. Dennis Jones, who is a gift to the world. He has been a major pillar of support. Without them, maybe, we won’t be where we are.

    How many memorandum of understanding did Accident Investigation Bureau sign with other countries?

    Today, we have nations signing Memoranda of Understanding (MoU) with Nigeria, believing in what we do and want to emulate us, want us to support them. They want us to work with them, they want to share from our experience. We have South Africa, we have Saudi Arabia, we have Gabon. Tshere are talks ongoing on partnership with these nations. Currently, we have signed an MoU with France, Benin Republic, Sao Tome and Principe and in the next one month, we will be signing with Saudi Arabia. These are great nations. But to me, you must have something sellable; you must have something they see in you that they admire in you before they want to sign an MoU with you.

    What is the infrastructure profile of the Bureau ?

    In terms of infrastructure, you will agree with me that there are four key elements to that irrespective of the industry or the sector. The four major components are human capital, infrastructure, equipment and systems processes and procedure. You need to score seven and half over 10 in each of these components. It takes time to build all these four key elements. Today, I can tell you in terms of equipment, AIB is one of the best in the world. I thank the Senator Hadi Sirika, the past Minister of State for Transportation, now Minister of Aviation, for his belief and support for making it happen. We are rated among the first 10 in the world in terms of equipment and capabilities. Our flight safety laboratory in terms of equipment, we are rated one of the best. In terms of infrastructure, we are rated 7/10.

    What is the human capital component like in the Bureau ?

    In terms of human capital, we have over 30 well-trained investigators in Nigeria. The whole of West Africa has no fewer than 30 investigators. So, you can understand the number. In terms of systems and processes, we are rated 8/10. We are independent. This is one thing that the International Civil Aviation Organisation (ICAO) calls for nations to have accident investigation bureau that is independent of the civil aviation authority and that was passed by the parliament in 2006 through the Civil Aviation Act 2006, which gave birth to AIB.

    When will AIB be multimodal in terms of accident investigation?

    We are working on the possibility and the approval of AIB going multimodal. Going multimodal means we are going to be investigating not just the air accident, we are going to be investigating rail accidents, we are going to be investigating marine accidents and road accidents. We are joining nations around the world who operate this multimodal system of operations.

    How did this come about ?

    Last year, the Federal Executive Council (FEC) approved our proposal – the new draft bill for AIB. Before the Senate went on recess, this bill is already in the Senate and hopefully, before the end of this year, this bill will be passed and that would make AIB Nigeria one of the top nations that do multimodal. We have reviewed just two months ago, we reviewed that to take care of all those gaps.

    If you stay stagnant, the world will go past you. I came in January 2017, if you count the number of reports we have released, they are all on our website. AIB, since 2017, has released 58 per cent of the total number of releases done since the creation of the agency since 2007. In terms of release of final reports, we have done 58 per cent. The main reason AIB is set up is to investigate accidents and serious incidents and to come up with safety recommendations to prevent future occurrence. If you don’t release those reports on time, you are doing a disservice to the entire industry because there won’t be lessons to learn. How do you prevent the reoccurrence? By the time you are issuing your safety recommendations, may be four or five years later, the airline may not even be in operation. When I assumed office, I said no report will go beyond 18 months except in an extremely special case, which we have not had.We are like the backend of the operations unlike the Nigerian Civil Aviation Authority (NCAA) that is visible. We influence safety through the backend. Our work is extremely important because we are the only institution that can investigate NCAA to see where there are lapses or gaps and to proffer safety recommendations to NCAA on how to do things better.

    What ground work have you done on the multimodal system you are proposing?

    When you look at accident investigation, the techniques are the same; whether it is marine or rail, the techniques are the same. How do we prevent future occurrence? When I said training, in the last one year, we have sent 30 of our investigators to Cranfield University to train on multimodal accident investigation. They are back in Nigeria. We have another two going in September to complete the cycle. We are working closely with the US NTSB. Singapore NTSB is working with us on this. As we speak, we have a relationship with NTSB, as some of our investigators go there for on-the-job-training, just to learn on the job, not just read books or sit in the classroom, but to actually be present with the US investigators to support us on that. Another thing you have to understand is that we will take on some rail staff from Nigeria Railways Corporation (NRC), the same thing with maritime and road and train them on how to investigate accidents properly. Those are the programmes we have in place to ensure we get there. It is not going to happen overnight. It takes time to build institutions. I can confidently say to you that AIB is a world-class institution.

    How comfortable will it be for AIB to investigate incidents or accidents in other modes of transportation when they don’t have FDR, CVR?

    Most ships have devices in the form of recording systems, but for cars, no. However, there are better ways to investigate car accidents beyond a recorder.

    I want to look at what your manpower will be when you begin with the multi-modal project? Will you be operating from the airport here?

    Currently, if you understand how we were set up, we have four office locations in the country. We are in Lagos, Abuja, Enugu and Kano. You don’t build Rome in one day. This will be a gradual process. We need to first of all utilise  the maximum of what we have first before we do a proper need assessment whether we are going to increase our point or we are good at four points, but these are decisions that will be taken in a later stage. I cannot really comment on that now.

    The Safe Skies for Africa Programme sponsored by the US Government in the past 21 years has finally come to an end. What do you think can be done among African nations to sustain this safety and security initiative?

    Today comes the end of our programme where we brought in African nations to join us in aviation safety programme sponsored by AIB in conjunction with Safe Skies Africa, which is a department of transportation and the NTSB. Unfortunately, the programme has come to an end. The US government will no longer sponsor the safe skies programme. It is very unfortunate. Africa has really benefited from this programme and I think we, Africans, should put heads together on how we can help ourselves. We have the African Development Bank (AfDB), which under corporate social responsibility can take up this programme to help Africans. When an aeroplane goes down, it does not distinguish nations.  This is why we owe it to ourselves, the whole world, to work together and strengthen aviation and make it a safer place to be.

    Why do you think the US Government decided to end the Safer Skies for Africa programme and how can AfDB come in?

    That is a very good one. I cannot speak on behalf of the US government on why they decided to stop sponsoring or funding the Safe Skies project for Africa. All I know is that we were told that the project has stopped. On AfDB, I make bold to say, this is my initiative of getting them to sponsor this project to the benefits of African nations. I had a meeting with Bernard Aliu, the President of the International Civil Aviation Organisaton (ICAO) two months ago in Montreal, Canada. I had a discussion with him on how AfDB can continue to be sponsoring this project through ICAO because AfDB will not just release money to AIB, it has to be an independent organisation, which is ICAO and it is not only for Nigeria, but to African nations.

    There will be another meeting in the next ICAO Assembly on the clear-cut modality to get this done. Talks are still on, on how to make this work.

    Earlier, you spoke about the various MoUs AIB has signed with some countries. Could you tell us what these MoUs tend to achieve?

    I will give you an example of the Sao Tome and Principe. The last accident that occurred in Sao Tome was ceded to Nigeria to investigate. We investigated that accident and the final report was released 12 months after the accident. That gave my investigators some kind of exposure. You need to understand what accident investigation is all about. There are no two accidents that are the same. They may look alike, but if you look critically, you will see that there are other things you need to learn as you go along. That is one thing strengthening your technical competence. Take France, for instance. France wants Nigeria to help the francophone African countries and their MoU is to look at how they can strengthen AIB either through training, equipment. Come November, there is training dedicated for our investigators from France to go to France and learn something. Don’t forget, when you talk aviation, France is one of the leading countries in the world. They have majority shares in Airbus and there are many activities in France. There is so much we can learn from France.

    Take Saudi Arabia, for instance; it is just because of the ongoing hajj, our agreement would have been signed because we have got ‘okay clearance’ from the Ministry of Justice to go ahead and sign the agreement. Saudi Arabia has some expertise that we need and they are happy to come to Nigeria to train our team on that.

    What area will the training address ?

    What they will be coming to train us on is looking beyond the Flight Data Recorder and the Cockpit Voice Recorder (CVR). We have met; we have discussed everything on the CVR and FDR. You need to look beyond that and that can help to make your report much better.

    For the Republic of Benin, what they have signed is to say whenever there is an accident, we should come and help them. They don’t have anything on ground, so they told us, if we have training, we should please include them. We have an agreement with Gambia through Banjul Accord Group Accident Investigation Agency (BAGAIA). Today, we have helped Gambia to set up an accident investigation agency. We supported them in writing their regulations, the Act, the whole work. We even helped them with our Standard Operating Procedure (SOP). They came to Nigeria, they sat with us and we put them through. Today, it has been passed by their parliament. These are the kind of things we are doing to help them.

    Earlier, you said when you came on board in 2017, you met a bureau that was poorly funded. Is the bureau properly funded today?

    If you look at most government institutions, they are funded from the government coffers, but through the ingenuity of the past Minister of State Aviation, vis-a-vis the challenges of AIB at the time, we came up with a modality, which was more of a stop gap measure, a temporary arrangement to fund AIB’s operations through a special intervention fund. But, the permanent solution to that is once our bill is approved and that is when we are going to have a permanent solution in terms of proper funding.

    A committee was set up recently to find out how your recommendations assist with safety. Are you satisfied with that?

    I was the chairman of that committee to look into the implementation and effectiveness of those safety recommendations that AIB has issued since inception and we came up with the final result of 62 per cent of safety recommendations that were implemented. Partially implemented were 18 per cent and the rest were not. You need to understand one thing. Safety recommendations can be issued to an airline. For instance, there was a helicopter crash, the first safety recommendation issued to that company was a Bell Helicopter. Unfortunately, the company went burst even before the safety recommendations came out.Will you count that that was implemented? The answer is no. Some safety recommendations may not be implemented because of cost.

    What is the realationship with the Nigeria Civil Aviation Authority?

    For us and NCAA, I have had a meeting with the Director-General of NCAA, we have agreed on how to work on an MoU basis. We have sent in a proposal and we are waiting for his response because AIB and NCAA need to work together as a team on MoU that will guide our relationship. For clarity sake, I have read some things in the newspapers when somebody said NCAA doesn’t have to implement AIB’s recommendations. It is either the person doesn’t understand aviation or how things work from AIB’s perspective or just trying to be mischievous. I will tell you the process.

    What is the procedure adopted before accident reports are released?

    When we are done with our investigation, we send the final draft to NCAA, among other stakeholders, for their review and we give them 60 days to come back to us to tell us why they are not implementable. We don’t just issue safety recommendations for issuing sake.We give the stakeholders opportunity to comment. That is why we call it 60 days window. We are trying to shorten it to 30 days, so that our reports can be out on time. You can imagine you completed reports and you have to give 60 days; that is two months just for stakeholders to read, comment and get back to you. You need to trust AIB.

    We need to build a world-class institution so that when we talk, you will listen. This is what we have been doing in the last two- and-half years to make sure that AIB is a credible institution that everybody would listen when we talk. That is very important. It is the same thing all over the world. The US NTSB doesn’t have it in their regulations that if you don’t comply, they will send you to jail. We are making it easy, we work with you. We give you time to assess our recommendations and discuss with us if you think it is not right.

    What template do you intend to adopt in handling investigation of road crashes?

    On the road, I will give you an example that there is a crash and the vehicle somersaulted, which was caused by a huge ditch or pothole on the road and we issue a safety recommendation to Federal Road Maintenance Agency (FERMA) to fix the ditch. We will work with FERMA, the same thing we are doing with NCAA. Once that pothole is fixed, this is how you can prevent all these needless deaths. People die every day on our roads. The problem is that nobody investigated anything, nobody checks anything, nobody says this is what we need to do to prevent future occurrence. We’ve heard of tanker fire accidents many times; have you read any recommendation on how to prevent it? These are the things we are going to fix. The people that don’t want to comply, it is either they don’t know or they just don’t want to comply. We found out more that people don’t just know.

    Some people think accident investigation is about witch-hunting, but it is not. It is about to help the individual airlines to make sure you reduce these bad images, you are not getting this bad press. If you stop having these reoccurrence, then you reduce the exposure to bad news. It is in the interest of everybody, including the flying public.

     

  • Sonaira Business world came from a brainwave, says CEO

    Sonaira Business world came from a brainwave, says CEO

    Our Reporter

    The seemingly exotic brand name of Sonaira Business World, Nigeria’s leading retail business, was not a product of lengthy deliberation, but rather a coinage arrived at on the spur of the moment, revealed the CEO of the company, Sonia Omon-Obehi Ovuehor.

    “My name is Sonia and my nicknames have always started with ‘So’ –Soneebee, So’diva, So’babe, So’mama and so on,” she explained. “So, when starting this business, I sought my friend’s opinion and he suggested that I shouldn’t use any of my nicknames. But I always wanted to include a currency symbol in my official business name; so we tried Sopounds and Sodollars but none rhymed better than SoNaira with the Naira representing our Nigerian currency.”

    Sonia Omon-Obehi Ovuehor continued: “Later on, I discovered that Sonaira is an Indian-Pakistani name meaning variously “Pleasant sound,” Good luck” and “Era of the sun.” I couldn’t have wished for better meaning.”

    On what distinguishes Sonaira Business World as a brand, she avowed: “Our products cater to the needs of everyone on a budget. Secondly, we offer opportunities to people to earn as they resell or refer others. We also take our clients seriously and consider their interests first before making reforms.”

    While it started in 2017 as beauty, health and fashion retail business, Sonaira Business World, which operates online and offline, has expanded into real estate management, sales and supply of construction equipment, local and international trade and global courier and logistics services.

    How Sonia Omon-Obehi Ovuehor had grown Sonaira Business World into a force to reckon with is a feat that did not surprise many observers as she had built an unassailable track record over time, winning several awards as a testament to her business acumen. Her slew of awards includes Most Aspiring Realtor 2017 and Pan African Institute’s 2014 Award for Excellence and Innovation. The Sonaira Business World CEO was also twice a recipient of Award for Excellence from Smart Woman Nigeria Network in 2013 and 2019.

    For Ovuehor, the success of Sonaira Business World notwithstanding, it is not yet time to rest on her oars, not untill she achieves her ultimate objective, which she concisely defined: “I envision Sonaira Business World becoming a household brand.”

  • Mutual funds investment provides diversification of risks

    Odiri Oginni is Managing Director, United Capital Asset Management Limited, one of Nigeria’s largest investment management firms. In this interview with Capital Market Editor Taofik Salako, Oginni, who is also a chartered financial analyst, speaks on the savings, investments and macro-economic drivers necessary for a national investment base and economic growth.

    The proportion of Nigerians investing in the domestic capital market is abysmally low compared with other countries. What do you think is responsible for this and what can be done to grow domestic investors’ base?

    According to the World Bank, in 2017, Nigerian domestic savings as a percentage of Gross Domestic Products (GDP) stood at 15.5 per cent compared with world average of 25.4 per cent and South Africa’s 19.6 per cent. This reflects the level of household, corporate and public sector savings over expenditure. This data partly indicates the low level of savings among Nigerians compared to the rest of the world, and also shows the intensity of poverty in the country. Clearly, the wealthier a country is, the higher the savings rate. Again, low level of financial literacy is a factor; Nigerians prefer to hold physical assets rather than financial assets. Lack of confidence in the financial system and the increasing get-rich-quick syndrome are other issues we need to address. To improve savings and investment culture, we need to lift people out of poverty, by creating more jobs, ease the processes and operations of doing business in Nigeria and achieve a faster GDP growth. More so, we need to do more on financial literacy and work very hard to restore confidence in the financial markets, so our people can see the need to save and invest.

    Savings and investment level of a country is correlated to the level of poverty, income per head and literacy rate. To boost savings and investment, we must all support President Muhammadu Buhari’s goal of lifting a 100 million people out of poverty over the next 10 years. In a country of 200 million people, if 50 per cent of us are poor, savings rate will remain abysmal no matter how well a few members of such a society is doing. So, we need to create jobs, investment in education, empower our people to be productive agents in the economy. That way, they will be able to save a portion of what they earn; this can then be deployed into investment and further productivity and growth.

    What is your assessment of the outlook of the investment markets?

    Looking ahead, although most stocks on the Nigerian Stock Exchange (NSE) appear under-valued when compared to their African and emerging market peers, interest in the Nigerian equities is likely to remain depressed for the rest of the year, especially as the overall economic condition remains challenging. In the fixed income space, we expect yields to continue to moderate gradually as the Central Bank of Nigeria (CBN) gets increasingly accommodative; however, demand and supply dynamics will play a major role. Activities will remain mostly active at the short to mid-end of the curve while interest at the longer end, that is, bond market will stay bearish, just like equities. On the supply side, we expect the government to ramp up borrowings over second half of this year in a bid to fund its  budget deficits. On the demand side, sizable Treasury Bills maturity are scheduled to hit the system over second half of 2019 and this is expected to boost the overall demand level. Our outlook, for the foreign exchange market is that of stability. The CBN will continue to use intervention sales to support for the value of the naira considering the availability of a sizable amount of dollar, worth $45 billion, in its external reserves as a buffer.

    As all arms of government settle down, what do you think should be done to improve the domestic investment markets?

    I think there should be a deliberate attempt to carry out reforms in key sectors of the economy that can accelerate growth. Local and international investors need to be clear on the policy direction of the government for efficient planning. The key sectors of the economy that need comprehensive policy overhaul include the power sector, oil and gas and the foreign exchange market.

    What is your firm doing to encourage savings and investments and general awareness about financial education?

    Last year, United Capital, in a move to drive financial inclusion in the country and serve its customers better, launched an app tagged “Invest Now”- an investment platform that enables potential investors to have easy and direct market access to different investment opportunities on their mobile phones from the comfort of their homes with the trusted guidance of experienced professionals. Commendably, more than N100 million online payments have been processed on the “invest now” app since it was launched. United Capital Asset Management has also taken investment education to Students and National Youth Service Corps (NYSC) members during their orientation programme, where we educate them on the benefits of investment as a youth. For our clients and the general public, our research team is saddled with the responsibilities of consistently providing latest and useful market updates to help them make informed decisions about the market.

    Do people really need asset managers when they can invest directly in the markets?

    The role of asset management cannot be overemphasised in the capital market. While it is true that an individual can invest directly in the market, especially the equities market, not all individuals have the expertise, time or substantial amount – to make decision about what to buy or sell and when to buy or sell – in a manner that maximises return. Asset managers are professionals in this field. They are knowledgeable, updated and are equipped with the resources to ensure this is done seamlessly to the benefit of their clients. Additionally, the asset management business helps pool resources together, from both retail and medium-scale investors, who are not sophisticated enough to invest in certain investment assets in the capital market, so they can enjoy the economy of scale available to institutional and High Networth Individuals (HNIs). So, we can say asset managers help create a level playing ground for investors, especially those that would have been disenfranchised by the huge capital requirements in some investment securities.

    What are the advantages of investing in mutual funds or collective investment schemes?

    Since the introduction of the first funds, mutual funds have been popular investment vehicles for investors. One of the major advantages of investing in mutual funds is the diversification of risk while still providing competitive returns. By investing in mutual funds, an investor is provided with the immediate benefit of instant diversification and asset allocation without the large amounts of cash needed to create individual portfolios.

    When you invest in a mutual fund, you are also choosing a professional asset manager. This manager will use the money that you invest to purchase assets that have been carefully researched. Therefore, rather than having to research thoroughly every investment before you decide to buy or sell, you have a mutual fund’s manager to handle it for you. Another advantage of mutual funds is the ability to get in and out with relative ease. You can sell mutual funds at any time as they are very liquid. Investing in mutual funds is also tax exempt.

    What challenges do  asset managers face?

    One of the major challenges being faced by asset managers in Nigeria is distribution. Distribution is key to driving the growth of asset under management of the mutual funds. The biggest asset managers in Nigeria are bank-owned and have been able to leverage the parent bank’s platform in terms of the use of the branches to spur growth in their asset under management. Innovation needs to be brought into existing distribution models to effectively address this challenge.

    Another challenge is low level of awareness of the benefits of mutual funds. Investors do not yet see that mutual fund is a way to meet their financial goals and not just a means of short-term financial gain. Mutual fund is a long-term investment vehicle with the potential to achieve financial goals and provide investment solutions especially in times of uncertainty.

    Also, the weak state of the economy has constituted a drag on investment returns in recent times. Due to the volatility in the macro-economic environment, asset managers face the daunting task of balancing risk and return expectations of clients.

    Long-term investments rest on the assurance that the asset management firm will sustain over the long-term to grow and reward the investor, what assurance do investors have in the event of corporate crisis involving the asset management firm? 

    All asset management companies are licensed by the Securities and Exchange Commission (SEC) to operate as asset managers, also all mutual funds are registered with the SEC and every fund has a separate custodian who holds custody of all mutual fund assets to ensure these funds are separated from the operational activities of the asset managers. The asset managers are only responsible for the management of the fund and in the event of corporate crisis of the asset manager, the investors funds are not affected as they are held by the custodians.

    Why do you think people should entrust their savings under your management?

    Our firm has been in existence for more than five decades and we have gained the trust and confidence of our clients over the years. We are currently the sixth asset manager in Nigeria with six mutual funds and separately managed portfolios. Our funds cater for all categories of investors with different risk appetite and wealth levels. We are also regulated by the SEC. We have a robust technological platform called “Investnow” that ensures that clients have unfettered access to their portfolios, can communicate with us real time and have our financial advisors attend to their request in a professional manner. We employ a rigorous investment process as well as deep research of investment opportunities in making decisions in order to maximise returns across all our funds. We believe that our expertise as asset managers, rigorous investment process and customer focus give us an edge in the market place. We continue to champion female inclusion in financial services through our Wealth for Women Fund which encourages more women participation in senior leadership roles. Earlier this year, we also won the Most Innovative Asset Management company award by Global Business Outlook.

    Besides your corporate strengths, what makes your mutual funds and asset management products competitive?

    As I said, we have six mutual funds that are registered and regulated by the SEC. Investors who want guaranteed capital investment and stable returns both in Naira and US Dollar would find our Money Market Fund and Eurobond Fund very attractive.  With as little as N10, 000, investors can invest in our Money Market Fund. The Money Market Fund is a naira-denominated mutual fund that is invested in short-term money market securities such as Treasury Bills, Bank Placements and Commercial Papers. It is a very liquid investment vehicle that can be exited at any time, while additional investments can be made with as little as N1, 000. Our return is currently higher than inflation rate, which means you can protect the real value of your money by investing it in the Fund rather than keeping it in bank accounts that yield very little.

    Our Eurobond Fund is a dollar-denominated fund with returns that are far higher than interest on domiciliary accounts with banks. The minimum initial investment in the Fund is $1,000 while subsequent investment can be as low as $500. The dollar mutual fund is the second largest dollar denominated mutual fund and is our fastest growing fund. The fund has grown from over $8 million in 2018 to $25 million. The return on the fund is also very competitive with a current yield of 8.06 per cent as at 30th June, 2019 as against a bench mark of 4.4 per cent. We also have a naira-denominated Bond Fund with stable return that is invested in federal government, state government bonds as well as corporate bonds.

    Investors who are willing to take some risks can also invest in other funds that have equity components. Our Equity Fund is majorly invested in stocks of companies listed on the Nigerian Stock Exchange while our Balanced Fund is a blend of equity, fixed income and money market securities. We also have a gender-focused fund called the Wealth for Women Fund which invests in companies with significant female representation in their boards and management teams. The Fund is also a blend of equities and fixed income investments.

    The professionalism with which these mutual funds are managed to ensure the returns are competitive always makes them very unique. Also, the reduction in the turnaround time of our mutual fund offering onboarding process as well as the improvement in our customer’s experience with our online mutual fund subscription and redemption process have driven up the demand for our mutual funds.

    What are the track records of returns of assets under your management compared with average returns in the market?

    We have consistently outperformed the benchmark returns for all our respective funds as all our portfolios are professionally managed by experienced fund managers.

    How do you stimulate investors’ interests and protect same in the entire chain of decision making?

    At United Capital, we have a team of professionals involved in the decision making to protect investors’ interest. The research team provides in-depth analysis of the macro-economic environment which guides the asset manager in making investment decision. The risk management team is also involved in ensuring that there are no deviations from the asset allocations stated in the trust deed across all the asset classes. The compliance and internal control team also ensure the adherence to internal as well as regulatory policies and procedures in the management of investor’s funds. We also have a culture of good corporate governance. In 2017, United Capital won the Pearl Awards for good corporate governance.

    As the only listed investment company, how do you manage the requirement for long-term growth and shareholders’ pressure for return?

    We are very conscious of the value we need to bring for our investors, not only in ensuring good returns on investments despite the difficult operating environment, but also to help them grow their wealth in a sustainable manner. We have put in place structures that would enable us to continue to deliver good returns despite pressure in the economy. We are also expanding our operations to key countries in Africa as a means of diversifying our revenue base. We have consistently paid dividends over the last five years and we plan to maintain that record going forward.

    Can you describe your firm’s investment management process? How does this impact on portfolio security and returns?

    In making asset allocation decisions, we adopt a risk-return philosophy that ensures the portfolio is well diversified, with relevant focus on alternative asset classes that have uncorrelated risk and return profiles. This approach is situated within the context of our clients’ risk profile, as defined by the Investment Policy Statements, governing documents such as Trust Deeds, as well as the mandates that we have from the universe of our clients. The diversification of the portfolio along different classes provides stability and ensures that we sustainably create value for our clients. Besides the multi-asset exposure that we provide to clients, our asset allocation provides a form of natural hedge against macroeconomic and market volatilities, as some of the asset classes have negative correlation with macroeconomic volatilities. Enterprise risk management and investment research are critical functions in investment while our operations are also highly automated.

    What other additional services or incentives do you provide your customers, especially given your relationship with other major operators in the financial services industry?

    We believe in putting the interests of our clients first especially because they trust us with their hard-earned money. Our corporate clients enjoy free investment clinics for their members of staff where we offer financial planning advice as well as informational services investment options in the market. Through our cutting-edge Investment Research unit, we constantly inform our clients on developments in the market and offer investment advice in line with current market realities.

  • ‘How Nigeria can attract more foreign direct investment’

    Foreign direct investment (FDI) inflows are vital in promoting growth and development in the country. The Managing Director, OCP Africa Fertilisers Nigeria, Mohamed Hettiti, speaks on strategies to achieve food security in the country and other issues with Daniel Essiet.

    Why are you interested in Africa’s food production growth?

     Over the period from 2005 to 2050, world population is projected to rise by 39 per cent  to reach 9.2 billion people. Most of this increase will occur in developing countries. In particular, African population is expected to double by 2050 to reach 2.5 billion people. Urbanisation will continue to grow at an accelerated rate. By then, about 70 per cent of the world population will be urban compared to 49 per cent currently. According to the Food and Agriculture Organisation (FAO), annual world agricultural production would need to increase by 70 per cent over the levels of 2005-2007 to satisfy the additional demand generated by population and income growth by 2050.

    Agricultural production has been increasing steadily in Sub-Saharan Africa(SSA) over the past decades; however, average yield and cropping intensity have not improved much while during the same period, other global regions succeeded to double or triple their average yields. The low agricultural productivity in SSA is largely due to low use of fertilisers. Average fertiliser use in SSA is 12 kilogramme(kg)/hectare(ha) compared to the global average of 125 kg/ha. With over 10 per cent of the world’s population, SSA accounts for less than 1 per cent of global fertiliser demand. Africa is uniquely positioned to meet the challenge of feeding its people but also the planet and spur economic growth. It holds more than half of the world’s fertile yet unused cropland. It has abundant water resources, and plentiful agricultural labour. Office Chérifien des Phosphates (OCP) Group strongly believes in Africa’s potential and is committed to contributing to a sustainable development of agriculture in Africa. In particular, our organisation is promoting innovation in an effort to contribute towards productivity-led agricultural growth and improve farmer livelihood.

    Why was OCP Africa created? 

    A lot of effort is required to transform agriculture in Africa from subsistence to commercial farming. Contribution of governmental and public organisation, NGOs, the private sector and academia is required to improve productivity, profitability and sustainability for the farmers.

    In this vein, OCP has created OCP Africa, a subsidiary that is dedicated to the continent. Our company aims at contributing to developing sustainable and innovative solutions to meet the challenge of a structured, efficient and sustainable agriculture in the Continent. Established in 2016, OCP Africa has opened offices in major countries, including Nigeria. We have developed several initiatives to provide our partners, producers and clients with the means to successfully access adapted and affordable products, services and supports, as well as logistic and financial solutions.

    For instance, in Nigeria we are developing with the NSIA a world-class Basic Chemicals Platform to be operational by 2023 to produce ammonia and fertiliser. We are also building modern fertiliser blending plants which will serve as a model to our partners in Nigeria. All these investments and many more are geared towards developing African agriculture and helping the continent to meet its growing food needs.

    We have a partnership with Mohammed VI Polytechnic University to strengthen the capacity of African farmers and leaders in many areas. Locally, we organise training for our partners, stakeholders and employees to enable them support the agricultural sector which is in line with OCP’s vision for resilient, responsibile and ethical agriculture.

    What is your assessment of Nigeria and Morocco relations?

    The relationship between Nigeria and Morocco is excellent. The economic partnership between African countries, called “Southsouth Cooperation” is for both countries a model of development characterised by a common understanding of the challenges and issues related to the emergence of their respective countries, which can bring socio-economic growth by providing appropriate responses to their growing population needs;

    If you recall in December 2016, King Mohammed VI of Morocco visited President Muhammadu Buhari at the Presidential Villa to facilitate discussions aimed at strengthening bilateral and economic ties between the two countries. This visitation led to the signing of 15 bilateral agreements, touching on trade and the oil sector. Part of this is a trans-Africa gas pipeline that runs  across coast of West Africa from Nigeria to Morocco, giving Nigeria potential to supply gas to Europe directly and in production of fertiliser by establishing production plant here in Nigeria to produce fertiliser to supply Nigeria and other West Africa countries.

    Let me talk about the fertiliser production agreement. The government of Morocco is working closely with the Federal Government of Nigeria to promote agricultural revolution to fight hunger and poverty, create jobs and ensure industrialisation. Today, fertiliser is sold to Nigerian farmers at N5,500 per 50kg bag as against the regular N8,000 per bag in the retail market. In support of the Presidential Fertiliser Initiative, OCP supplies quality phosphate fertiliser to blending plants in Nigeria. At first, the signing of this agreement led to the resuscitation of 11 old blending plants in Nigeria and currently, fertiliser is being produced in about 20 blending plants in Nigeria. This has allowed partial import substitution by using local products such as urea and limestone and created hundreds of jobs, additional income and other added value for the people of Nigeria. The agreement has also led to the development of several new blending plants. Another relationship between Morocco and Nigeria lies in the development of multi-billion-dollar basic chemicals platform to produce ammonia and phosphate fertiliser production plants in Nigeria. This will leverage natural resources complementarily between the two countries namely Nigerian Gas and Moroccan Phosphate.

    What is OCP?

    OCP Group is Morocco owned company. It is a leading global fertiliser player with nearly a century of expertise in mining and fertiliser production. We specialise in the development of adapting fertilisers to soils and crops which contribute to the development of sustainable and resilient agriculture for the benefit of farmers around the world.

    With a production capacity of 32 million tonnes of phosphate rock, 12 million tonnes of fertiliser at the processing sites in Morocco, global footprint and revenues of more than $5.5 billion (2018), the group has 23,000 employees and serves every key agricultural market across five continents. OCP remains in leading position around the world and is determined to support a genuine green revolution in Africa, and thus, the OCP Africa subsidiary was established.

    The group’s new subsidiary, OCP Africa, steers OCP’s growth in the African market with an approach aimed to cover the entire value chain, including the construction of local fertiliser factories, the development of logistics distribution capacity, investment in research for the development of fertiliser suitable Africa soils and crops (customised fertiliser), the mapping of African soil fertility and every other related fertiliser need. OCP also built the African Fertiliser Complex in Jorf Lasfar, which was dedicated to service the African market, with a production capacity of 1 million tons of fertiliser. OCP Africa has presence in Senegal, Cote d’Ivoire, Benin, Ghana, Nigeria, Cameroon, Niger, Mali, Guinea, Burkina Faso, Ethiopia, Kenya, Tanzania, Mozambique, Zambia and Madagascar.

    It has built a fully-fledged university to provide training opportunities and help people reach their full potentials. In line with its mission to promote further research and development, in 2014, OCP launched the Mohammed VI Polytechnic University, a world-class institution of higher learning in Benguerir. The university emphasises Research and Development (R&D) in areas critical to OCP’s development –such as mining, sustainable development and industrial management – and to the economic, social, higher education and environmental future needs of Morocco and her partners in Africa.

    Can you talk about the Nigeria subsidiary which you oversee as Managing Director?

    The Nigeria subsidiary (OCP Africa Fertilisers Nigeria Limited) was incorporated on July 12, 2016. OCP Nigeria has conducted several R&D project towards the development of tailored made fertiliser for major crops in Nigeria. One of this is the specialty fertiliser development for maize in Nigeria with ITTA. The project lasted for about three years and was conducted in eight major maize growing states, where 3,000 soil samples were picked and analysis for proper understanding of the soil components. After the soil analysis, three major fertiliser formulations were developed and tried across 1,500 plots in the eight stated after which two out of the three formulation are validated and ready to be launched into the market for maize soon. Other R&D projects include the cocoa fertiliser development and validation trials with The Sustainable Trade Initiative(IDH), Cocoa Research Institute of Nigeria(CRIN), International Institute for Tropical Agriculture(IITA) and Federal Ministry of Agriculture and Rural Development(FMARD), the rice and soybean fertiliser trials with National Cereals Research Institute(NCRI) and the Irish potatoes fertilisers trials with Plateau State government, Agricultural Development Project (ADP), NRCRI and FMARD. Second is the aspect of farmer enabled projects. Example of such projects are Agribooster, OCP School Lab, OCP One Stop Shop. Lastly are its industrial projects. OCP Nigeria is currently developing two ultra-modern blending plants and setting an industrial chemical plant in Nigeria.

    How can Nigeria attract more foreign direct investment (FDI) across all sectors?

    Nigeria is blessed with natural resources, she is rich with its people and has an important market. The country has shown strong potential thanks to solid economic growth, large market, greater connectivity and improved position in global commodity markets. Nigeria has adopted several measures that improve its attractiveness to FDI.

    What kind of innovations has OCP brought into the local market?

    First is in the area of soil fertility maps, OCP has experience in developing a soil fertility map, which has been done for Morocco. This public and free tool is a database of geographic and scientific Moroccan soil, aiming to facilitate the establishment of a balanced and productive agriculture. OCP is promoting the use of the tool across sub-Saharan Africa. In a bid to begin soil fertility mapping, disseminating good agricultural practices and educate small farmers about the importance of the rational use of fertiliser and other farm inputs, OCP had launched in 2012 OCP School Lab (OCP Caravan). This is a mobile school and laboratory that goes to most remote farming communities to conduct soil-testing using latest innovations (X-rays, big data and machine learning) and  conduct interactive training sessions using pedagogical tools by providing live information on soil needs. This allows for offering a full set of agric-services and fertiliser recommendation to small holder farmers free of charge. The OCP School Lab Caravan has been deployed in Nigeria, Rwanda, Ghana and other places. Currently in Nigeria, we have five of these lab caravan conducting free soil sampling, free soil testing, free soil analysis, free farmers training and free fertiliser recommendations in Nigeria. We have reached more than 150,000 farmers so far.

    Another innovation is what we call OCP Agribooster Programme. This programme has been launched in many countries in Africa. This programme was developed to build-up a complete ecosystem around farmers to boost their development and income for them to be a suitable farmer. This programme offers a complete bundle to farmers, such offer includes farm inputs such as seeds, fertiliser, crop protection products, agricultural equipment and others. It also offers financial and insurance services, training, monitoring and extension services and market offtake to facilitate farm produce sales.

    All these elements allow farmers to boost their yields and increase income and be sustainable farmer by also creating an economically viable and sustainable  cycle for all stakeholders in the value chain.

    Another innovation is the OCP One Stop Shop. At OCP, we understand that fertiliser and farm input distribution is very important in the use of fertiliser, just like fertiliser production especially in Nigeria. So, we came with the project called OCP One Stop Shop, which is aimed at developing retail channels for basic farm inputs in under-served locations/market with huge agricultural potentials. This shop ensures distribution of farm input, train farmers on good agricultural practice and extension services. This is also aimed at unlocking the market demand for farm and help in food production and sustainability. OCP One Stop Shop was also  launched in Nigeria in 2018, with our first Shop in Lambata community, Niger State.

    Another area of innovation is the encouragement and support for agricultural students in the universities. In 2017, OCP Nigeria began sponsorship of students in Faculty of Agricultural of Kaduna State University (KASU) by paying student’s tuition fee and giving grants for their research and development studies. Also, the Nigeria subsidiary has granted research grant to the same university and its currently planning to develop a state-of-the-art laboratory for the faculty of agriculture.

    We are promoting science and innovation to help farmers by developing adapted fertiliser to satisfy Africa’s specific soil characteristics and crop needs. OCP has developed and launched new fertiliser products specifically adapted to Africa’s needs. Those new products are the result of extensive research on agronomy conducted by OCP. Examples are the maize project with IITA.

    Speak specifically  on the Africa Fertiliser Complex?

    His Majesty King Mohammed VI inaugurated the Africa Fertiliser Complex, a fertiliser production plant dedicated to secure the supply of quality fertilisers to the African continent. The complex was inaugurated in February 2016. It is a fully integrated plant, and has a production capacity of 1 MT of fertilisers per year.

    What is OCP’s aspiration for expansion in Nigeria?

    We are currently working on numerous projects across Nigeria to boost agriculture in the country. OCP Nigeria is aiming at developing comprehensive and holistic development projects and complement efforts of other market players (research institutes, NGO) to address productivity and sustainability challenges along the whole agricultural value chain.

    OCP Nigeria aims at securing the supply of quality fertilisers to Nigerian players, support initiatives to strengthen distribution capabilities of the supply chain, work on agricultural extension services through notably the OCP School Lab Programme; secure involvement of value chain stakeholders through notable agribooster programme and support capacity building. We are willing to extend the programme for the years to come.

    OCP Africa says it will create two fertiliser plants valued at $1 billion this year in Nigeria to support the local production of fertiliser. How far has the project gone now?

    You are referring to the basic chemical platform which budget exceeds $1.5 billion. On the blending plants, engineering is now finalised and we are in the process of starting construction of the plants.

     

  • ‘Why economy remains stagnant’

    Nigeria Labour Congress (NLC) President Comrade Ayuba Wabba, in this interview with TOBA AGBOOLA, says the government’s efforts to diversify the economy, attract foreign direct investment and create jobs are being frustrated by systemic challenges. He also pledged to double efforts at protecting workers’ interest.

    ASSESS the economy and state your expectation from the government, especially in this second term?

    According to the 2019African Economic Outlook Report+- by the Africa Development Bank, Nigeria’s economy is expected to grow at 2.3 per cent this year. This would be an improvement on the Gross Domestic Product (GDP) performance in 2017 and 2018.

    According to the National Bureau of Statistics (NBS), the Gross Domestic Product grew by 1.81 per cent (year-on-year) in real terms in the third quarter of 2018. This seems slightly better than the growth of 1.17 per cent achieved in the third quarter of 2017. This is encouraging as it shows that our economy has made a rebound from the recession of 2014 -2016. This pattern of growth is expected to sustain Nigeria’s status as the largest economy on the continent, contributing about 20 per cent of Africa’s GDP.

    However, despite the promising nature of the economy, it is yet to be weaned from import dependency. Our economy remains essentially rent seeking, subsistence, non-inclusive, vulnerable to shocks from the global commodities market, fraught to unwieldy inflationary trends and unable to create sustainable mass jobs.

    The government’s efforts to diversify the economy, attract foreign direct investment, increase foreign exchange revenue and create more jobs are being frustrated by systemic challenges. The challenges include endemic corruption, institutional chaos, crises in our social sector, and disabling physical infrastructure – electricity supply, water, rail system, road network, inland waterways transportation among others.

    What is the way out of unemployment?

    A 2010 British Council Report on Nigeria identified unemployment, especially youth unemployment, as a demographic time bomb. Today, the bombs are going off in all directions by way of upsurge in crime and restiveness. The National Bureau of Statistics(NBS) reported in December 2018 that Nigeria’s unemployment rate stood at 23.1 per cent in the third quarter of 2018, up from 18.1 per cent same period in 2017. At the last count, the combined unemployment and underemployment rate in Nigeria was 43.3 per cent. Of course, we have noted the efforts by President Muhammadu Buhari to create mass jobs through the diversification of the economy, particularly through the Economic Recovery and Growth Plan (ERGP).

    My advice is that these initiatives be anchored on a strong commitment to industrialisation. We also call for the revival of the intermediate and capital goods production segments of the industrial sector, especially the auto assembly plants, the steel industry, the fertiliser and petrochemical industries in the context of a medium-term national development planning. We must develop a national consciousness and culture that frowns at exporting raw materials without value addition. All tiers of the government should try to provide incentives to drive and sustain the growth of labour-intensive industrial sector. There are millions of jobs locked down in the untapped value chains in our agricultural, petroleum and mining sectors. Now is the time to unlock them and provide decent jobs for our youths. Now is the time to reconstruct the sour narrative of exporting jobs and prosperity to other climes and importing joblessness, poverty and misery into the motherland.

    Also, the de-industrialisation of Nigeria, as already identified, is the reason for the plague of mass unemployment and poverty ravaging our country. Industrialisation is the key to delivering sustainable jobs and is crucial for the overall growth of the national economy; it is the foundation for good living standards. Unfortunately, the manufacturing capacity utilisation (MCU) in our country has fallen headlong over the years. Nigeria might be the largest economy in Africa but the contribution of manufacturing to our economic size is appalling. From 75 per cent manufacturing capacity utilisation in 1980, Nigeria has fallen to 54.6 per cent as at September 2018. For me, I think we should emulate the tested and proven prototypes elsewhere in places, such as Singapore, Argentina, Brazil, India and China to attract relevant production lines and labour-intensive industries to Nigeria. This would help to engage the teeming population of our country in industrial production, build the skills of Nigerians and place Nigeria in a progressive manufacturing trajectory. Similarly, the government should provide practical incentives and support to encourage large scale industries to develop networks of SMEs to be part of their production networks and supply chains. This is the most viable way to promote horizontal integration.

    The textile industry that used to be the highest provider of employment is moribund. What is the way forward?

    Yes, you are right.There was a time the textile industry was the highest provider of employment in Nigeria, second only to the public sector. The story of our textile industry has been reduced to a tale of tears. From more than 175 textile factories in the late ‘80s, we can only boast of less than 27 surviving ones. The greatest social tragedy in the near total collapse of our textile industry is the mass retrenchment of hundreds of thousands of workers and the attendant suffering that their families are exposed to. We cannot allow this sad state of affairs to continue indefinitely.

    We demand the recovery of the cotton value chain. The government must also urgently revisit the textile revitalisation fund.

    The Obasanjo administration and later the Yar’Adua administration, secured N100 billion intervention fund to revive our textile sector. We need to know what was responsible for the less than successful impact of this big fund invested to revitalise the sector and what needs to be done to avoid the pitfalls from that experience. Nigeria with almost 200 million people is a massive market for textile materials, and it is sad that we produce far less than 25 per cent of our peoples’ clothing needs. The infra-structural and other challenges that have continued to hinder the growth and development of the textile sector need to be addressed head on by the various governments of the federation.

    Furthermore, we implore the government to make it a policy that the Armed Forces, Police, Customs, Immigration, Civil Defence, Federal Road Safety Corps and all uniformed services personnel should be kitted with locally produced textile and footwear. Also, appropriate directives should be given that the uniforms of all school children in Nigeria should be made from textile produced by local industries. This same gesture should be extended to all locally manufactured goods in order to guarantee markets for them.

    Despite the privatisation of the power sector, the challenges are still far from being over. What is your take on this?

    On November 1, 2013, the Federal Government privatised power generation and distribution to address the following challenges: end darkness by increasing generation, improve distribution facilities, and reduce government financial burden on power. While it is expected that the private investors will build more plants and improve distribution facilities, many years after, the situation has not changed. GENCOs and DISCOs continue to be huge financial burden to the government and ruthless exploiters of consumers.

    In 2015, we were told that the Federal Government bailed out the private investors in the power sector with a lifeline of N233 billion. It is also being proposed that the government is going to take over the burden of providing pre-paid meters from incompetent DISCOs at extra cost. Consumers have endured debilitating tariff hike – the DISCOs want tariff hike every six months. Consumers are being tormented with crazy fraudulent bills that have no bearing with electricity consumed. It is sad that five years into the power privatisation programme, none of the key targets have been achieved.

    The Federal Government, GENCOs, DISCOs and even gas suppliers are locked in an endless buck passing over the failure of the system. Government blamed DISCOs for abysmal supply of gas and the DISCOs blame government for failure to implement tariff increase every six months. We are in a situation where no one wants to accept blame for the failure of the privatisation scheme in the power sector. It is clear that the power sector privatisation failed because incompetent investors were engaged.

    It is sad that the Nigeria Electricity Regulatory Commission (NERC) appears soft on operators and hard on consumers. We call on the Federal Government now that the tenure of the DISCOs is due for renewal to review the entire privatisation and come up with the best approach to deal with this challenge.

    Assess the agricultural sector given the government’s focus on it?

    I want to commend the Federal Government and a number of state governments for showing commitment to the revamping of the agro-allied sector. A few weeks ago, Nigeria was rated as the largest rice producer in Africa with an annual rice turnover of four million metric tons upstaging Egypt which used to be Africa’s number one. We believe more can still be done. We call on the government to focus on improving the agriculture value chain, especially agro-processing. We must now make the critical transition from primary production to secondary and even tertiary levels of production. It all starts with adding real value to our agricultural products. By so doing, we would not only unlock huge potential for the creation of decent jobs, we would also be creating more wealth for our people and for government.

    I also commend the plans to recapitalise the Agricultural Development Bank. This is a good step, but the Federal Government should extend the recapitalisation to all existing development banks. In fact, it is important to create new ones to fill identifiable gaps.The recapitalised development banks should work with a network of commercial banks to secure loan facilities of adequate term structures and at reasonable interest rates.  We are convinced that the prevailing double-digit interest rates and the wide interest rates spread are inimical to industrial development and should be comprehensively addressed.

    How are you handling the contributory pensions deductions by employers?

    Incidence of unlawful and illegal withholding of contributory pension deductions from workers’ salaries and not remitting same to their Pension Fund Administrators (PFAs) still abound. In Ogun State, deductions from workers’salaries were unjustly withheld for close to 105 months. It took the mobilisation of workers in Ogun State and beyond to make the state government to budge. We will never allow such unjust treatment of workers and infractions on their rights to linger that long.

    The unpleasant situations where workers retire from public service and are forced to wait for several months for their pension benefits to be processed still persist. The  non-payment of pensioners, especially by state governments continue to militate against the smooth operation of pension administration in our country. We call on all employers of labour and the three tiers of government to promptly remit all contributory pension deductions to workers’ PFAs.

    Some states are still owing salaries, pensions and gratuities? How are you handling the matter?

    Yes, some states still owe workers and pensioners salaries and pension in arrears. Some states owe pensioners many months of pension arrears, despite the bailout funds, budget support fund and the Paris debt refund. The inhumane treatment of pensioners has exposed many of our senior citizens to unnecessary hardship. Many of them have gone down with avoidable ailments and even died untimely while waiting for their pension allowances. This situation is deplorable and sends wrong signals to workers still in active service.

    Also, the public service is the engine of government policy articulation and the implementation of public programmes. Unfortunately, the public service in Nigeria is marked by low pay and huge salary disparity in the core civil service when compared to other MDAs. This needs to be addressed as it negates the ILO’s principles of equal pay for work of equal value. There are also the challenges of delay in the payment of promotion arrears, transfer allowance and other legitimate claims of workers and the dearth of working tools and conducive workspaces for workers. Also, of paramount concern to workers is the policy that discarded the tenure system for the top echelon in our civil service making the civil service top heavy and promoting career stagnation and indiscipline.

    We call on the government to ensure adequate and timely payment of salaries for public sector workers, especially those at the state and local governments. This would make the public service attractive to top talents and minimise the lure of official graft. The government should remedy the huge salary disparity in the core civil service compared to other MDAs. The government should reinstate the tenure policy in the civil service, stop the overly dependence on consultants and improve the work environment.

    What is your take on the government’s anti-corruption fight and fiscal discipline?

    I commend the commitment of the government to fighting official corruption. There is an increase in the number of public officials and their collaborators in the private sector who have been successfully prosecuted and convicted on charges of corruption. It is important for all Nigerians to see the fight against corruption as a collective battle, which must be fought in a transparent and holistic manner. Corrupt persons in and outside government must be dutifully tracked and diligently prosecuted. This requires a reformed judiciary. We also reiterate our demand for specialised courts to speed up the prosecution of all corruption cases. Corruption cases must be dispensed with in a specific period of time.

    I also see the huge severance payment and pension to political office holders as a form of corruption. It is even more disturbing when many of the recipients of these self-sponsored and self-benefiting allowances are governors who left office with piles of unpaid salaries, gratuity and pension liabilities.

    Furthermore, we demand that recovered looted funds must be transparently accounted for and utilised to revitalise the economy and attend to the welfare of citizens.

    What is your message for workers, government and other employers on the new national minimum wage?

    Our recent struggle for a new national minimum wage of N30,000 has been one of the most arduous and long drawn in both our history as a movement and in the annals of our country. This should not be so. Well, as it is said: “It is better late than never.” I salute all our comrades, especially our leaders at the state level who astutely discharged the burden of leadership by mobilising our workers during our different campaigns, rallies, protests and strike on the account of our demand for a new national minimum wage. It was their steadfast commitment and dedication to this struggle that won us victory.

    We acknowledge the efforts of the Secretary to the Government of the Federation for easing social dialogue between us and the government while this process lasted. I also applaud President Muhammadu Buhari for being a promise keeper. He promised to sign the minimum wage into law and even after securing a second term in office, kept true to his promise by assenting to the new national minimum wage bill. That was another demonstration of labour-friendliness by Mr. President. You will recall that it was President Buhari, who asked governors: “How do you sleep at night when you have not paid the salaries of workers?”

    I urge the government to quickly finalise salary adjustment across the payroll of civil and public servants. We have already wasted a lot of time arriving at the new national minimum wage, we should not waste a single more second implementing the new national minimum wage across board. I urge workers to remain vigilant till total victory is won.

    ILO celebrated 100 years. How would you assess its activities in the last 100 years?

    The International Labour Organisation (ILO) has come a long way – 100 years. We are not just celebrating 100 years as mere numbers. We are celebrating 100 years of global impact and quality service to working people. We are celebrating 100 years of consolidation on the convictions of the founders of the ILO, who arising from the ashes of the First World War, sought to build the consciousness that social justice is the only foundation for sustainable world peace. So strong was the commitment of ILO’s founders that by the time the United Nations (UN) was birthed in 1946, the ILO was the first specialised international agency associated with the UN.

    We cannot ignore the social progress that has been made, especially since the 1944 ILO Philadelphia declaration; the eight core Conventions of the ILO including the Conventions on Freedom of Association and Right to Organise, Collective Bargaining, Child and Forced Labour Conventions, and the ILO declaration on Social Justice for a fair globalisation in 2000 and the successful launch and sustenance of the Decent Work Agenda.

    Putting the hundred years of the ILO in perspective, the premier global labour institution can keep counting the many laurels on its cabinet. From an original membership of forty-four countries, ILO now has a membership base of one hundred and eighty-seven countries across the continents of the world. The ILO as the only tripartite agency of the UN has over the years remained unflinchingly committed to its mandate of setting the standards for industrial relations, technical cooperation to assist developing countries and systematic pursuit of research, education, and manpower development. Since 1919, the ILO has used its Conventions, Recommendations and Frameworks to push back aggressive advancement of industrial tyranny, social injustice and abuse of rights. The fruits of these commitments are self-evident not only across the globe but also in Nigeria.

    This year also marks 60 years of ILO in Nigeria and Africa. We shall join the ILO Area office in Abuja and the Regional Office in Abidjan to celebrate the dual anniversaries and will actively participate in all programmes lined up for these occasions in Addis Ababa, Abuja, Pretoria and Abidjan, including the 14th quadrennial African Regional meeting due in Cote d’Ivoire later in the year. There is indeed a lot to celebrate in the one hundred years of the ILO.

    As we celebrate the Centenary of the ILO and the institution of social dialogue, we call on the Federal Government to prevail on the Federal Ministry of Labour and Employment to reactivate our own social dialogue mechanism via the functioning of the tripartite National Labour Advisory Council, which is the apex statutory body that advises on labour regimes and industrial relations in the country, under the chairmanship of the Permanent Secretary, Federal Ministry of Labour and Employment. It is unfortunate that since the current Minister of Labour and Employment assumed office, this important advisory body has never met. Organised Labour also wishes to use the occasion of the 100th Anniversary of the ILO to call on the current Chairman of ECOWAS, our own President Muhammadu Buhari, to use his good offices to capacitate the regional Social Dialogue Forum to function properly. The Forum was created by a supplementary protocol of ECOWAS Heads of State in 2011, when our former President Goodluck Jonathan served as Chairman of ECOWAS. Nigeria being the first country in Africa to host the ILO, must continue to give leadership to the rest of Africa and the sub region in this regard.

    As this administration is starting its second term, what other advice do you have for it?

    We are concerned with the increasing debt accumulation by governments at all levels. The Debt Management Office (DMO) disclosed that as at December 31, 2018, Nigeria’s debt burden stood at N24.387 trillion. A breakdown of the debt stock revealed that the Federal Government of Nigeria’s (FGN) external debt increased by 42.69 per cent, from N4.527 trillion in 2017 to N6.460 trillion in 2018. About two-thirds of the government’s revenue go into servicing interest payments, with the principal still waiting for redemption at maturity. Even the Central Bank of Nigeria, through the Monetary Policy Committee, recently cautioned the Federal Government against Nigeria’s rising debt level. The committee warned that except the Federal Government came up with measures to address the situation, Nigeria’s debt might rise up to the pre-2005 Paris Club level.

    Nigerians would recall that in October 2005, Nigeria and the Paris Club announced a final agreement for debt relief worth $18billion and an overall reduction of Nigeria’s debt stock by $30 billion. The deal was completed on April 21, 2006, when Nigeria made its final payment and its books were cleared of any Paris Club debt. Though there is nothing wrong in borrowing to invest in infrastructure with the capacity of enlarging the public revenue base, we want to caution the government to ensure that our debt profile does not get toxic and return Nigeria to another milieu of debt trap. Once bitten, we must be twice shy!

  • ‘Many top businessmen in Nigeria are commission agents’

    Chief Oladele Fajemirokun, an industrialist, is presenting his book: The Making of Me: My Odyssey in Business, in Lagos today. He spoke with reporters on his life, business career, challenges of business operations in Nigeria, strategies for survival and growth. EMMANUEL OLADESU was there.

    DID you set out to be a businessman right from the beginning?

    That is a very tricky question. You don’t set out to be something as a baby or as a grown up. You are first born and then go to school and from there I read Economics, which does not mean I set out to be a businessman. Nonetheless, I started learning how to trade from my university days, which I picked up from my parents because they were both traders.

    Can we therefore say that you inherited that business trait more from your father?

    I cannot say so, but maybe, the doggedness or attitude to doing things and the courage to follow through anything that you are doing. I am not totally too different a businessman from my father. As you know, my father was a trade unionist. So, he helped to build up the Nigerian Chamber of Commerce.  But, I totally didn’t go into that but made people that worked for me, my chief executives, members of those chambers. I don’t have the oratory gift that he had and I discovered that early.

    What kind of businesses are you into and what are the challenges and how did you overcome those difficulties?

    With this question, you want to go into another book to be written. This is because when you are a businessman, you are to some extent an opportunist. When you get the privilege to make money, not all eyes that will see that opportunity, but your own eye catches it. You can  be a businessman, but I don’t still believe in anybody starting any business big. It always starts small and you will nurture it to a lasting institution that will outlive you and that is where my background and education comes in, since I read Business Economy in school.

    Did you inherit the business empire of your late father?   

    No, how can I inherit because we are 11 children and he had a number two when he died? The late Professor Ayo Ogunseye was his deputy and the Group Executive Director. He was second to him when he died and he took over from him. He became the chairman and managing director when my father died. I was not in the group at that time.

    What’s the title of the book and at what point did you decide to write about yourself?

    The title is: ‘The Making of Me: My Odyssey in Business.’ It contains the answers to all the questions you were asking before. The book describes me. There is a time in one’s life when some people would ask the reason you take certain decisions and you will give an explanation because it is in you and you will have to go on a sober reflection as to exactly who you are. For example, seeing someone is totally different from whom the person is. That is his education, parents and what makes up a person is so intricate. There are many things about an individual that are difficult to find answers to directly except you think deeply. For instance, you want to know what makes you a bad or good loser? A bad loser is someone who loses in business and dies. Like I teach my children that failure is not falling down, it is staying down. People must not see you on that ground.

    How did you get into your discipline because in those days, parent’s wealth usually had negative impact on their children?   

    That is one of my strong emphases in the book. As I wrote inside, my parents, especially my father were extraordinarily  disciplined persons. Maybe his military background added to that. I was not a particularly easy child, but by the way the senior brothers told me, he was like that too. He absconded from school at age 16 to  join the army and his parents thought he was dead, only to learn one year later that he was still alive. I think he saw that in me and he used the iron hand to really press me down even when he had nothing. We were the first four children he gave birth to in one room in Eletuwase. He had no car and we were not born with silver spoon, so you can see what I am trying to say about the Making of Me, what people perceived of me is totally different. Immediately you entered this room, you saw his picture and recognised him and the first impression was that the son inherited his wealth and it did good on me, but it is totally different.

    What are those factors that accounted for your successes in business?       

    You must first identify what you are doing. And one mistake that many journalists make is calling everybody a businessman; but not everybody is a businessman or an entrepreneur. It is not easy to be an entrepreneur-  that is to create wealth almost from nothing and from other people’s money, which are the bank loans and others. But people call commission agents businessmen. In fact, the majority of the top businessmen in Nigeria over the years have always been commission agents. Not the likes of Odutola, Chief Fajemirokun, Keshinro and others are industrialists. They never introduced people to government and got commission. You understand the explanation now. It is an entrepreneurial trait that is inborn. I have tried to define this to many people that it is a misnomer; in fact, when I am in any immigration office and they ask, what is my job? I don’t write businessman. I either write an economist or director of business. A businessman can be a cocaine pusher, smuggler and cover up as a businessman.

    From your argument, could you say that Nigeria has actually produced top businessmen? 

    Very few in number and this is because the government is the biggest spender. It is easy to make it big by patronising government, by following one minister as a commission agent.Anyway, that is the beginning of corruption.

    We know your father but what impact would you say God and your mother have on your life?

    The impact of God starts from the time you were conceived. There is nothing I am today that I said I planned to be. The opportunity would come and I would build  on it.  It developed in my late 20s and early 30s that the way to go is to create wealth, employment to the extent that my joy and comfort actually lies in how many people I employ or work with in my organisation?

    I started some of these companies as people brought the ideas to me and I financed them like a venture and we built them to a board level, I would resign. I may still own majority of the shares, but I let it go to see how the company grows on its own in my lifetime and its succession  so that those employed in the organisation would know they are not going to die there too. They too would know there are successions in individual companies, so with that kind of formula, you are sure that those companies  will outlive you.

    My mother was a trader and my grandmother was the Iyaloja of Ondo Town, so it was a line of traders and my mother too had a store in Ondo State.

    Is the climate in Nigeria friendly to business?   

    You are going political now. It is not friendly to business and it is well known. We are dealing with international industrialists now and I can tell you that they are jittery about the business environment. But as an entrepreneur, let me tell you that  difficult times are always the best time to go into business. When the company is out of the problem, then you are ready to take advantage of the turnaround. That’s why I make sure sustainability of the company goes on while the environment is down, that the company does not die.

    What’s your view on privatisation?

    My view on it is simple. I have always said that government has no business in business. If government has just one percent investment in any company, I will not invest in it. Some of the businesses that I bought into, that regional governments had investments in  Midwest and  Old Southwest, those  in the states became a real problem to get them out because when they formed the company and you just bought into it later, people that bought it before they were sold to the stock exchange, did not care where the money came from. It is a government that bought into it and what they are raising is stock exchange money. Other Peoples Money (OPM) you understand what I am saying.

    But when you have government in there, if you don’t have a way to talk the government out of it, to sell their shares, before you know it, another government would come and may not be interested in it. Meanwhile, you cannot hold a board meeting when anyone of them is out and they will tell you they have to get permission from the Permanent Secretary and others to delay decision-making, which does not facilitate growth of the business.

    A decision of today cannot be delayed till tomorrow in business particularly in the Third World.

    What are those things you would have done differently from the way you handled them if you have the opportunity of going back?  

    What makes me happy most in my life is the legacy of good name that my parents left. My mother is still alive and secondly, my immediate family. Your happiness is from home because if you are successful in building up a family, a home where the children are together, you a successful parent. It gave great joy to learn that eight of the children have  masters and they can all work anywhere in the world and not depend on my estate or  on me. That was the way I was trained by my father because when he died, I was not even in his company I was in Kano State.

    Behind any successful man there is always a woman…..

    Like I said, whatever it takes you to get a peaceful home, that peaceful family is what triggers your development faster, which of course is your next of kin in a peaceful home is your wife, or your wives.

    The Fajemirokun family name has not been linked with any scandalous issue…

    Since I am a corporate man and that’s one important point in my life. There was a time I used to attend social engagements a lot over 24 years ago. But I asked myself whether I am a socialite or a corporate man. People working for me,  I do meet them at social engagements, the two did not go together and I decided to choose the part of corporate and that was what earned the respect of the banks, both at home and abroad. And the embassies that bring business to you they see you as a corporate man and a builder who started a company from the scratch and build it and go to another one.

    So you are one of those businessmen who hardly relate with his employees?

    That’s not me. If you come here in December during the festive period, we are all here together and relate as one family in my group.

    Do you give back to the society?

    That is my most cherished silent commitment to life. I do it without any announcement.

    How close were you to the late Chief M.K.O. Abiola, the acclaimed winner of the June 12 Presidential election? He was also a businessman before he ventured into politics

    We are not that close but he was a good brother because we were neighbours in Ikeja. He was a very simple and humble man. There was one evening he walked from his house to mine to appeal to me. At that time, Concord Newspaper, which he was the publisher, carried a front-page story about me and Ibrahim Tahir, which was false. He was a member of the then ruling National Party of Nigeria (NPN). He apologised to me that the boy that wrote the story was stupid. He shouted from the gate, ‘chief, chief’ he came not because I complained, but he felt the story must have hurt my feelings.

    How are you mentoring young men in business?     

    I believe in skilled labour and in all my organisations we spend a lot to train people. Send them to the best of training schools abroad. I believe in the richness of knowledge because lets face it, if I have a company can I also do the work of an accountant? When you employ such professionals, you have to pull yourself away to allow them do the job. But then you have to do your bit by re-investing part of the profits on the training of those that are doing the job. And I mean unending training, which is a policy in all the companies I am associated with.

    How comfortable are you with the Nigeria that you grew up in,  is  it the same with the Nigeria of today? 

    I can’t be comfortable. When I was in the university, we didn’t know that we were living the best part of our lives then. When I was in the university hostels then, we didn’t understand that we were living in five star luxury hotels compared to now. When we start from there, it is sad. The quality of education has fallen drastically than you can imagine.

  • ‘Solid minerals devt: Pathway to economic prosperity’

    What are the benefits of the solid mineral sector to the economy?

    I firmly believe that strengthening ceramic and solid minerals entrepreneurship  is the golden highway to Nigeria’s economic democracy. Solid mineral processing industries offer ‘unparalleled perfect storm of business opportunities’ for industrialisation, economic development and growth of the country. For example, the solid minerals sector alone has the potential to rebuild the ailing economy, generate employment and wealth for millions of people, build human capital, and exploit new opportunities.

    The government seems to be more interested in the oil revenue rather than investing in more sustainable sectors. What is your take on this?

    One of the unfortunate things in this nation is that the Central Bank of Nigeria (CBN) seems not to understand the concept of the solid mineral sector, especially the ceramics subsector and its benefits to the country. This is also the same challenge with the governors who rather than sourcing for experts who can help them exploit the resources, prefer to go to Abuja monthly for allocation. We were preparing to sign a Memorandum of Understanding (MoU) with the Governors Forum before the change of government. We are waiting for them to settle down and hope that they will be more receptive to the development of the sector. Furthermore, we are hoping, too, that the National Assembly and her principal officers will settle down quickly to look at how to move the nation forward through this important sector. We have stretched our conviction and commitment with our partnership with the National Universities Commission (NUC), which is working on having a benchmark for universities to offer ceramics science, mineralogy and engineering technology. But, as we speak, no university has embraced it because of apprehension that they may not have lecturers. We have gone to Olabisi Onabanjo, Ago-Iwoye, Ogun State and advised them on how to get round it by not necessarily engaging expatriate lecturers but rather engaging them for a year or so while encouraging exchange programmes.

    Why should the sector be given attention?

    In our presentations we have been able to itemise the benefits of the sector by explaining that it has the capacity to grow the standard of living and confidence of our people’s renaissance, attract the establishment of various industries, and increase our nation’s competitiveness, support rapid infrastructural development, drive growth and wealth in communities. We have illustrated to them how it would tremendously increase internally generated revenue as the cash cow for the country, grow our technology and foreign direct investment (FDI) profile, balance profit maximisation with sustained economic options, create a profitable, safe and sustainable growth. Furthermore, it will impact on households economy, integrate communities and artisanal miners where possible into the mining ecosystem.

    How will you convince an investor to invest into the sector?

    Investors can only be interested when we do the needful and in this case it is taking audit of what we have, characterise them and itemise what it can be possibly used for.

    We need to encourage investors to show interest in the processing of our solid minerals for industrial manufacturing of allied products; and the fulfillment of our national priorities that include job creation, skills development, supporting developments in the second economy and creation of  Micros Small and Medium Enterprises (MSME’s), providing sustainable livelihoods for poor rural communities, preserving and realising value from indigenous knowledge systems and promoting the local benefits of solid minerals.

    Why are the huge coal deposits in various states not developed?

    Nigeria has coal in commercial quantity, yet it virtually lives in darkness; and businesses die due to lack of power. It is estimated that the mineral resource found in large quantities in Enugu, Ondo, Kogi, Gombe and Nassarawa states is enough to provide electricity to the country and for export. Coal is highly underutilised in Nigeria despite that it can grow the non-oil economy, if policy makers can understand the huge impact it can create in the economy. The country is estimated to lose huge revenue, about $132 billion yearly, through the neglect of the abundant solid mineral deposit. Coal is a major contributor to the United States’economy and it can do the same for Nigeria, if properly harnessed. Coal has played a crucial role in industrialisation since time immemorial and it has a significant impact on domestic economies in the world. It has been the key factor in shaping economies across the globe and determining the pace of development for several nations. The monumental amount of coal consumed by the world is used in a wide range of applications, such as generating electricity, the production of steel, iron, power, and several manufacturing and transportation industries, but this huge resource is wasting in Nigeria.

    What are the other resources seemingly neglected by the government that has retarded the growth of the economy?

    The government has totally neglected the solid mineral sector. For instance, the global market for clay, which is also in abundance in Nigeria but largely untapped in 2018, is is worth about $216.9 million. Other mineral resources are Feldspar found everywhere in Nigeria and is worth $3.2 billion; while Kaolin deposits across the nation  can fetch $5.2 billion, Silica Mica accounts for  $678.2 million, Phosphate is $83.11 billion and Silicate $600 million. All these are not tapped, but left to waste without exploitation mineral deposits are high employment and wealth generating agent, with a large capacity to halt rural urban drift and boost the economy. Let me give you an example. In one state that achieves N11.45 billion as Internally Generated Revenue  (IGR) and incidentally the same state is hosting 29 of 44 identified solid minerals in Nigeria. This state has a solid mineral resource known Feldspar and if it can develop the remaining mineral resource, from our estimation, it will earn over N485 billion. Feldspar is used for drug manufacturing, ceramics, paper, paint etc. Recently, we visited Katsina State, one of the states rich in solid mineral resources. We observed people digging out kaolin and packing it in bags that they sell at N900 per bag to paint manufacturers. Meanwhile, clay is an essential ingredient for manufacturing porclean, and is also widely used for making paper, rubber, paint and other products. However, if this product is processed by the government or registered as a Small Medium Enterprise (SME), it can fetch the miners over N3,000 per bag. Unfortunately, the companies buying the bags of kaolin from the local people through their agents are making good money, but the people are losing. Besides, l don’t believe these people can be justly called illegal miners in their own state; nature abhors a vacuum because the government has refused to do what it is supposed to do these poor miners are helping themselves rather than starving with their families. What the government should do is to organise them into a cluster and support them with simple technology that will aid them mine safely and pay taxes to the government. I went further to ask them why they were reluctant to develop the abundant solid minieral and negotiate with Abuja on how to share the profit instead of going cap in hand every month in Abuja for monthly allocation. However, from my investigations, l identified two major problems why they have not been able to do so. I discovered that it is impossible to negotiate from the point of ignorance, meaning they are not aware of the extent of the deposit, including charecterisation.

    How can skills be developed to exploit the mineral deposits?

    The government must know the volume of the mineral deposits and how long they will last, its characterisation, including physical and mechanical properties. It is only when the facts of the mineral deposits are known that a business profile could be prepared, listing what each mineral can be used for, so it is only then that investors could be wooed to come because we have made their decision easier by letting them know what we have and how best they can apply to get the right product. It is imperative that we know the physical and mechanical properties, once we have that, we prepare business profile proposal to woo investors itemising what each mineral resource can be used for. This is the only we can transform solid minerals into products. Besides, this can only transform into reality when we build technology that will enable us transform the solid minerals into various products, such as drugs and paper. Furthermore, in our quest to build skills, we have elected to train 500 youths per state on ceramics making pro bono, don’t forget that this sector can generate billions of naira yearly. Barriers to successful market mining in the solid mineral sector exist because of lack of quantification and characterisation data. The practice of roadshows where experts are not included in the teams to answer technical questions that may be asked by would-be investors is an exercise in futility. We discovered that our country does not have the skillset; secondly, the law that says that Federal Government owns all resources in each state is scaring the state government from developing their solid minerals and other natural resources. But l give some of them this illustration; if, for instance, I have  my house that is supposed to be cleared by the community and, it is not, nothing stops me from clearing the pathway that leads to my house. A proactive governor can put into action the process of developing the abundant resources in my state, what prevents me from doing it and working out  an agreeable arrangement with the Federal Government to have a sharing formula since that seems to be in the interest of both parties. Nothing can beat the development of solid minerals. Women are more involved in ceramics than their male counterpart, especially in packaging, decoration, glazing, quality control, laboratory and inspection and we ready to train them to be economically dependent.

    Can you set agenda for the incoming solid mineral minister?

    The first thing l would advise him is to ascertain how many Nigerians are experts in the solid mineral sector, invite them for a business discussion and form a small team that will come out with a road map for solid mineral development. In the proposed road map for the country l will ask the minister to work on the characterisation of the different mineral deposits in the country, their extent of deposits and business profile. It is with this knowledge that a serious minister can get to work. A minister needs that kind of document to attend investors’ fora or roadshows to woo investors. Prior to the roadshows, which have become prevalent, the minister should know that in Ebonyi, Imo, Delta, Kogi, Yobe, Sokoto and other states, solid minerals can pull them out of poverty and regular visits to Abuja to collect hand-outs are not worth it. For instance, state governments  have no business  not paying salaries or building infrastructure, but all these happen because of lack of knowledge of what to do with what God has deposited in their various states to prosper. As l said, initially the Central Bank of Nigeria has the least knowledge of how to encourage investment in the solid mineral sector and the least of the ceramics sector that have the capacity to drive the non oil sector.

    Why has the country remained undeveloped when no state is without at least a mineral resource?

    Nigeria has remained largely undeveloped and poor as a result of the neglect of the non-oil sector, in the first instance, the solid mineral sector, especially the ceramic sector that is all inclusive. As long as policy makers are not aware of the need to characterise our raw materials, that will let them know the mineralogical and chemical composition of resources because it is the only scientific way that will enable investors know what is available and what it can be used for. We have seen where some manufacturers use some minerals in ignorance because they actually do not know the composition of the minerals. Some of these people do not know either the characterisation or composition of them and end up producing poor quality products that may endanger lives.

    Quality is based on the composition of the materials; if you miss that important segment of information the final product will be poor. We are, therefore, pleading with state government to remove the fears they are entertaining. We have the skill set and every other thing needed for it to succeed. What we are asking from them is to reach an agreement with us since we are bringing the technical know-how. We propose to them to allow us take 50 per cent while they take the balance because we are providing the skill as our own contribution. We canvass that our skill set is quantified as our contribution, the government bring in money to run the project while we set up the business, run it and train skills to over from us. Our team will not be paid as consultants because if we take the option of serving as consultants the capital outlay will be huge.  We don’t only want to characterise and determine the extent of the deposit in Nigeria but want to go further to show you how to translate solid minerals into products that will grow the economy of this country we have the expertise.

    What is state of the ceramics industry?

    We have many of them, but unfortunately, only four are  producing. Sagamu, Benin and two in Ajaokuta, owned by an Indian and Chinese, but just learnt that there is one in Agbara, but I think it’s linked to one of those in Ajaokuta.

    Why is it difficult to sustain the ceramic industry in Nigeria, especially the Modern Ceramics in Abia State that has changed hands?

    We simply don’t have the skill-set besides insincerity of the operators. For instance, the one in Abia State, known as Modern Ceramics, is long dead, despite the funds pumped into it? The story is long. At a point, the liquidator called me to access how best to bring it back to life and l told him that there is nothing that can be done and nothing can be sold too. The whole place, when l visited, was overtaken by weeds. The Catholic Church, at a point, got a grant of N500 million to revitalise the erstwhile thriving factory. They travelled to Italy, thinking they could get it started, but they failed. They failed in the exercise, partly because if you design a machine in Europe to be used in Nigeria without any idea of the characterisation of the minerals in Nigeria, it will not work. The Katsina case is a bit different as it started with two processing plants in Dusinmi and Kakara Local Government Area and they never worked. The one in Kakarar didn’t operate for a day and was subsequently vandalised. The one in Dusinmi after producing for a short time was vandalised also. These are clear cases of what is called a white elephant project.

    Why is it so?

    In the Katsina case, the ‘investor’ just came in, put the two machines together and vanished. The one in Dusinmi ran for a certain time producing kaolin powder and within a short period stopped. They called us in, but we advised that the money to refurbish the two factories will be enough to start three new ones. In these scenarios, our advice has always been that the government or individuals should not enter into any a business they do not have the competence.

    What is the worth of the ceramics industry and can we be an exporter nation?

    According to reports from World Imports, we have N902 million yearly imports of ceramics. We have not started, it will take us years because we cannot export the bad quality w e are producing. As I stated initially, because most people don’t understand the characterisation of the minerals, the tendency to mix it wrongly and manufacture the wrong products is high. In 2009, we imported ceramics worth $319 million; 2012, we imported $416 million worth of ceramics while in 2014, we imported ceramics worth $600 million. When you do not have much about anything, you will not want to spend money on it. Unfortunately, the thing that can bail this country is solid minerals when we build the capacity for the development, but the government prefers to go to China and import or look for consultants.

    What about the roadshows the country has been involved in the name of wooing investors, are you suggesting that our country is not gaining?

    For those who attend, they must be gaining something, but have you asked how many experts are part of the them? How many experts in solid minerals follow them to China and Thailand? Those who go for the shows should answer these questions. We should think of how best to develop this nation. We have the Raw Materials Research and Development Council (RMRDC) and other agencies, but they are doing next to nothing. RMRDC’s mandate, for instance, is to show you where the raw materials are, but they do not do research to educate the public on how to manufacture from their research. Imagine if all the interlinked agencies in Nigeria are working together, the country will move forward unlike where the fiefdoms are carved out, each with a director-general almost doing the same thing. This is wasteful and not helping the nation in its quest for development.

    How do we grow the non-oil economy through the solid mineral sector?

    We can grow it if the government is committed to it. We have coal in Enugu, Kogi, Nassarawa, Ondo and other states. The market contribution to the economy of America is $21 billion and indirectly $132 billion. Evidently, we are losing so much. The global market for clay in 2018 was $216.9 million; all these are in our soil; one can only imagine if we convert these to Naira. Feldspar, another mineral that is like alliums in the global market in 2017, rose to $3.2 billion. Incidentally, it’s everywhere in Nigeria; kaolin is $5.2 billion and available in all local government areas. Silica mica is $678.2 million; phosphate is $83.11 billion, silicate is worth over $600 million, convert these millions to naira and note how much trillions we will we be talking about, yet we are poor. All these are high-employment generating activities, wealth creators and can stop rural-urban drift. If SMEs are encouraged to run micro businesses and industries in localities where people will be decently engaged and live a good life the allure of the city will be limited.

    How can you encourage the universities to take up the course?

    The NUC is encouraging the universities to offer mineral engineering, mineral economics and ceramics engineering. We are suggesting that universities should be encouraged to have foreign lecturers to come maybe for a year and leave. This will afford the students the opportunity to learn global best practice. These guest lecturers will not be in full-time employment; universities where these courses are offered should encourage exchange programmes where students can go for their industrial attachment (IT) for between three and six months. That way, the students will acquire skills that they will need to help the country. Indeed, we need to review our universities curricular every three years to get the latest from the international community. I make bold to suggest that the practical aspect of the course should not be less than 40 per cent. The best way we believe it can work is to say, for instance, in the six geo-political zones, let three universities offer ceramic engineering; the other three mineralogy. In that case, before the students graduate they will be able to set up industries for themselves. The government should have built clusters for them and created or encouraged SMEs in those areas to make them official and organised. They are doing what the government failed to do. We are asking each government to provide 500 youths for us to train in a week. From there, you eliminate restiveness, kidnapping and other opportunistic crimes that are prevalent in the country.

  • ‘Why Nigeria needs nuclear energy’

    To tackle its power challenge, the Federal Government is partnering ROSATOM, the Russian government-owned nuclear agency. In this interview with AKINOLA AJIBADE, ROSATOM’s Central and Southern Africa Chief Executive Officer Dmitry Shornikov speaks on the benefits of nuclear energy, among others. They met at the at the X1 Atomic Energy Conference in Sochi, Russia.

    What informed the partnership between ROSATOM and Nigeria on nuclear energy?

    The sector is grappling with problems, such as shortage of gas, irregular power supply, poor distribution network, a development, which has put the industry in a comatose. The country has tried to fix the sector, but to no avail. Even the energy mix introduced by the Federal Government, in conjunction with the Ministry of Power, did not help matter.

    To address the problem, Nigeria is left with the option of partnering  an organisation, which core competence lies in promoting the energy industry. That is where ROSATOM comes in.

    How can Nigeria meet the demand for uninterrupted electricity supply?

    Improvement in the supply of electricity in Nigeria is tied to the efforts being made on the issue. The Federal Government has taken critical steps towards improving electricity supply in the country. It has privatised the power sector, built some power stations and lately trying to go into production of nuclear energy for growth. The government is making steady progress towards adopting and integrating nuclear energy, with a view to improving production and supply of electricity to her more than 170million population. Besides, the government, through its Ministry of Power, the Nuclear Energy Commission and other critical stakeholders, signed an agreement with the Russian government on the use and production of nuclear energy in the country. Represented by ROSATOM, the leading nuclear energy producer globally, the Russian government did not leave anyone in doubts on the need to bail Nigeria out of its energy problems. We, at ROSATOM, believe that Nigeria can come out of its energy crises, if she remains committed to the issue of generating nuclear energy, which many countries have keyed into. Through this means, we believe that the country can scale up generation from its less than 5,000 megawatts (MW) of electricity greatly. Beyond this, the use of nuclear energy would help in improving power supply, activities in the manufacturing and other sectors of the economy and, by extension, the country’s Gross Domestic Product (GDP).

    What is the level of seriousness Nigeria attached to the issue of producing nuclear energy?

    The government is making steady progress on the issue. This is evident by the aggrement which the country signed two years ago in relation to this issue. We believe that the Federal Government’s gesture would culminate in signing more agreements in the immediate future; that is, the agreements would lead to siting of nuclear energy plants and production of electricity in Nigeria, reputed to be biggest economy in Africa.

    Is Nigeria serious about nuclear energy?

    Yes, a whole lot of things must be on ground before any country can actualise or practicalise the use of nuclear energy. First, is a well articulated policy, which spells out the reasons behind the issue of generating nuclear power, the megawatts, which the country intends to generate, the distribution and transmission capacity and others as contained in infrastructural provisions of that country in particular. A well-structured infrastructural guideline, are required to ascertain the level of seriousness, which either a public or private entity is having in the course of producing nuclear energy for growth. For instance, the nation or government, which intends to provide nuclear electricity for its people must have taken a position on the issue, showing a reasonable level of involvement of its key stakeholders in the project; prepare its legislative and regulatory; ditto providing a strong human resources and safety programmes.

    Others include provision of a bigger funding and financing structures, sites for the construction of nuclear plants, among others.

    When will Nigeria and ROSATOM sign the agreement?

    The two parties are holding discussions on the issue of production of nuclear energy for growth. Discussions between Nigerian and the Russian Government on the issue have reached an advanced stage and hopefully would lead to success in the long run. ROSATOM would be more interested in building nuclear energy resource centres, a development, which would further take the cooperation between the two organisations forward soon.

    Other things that would be taken into considerations include building of nuclear power plant(s), among others, and we are hoping that the partnership between Nigeria and ROSATOM on the use of nuclear energy would provide some benefits to the two countries.

    In which other countries do you intend to build nuclear energy centres?

    Rwanda is another country, where ROSATOM is planning to build centres, which would help in the efficient and seamless production of nuclear power for the country. ROSATOM has signed an agreement with Rwandan government to achieve this goal. Besides, there was an inter-governmental agreements signed with Rwandan government last year.  The firm is planning to replicate the facilities in each of the countries that has reached a conclusion on the issue of generating nuclear energy for its people. The firm is proceeding with negotiations in countries that want to produce nuclear electricity in Africa and beyond. Rwanda  is a new comer, as it has not used nuclear energy before and what this means is that a lot of things have to be provided by the country, for the idea to birth into reality. South Africa has embraced the use of nuclear technology and the idea has helped the former apartheid country to improve its electricity generation well. The country has put in place energy mix, with nuclear power providing the much-needed power to grow its economy. It is on record that South Africa produces the highest megawatts (Mw) of electricity in Africa, by providing 40,000Mw, a development made possible by a well-articulated energy mix programme. Egypt is another African country with interest in nuclear energy programme.

    How many megawatts (Mw) of nuclear electricity is Nigeria creating?

    This is basically for Nigeria to decide. The reason is because Nigeria is a client to be for ROSATOM or better put, the Russian government that is generating nuclear energy. Other countries that have signed agreement with ROSATOM for the production of nuclear energy know their energy needs and go out there to meet the needs. They know the electricity megawatts they needed; so also Nigeria. What I can say is that whatever Nigeria wants, we would do our best to give the country what it needs.

    Has Nigeria met all the requirements for producing nuclear energy? 

    Nigeria may not have met all the requirements needed for the production of nuclear source of electricity. But the country seems to be making efforts in that regard. An agreement was signed on the issue two years ago, coupled with the fact that more agreements would be signed by the two institutions in the near future. However, what I can say is that discussions are on-going between the two parties and hopefully, something good would come out if it.

    What is ROSATOM doing to enable people buy nuclear technologies at affordable rates?

    The firm has decided to deal with misconceptions regarding the use of nuclear technologies by some countries. We have heard that the technologies, especially the one that is used in producing electricity, is expensive and not affordable. But the cost is not that high as people are made to believe. This is because the use of the technologies is guided  by some variables. The cost of a technology, which a firm or country is looking for, is influenced by some variables that are attached to it. For instance, nuclear power plants are not constructed the same way; that is their configurations are not uniform. While some have larger configurations, others do not. Obviously, plants with higher configurations tend to attract more costs than the ones with lower configurations. The same thing is applicable to other nuclear technologies. The cost of the technologies is based on the capacity to carry out the functions, which they are designed for. Many of these beliefs are myths, which often times, have been demystified by experts that are working in the nuclear energy industry globally. We have made people to understand at different fora, that building or provision of nuclear energy technologies is not done through a one-off payment.

    What does it take to provide nuclear infrastructure?

    It takes a lot of efforts to provide the infrastructure for producing nuclear energy or any other nuclear products. Normally, a period of  five years is required to build nuclear power infrastructure and another five years to construct power plants. This implies that payment, or better put, funding for the nuclear power projects would be spread across 10 years, a development, which is contrary to the beliefs held in some quarters that payment for nuclear energy plant or production is a one-off thing.

    What other misconceptions surround the production of nuclear energy globally?

    There are many misconceptions surrounding the use of nuclear energy technologies for production and these misconceptions are held by different people. While some believe that technologies are harmful and destructive, others various views.

    Some even said the nuclear energy industry is not well regulated. But I can tell you that it is the most regulated, controlled and safer industry in the world. The reason is that the industry has a system of regulations, which different bodies or arms in the global nuclear energy abide to. There are misconceptions that nuclear energy produces harmful radioactive waves, coupled with the fact that those waves assist in shortening the lifespan of individuals who inhale them. Another one is that nuclear power emits greater and dangerous amount of radiation and that the people living close to the plants are often times prone to lung attack and others. These have been proved wrong by ROSATOM and companies that are working under it through, by educating people on the issue. Many of these things are myths and do not pose some threats to the society, as many people have been made to believe. We have educated people by telling them what nuclear energy can do and what it cannot do.

    What is the lifespan of a nuclear power plant?

    Nuclear energy plant has a longer lifespan, compared to the plants used in generating other forms of energy. Usually, the lifespan of a nuclear energy plant, on the average, is 60 years. The lifespan of the plants can be extended to 80 or 100 years, depending on the level of maintenance of the plants. ROSATOM has constructed several nuclear energy plants and can confidently say that they have longer life span.

    What is the lifespan of other power plants, aside nuclear plants?

    As I said earlier, there are power generation plants that have lower lifespan, and a good example is coal power plant. The lifespan of a coal power plant is usually 20 years, which means that every two years, one must have a cash flow to ensure continuous maintenance of the plant. To ensure that the coal power plant operates seamlessly, it must be maintained continually. When you add the cost of maintaining a coal power plant within a short period of time, it is a lot of money. This aside the fact that the plant generates fewer megawatts compared to a nuclear energy plant that produces thousands of megawatts(Mw) of electricity.

    In what way  can nuclear energy technologies improve the growth of Nigeria’s agricultural sector?

    Nuclear technologies would help to improve agricultural growth in Africa, and countries, such as Nigeria, Zambia, Rwanda, South Africa, Ghana, and Cote d’Voire are going to benefit a lot. The reason being that those countries practise agriculture substantially and would need the technologies to improve the health of their farm produce. Once those countries can identify areas where they need the technologies in their farms and appropriately apply them, the better for the growth of the sector.To tackle  problems, such as pest, that are inbiting the growth of agricultural produce, ROSATOM has introduced radiation centeres in some regions. The centres would help in improving the quality of the stored farm produce.

    What is the purpose of this exhibition?

    The main purpose of this exhibition is to promote the use of nuclear energy and other things that are associated with it. Besides generating electricity for people, nuclear technologies provide other functions in the society. These functions in one way or the other help in improving the quality of life of the people.These functions are brought to the knowledge of the people through education, which is in line with the theme of the exhibition.

    There are several ways in which nuclear technologies help in improving the standards of life of the people, as stated in the theme of this year’s Atomic Exhibition.

    First, the technologies help in providing a clean and affordable source of energy.  Unlike gas and other energy sources, nuclear energy is cheaper, healthier and easier to access by the people. Secondly, nuclear energy does not produce radiations. By this, the users of nuclear energy have been saved from radiation, caused by emission of harmful chemicals like carbon dioxide and others.

    Thirdly, the technologies offer medical solutions to the issues that affect the people. In this case, they help in the treatment and prevention of cancers and other life-threatening diseases in the world.

    Fourthly, they offer great potential for the development of the agricultural sector. The technologies assist in destroying pests that are inhibiting the growth of the agricultural produce, when they are well applied. When this happens, the life span of agricultural products is increased; ditto the individuals who use the products for their development. Fifthly, the technologies help in reducing climatic problems globally. Issues, such as emission of carbon dioxide, oil pollution, and water pollution, are dealt with by the rightful usage of nuclear technologies.

  • ‘Indigenous oil, gas firms play in deepwater terrain’

    Mr. Emeka Okwuosa, an engineer, is the Group Chief Executive Officer of Oilserv Group. In this interview with Assistant Editor EMEKA UGWUANYI, he says indigenous oil firms are already playing in the deepwater terrain of the oil and gas sector. He stresses the importance of Nigeria’s two massive gas pipeline projects – OB3 and AKK. He also speaks on the need to drive technology growth in Nigeria, among others.

    THE Obiafu-Obrikom-Oben (OB3) pipeline is said to be a game changer and you are playing a key role. When is it getting to the final stage and how will Nigerians feel the impact of the strategic project?

    Let’s put OB3 in proper perspective. No pipeline of that size or capacity has been built in Nigeria. You may recollect where we are coming from in the 1970s, ‘80s, and ‘90s, when we had the likes of Willbros Group and McDermott International, among others and there were no Nigerian players. But even at that, if you look at all our pipeline infrastructure, nowhere hasa 48-inch pipeline been built, but that is what we building. Let us also put this in perspective. It is not just about the pipeline we building. We also have the Gas Treatment Plant (GTP) at Oben, which is part of our scope.This is a GTP that will handle two billion standard cubic feet per day (2bscf/d) of gas. This has never existed in Africa. When we talk about OB3, it is not just about building a pipeline. Our own section, don’t forget there are two lots there. We are building Lot B that will take the gas from mid-point to Oben plant plus the Oben plant itself. For our pipeline, we finished it three years ago, but the treatment plant took a longer time because the location was changed from Oben North to the GTP location and it took us two years to go through the re-engineering and getting the approvals. But the story is clear: the pipeline and the GTP are going through pre-commissioning in our section. The management of the Nigerian National Petroleum Corporation (NNPC) visited the facility last month. By September, our own lot would have been done.

    With the completion of your Lot, will the pipeline be in operation without the other party working on Lot A completing its section?

    To some extent, no; but it depends on how the owner of the pipeline wants to use it. One thing you have to know about the technicality is that we have a pipeline going to GTP Oben, but we have a 36-inch line we built from Oben GTP to Escravos-Lagos Pipeline System (ELPS), which is Oben North; that is a bi-directional pipeline. This means you can take gas from the GTP in Oben to ELPS or take from ELPS to GTP. So, the answer is yes and no. Yes, in the sense that from the 36-inch pipeline, which we have completed, you can take gas from ELPS to Oben to Ajaokuta when we commission it. But the other section cannot be completed except Lot A is completed and is able to evacuate gas from Obiafu-Obrikom to Oben.

    What are the inhibiting factors to participation of indigenous companies in  deepwater terrain? Do you see indigenous companies operating in that terrain in the nearest future?

    We are already operating in that terrain in reality. When you say operating in the deepwater, you look at it from two different points. Are you looking at Exploration and Production (E&P) ownership, which is operatorship or are you looking at services? I will talk from services point of view. From the services point of view, Nigerians have been participating all the way from Bonga, Akpo and Usan, which are deepwater assets. All these have had Nigerians’input. There are two key issues with participation in the deepwater arena. It is about technology and capital. Both will take time normally to scale up. Nigerians are participating, but we are only scratching the surface. There is still more opportunity for participation. Now, how do we increase that? Like the Managing Director of Shell Nigeria Exploration and Production Company (SNEPCo), Bayo Ojulari, said, we require, basically, to assemble capacity and integrate that capacity by working together to have synergy and to deal with bigger scope. But we are in the integration of the FPSO (Floating Production, Storage and Offloading) vessel, which is the issue of topsides. Nigerians are in pipelines, flow lines and risers and drilling. We are quite in a lot, but it is very competitive and capital intensive and we have to slowly built it up as soon as we can because we have proven capacity, but we need to do more because there is so much out there.

    How do the indigenous players collaborate to be competitive and add value to the sector?

    We have been adding value, but not to the extent that we want it. So, the way we can achieve this is by collaborating and synergising among entities and all PETAN members and be able to handle bigger scope and compete with international service providers.

    Why is there no such collaboration?

    It is the Nigerian factor. Everyone wants to do things in his own way and it is not the way to go. For instance, if you go to houses that have flats, if it is 20 flats and you have 20 tenants, instead of one tenant providing energy and everyone connects to it and shares the bill, you will see everybody with his own generator. It is a Nigerian factor. It is about understanding that the way to create value requires working together and not as individuals. It is a mindset thing but we will get there.

    Oilserv is good in nanotechnology and the future of oil and gas is technology. Robotics does a lot of works in the industry. What is your plan in incorporating technology in your operations?

    We are already incorporating technology in our operations. Many years ago, you could not find any Nigerian company that could do horizontal directional drilling. You would have had to go abroad for people to come and do it. We have deployed that. We have been able to cross rivers with 48-inch pipeline, which would mean drilling and opening the line to 64-inch, which is a major challenge because it collapses a lot. We are encouraging technology a lot as a company. In the University of Nigeria, Nsukka (UNN), in the past eight years, we have been sponsoring nanotechnology and it has got a lot of possible applications across board. But, in the oil industry, you can talk of the drilling solutions and materials. But the fact remains that in such technology, we are still on the research stage from where it develops into deployment stage. Deployment requires teaming up between the research entity and the industry. It is a process and that is still at the preliminary stage. Also in UNN, we have sponsored the science park, which they call – the Lion Science Park, the first of its kind in Nigeria.

    UNN is the first to set up a science park and it was done in collaboration with Ideon Science Park in Sweden. It is a big thing going on in Nsukka. What are we doing there? Incubation of technology from the students at various levels and we help them to develop it, and we link them to industries that can invest and take it to work. If you have a project like this, you may not achieve 100 per cent of your initiative, but if you achieve 20 per cent, you are making a major headway and it will end up like the Silicon Valley. It is things like this that Oilserv encourages to drive technology in Nigeria.

    There have been talks about the role of robots in deepwater operation. Do you think that is possible in Nigeria?

    Anything is possible but what we should be asking ourselves is, how do we put that side by side with the Nigerian initiative and benefits? If you take robotics totally the way you see it, you displace human capital and if you displace human capital, what happens to our economy? I won’t say it is not in our interest to deploy that and I won’t say you can stop that because you can’t stop a moving train. You would have to realise that overtime, it may take 10 to 20 years or more, and that may become the norm, but what do you do? You train people to develop such technology, you train them because somebody has to manage that. You will create a different skill-set to drive that, but you cannot completely take out the human interface.

    What stage is the AKK project?

    The Ajaokuta-Kaduna-Kano(AKK) project is very unique, not just what it would achieve, which is to move gas to the northern part of Nigeria to drive industries and create job opportunities. If the North does not have energy, unemployment continues, security problem continues, everybody will suffer. Secondly, AKK is significant because it is the first time a project of that magnitude is being done as engineering, procurement, construction (EPC) and finance. It is not like the previous projects where the NNPC or the International Oil Companies (IOCs) award you a project and pay for it and you go ahead and execute and collect your money. In this project, we (the contractors) are providing the money and to provide such amount is not easy. The total value of that project for the two Lots is about $2.8 billion. This is not the kind of money you raise in Nigeria. You have to go and raise that capital outside the country and for you to raise it, you need security. That security instrument is a process, and part of it requires the Federal Government’s nod. For instance, if you are backing up the financing with the tariff you will raise from that pipeline, don’t forget that most of that tariff, for example, will be in naira. A financier, who is overseas, doesn’t know what you are talking about in naira. So, you have to provide an instrument of convertibility that has to come from the Central Bank of Nigeria (CBN), and guarantee that every collection in naira will be immediately converted to dollars. That is the typical instrument. These things take time to get through the government agencies. So, we are going through that process and we are almost there. We have almost finalised the security and we have also started with the early works -engineering. As we speak, the AKK has started; that is the point I’m making.

    Does the spate of kidnapping and insecurity in the north affect the project?

    We are Nigerians, if there is kidnapping, we will deal with it. We are not going to stop developing Nigeria because there is kidnapping. In construction, we are tested and we are knowledgeable. We worked 100 per cent between 2002 and 2007 when kidnapping was the norm in the Niger Delta region. Oilserv remained there. We worked in the swamps, maintained all the pipelines, so there are ways to do that. We are Nigerians, we work in Nigeria and we must create capacity in Nigeria. That is not going to be an impediment at all. It is a concern, but we have procedures to deal with that.

    What is the state of the oil and gas industry and what does it hold for service providers?

    Oil and gas industry is a very active industry all over the world and, particularly for Nigeria and theme of this year’s OTC panel discussion which hinged on deepwater services and opportunities, tells it all. The Nigerian oil and gas industry has come a long way. Clearly, the oil and gas industry will continue to be relevant and drive the economy, but not quite as much as we expected it in terms of integration into the  economy as far as Gross Domestic Product (GDP) contribution is concerned. There are many structured manners that can be put in place to achieve that. Some of these were discussed at the panel session. What is important is that available opportunities in services, whether it is in deep offshore, land or swamp, less than 20 per cent of that opportunity is being tapped in terms of value, so I can say the opportunities in the oil and gas industry are still huge.

    Can you tell us something about Oilserv that will encourage upcoming service firms or those intending to come into the subsector?

    Oilserv was set up on a sound basis and principle. That’s the basis of sound knowledge of engineering and clear plan to grow technology and grow the company organically. When we started in 1995, it was a very small company.  It was only the other employee and I and we slowly built it up. Now, we built it up by reinvesting whatever money we make and acquiring latest technology. It’s not just about technology acquisition, but by knowing the principles of these technologies. For my background, I’m a cerebral engineer and I worked in 12 different countries before I came back to Nigeria. I was principally focused on developing engineering capacity. Along the line, we moved on to look at the best way of achieving the engineering, procurement and construction (EPC) work we have. We later introduced the welding works. Welding is at the core of pipeline construction and the major threat in welding is the fact that using traditional welding system, which is the manual welding system, will involve welders association. Some of them are not there to work, but to create problems and you can’t control the quality of output too. We moved on to develop automatic and semi-automatic welding system where it is more like being in a production line in a factory. We trained our own staff and they became the welders and because it is not manual welding but automatic, so we are not bound by certain rules of the welder association. With this, we are able to do as much as 25 joints a day. Manual welding can’t do more than six joints a day. That’s how we sped up.

    The other technology is our Horizontal Directional Drilling (HDD) technology system. You may realise that in building pipelines, you cross rivers, creeks, and all kinds of barriers. If it is water, you will dredge it, drop the pipeline, and cover it up. But by doing that, you disturb the water system, damage the environment and you may muddle the water. If you don’t restate it very well, you create additional problem down the road, which can be erosion of the water bed. We developed a system where we can drill from one bank to the other without touching the bed of the river.

    In crossing roads, in the past, we have to cut the road; imagine cutting an eight- lane road. Today, we do cross-boring system by going from one end to the other without disturbing vehicular movement on the road. These gave us advantage over others. We invest in human resources.

    We won the AKK project because it was through a bidding and we came out best.  We are the only company in Nigeria that can deliver such a project. We are the first indigenous firm to graduate from being a construction firm to full EPC company. To be a full EPC company is expensive. It requires investment and dedication. If you look at AKK, you realise we got the first section, which is the most important. If you don’t get the first section right, you don’t have a pipeline.

    The OB3 is undergoing pre-commissioning. A project of that size, the largest pipeline in Nigeria for gas, which is 48 inches in diameter and 67 kilometres is not a small project. For you to do pre-commissioning, you have to clean up the pipe, pressurise it. Just imagine 48″by 67km pipeline and the volume of water you have to fill it. It has to be sectionalised, fill the water, pressurise and clean it up to meet all the standards before you can remove the water, dry it up.  To dry alone, because you can’t mix water with gas which you intend to transport, you will use a compressor with high pressure and temperature and pump. Just imagine the volume of air you have to pump into 48″ diameter by 67km pipeline. Sometimes, it can take up to three months to dry.

  • ‘Banks should not joke with cybersecurity’

    The banking sector is bracing for another phase that will lead to the emergence of mega banks, which will enable the industry take on huge project financing. But much as this may be the trend, the impact of digitalisation and the fear of cybercrime remain an issue. In an interview with select Business Editors, the Managing Director/CEO, Fidelity Bank Plc, Mr. Nnamdi Okonkwo, spoke of the lender’s plan to launch itself into the prestigious Tier 1 category. He spoke on other initiatives of the bank, which will make the Tier 1 dream a reality, Group Business Editor, SIMEON EBULU, was there.

    How are you implementing your bank’s strategic growth plan?

    Two years ago, we set out at Fidelity Bank, to drive a five-year strategic plan, beginning from last year that would see us migrating to a Tier 1 bank in the country by 2022. We want to break into the league of Tier 1 banks and grow organically, keeping in mind that the other banks are also growing. This is my sixth year as Chief Executive of the bank and by God’s grace, we are driving the plan and the numbers show that we are making steady progress, year-on-year, in terms of balance sheet size, deposit and profitability. As we are doing this, we are keeping our eyes on the safety of the bank. We have thus kept our eyes on the bank’s capital adequacy, liquidity ratios, risk management framework, governance and compliance practices e.t.c. For instance, as a result of our prudence in building up capital, we were able to cushion the impact of the implementation of International Financial Reporting Standard (IFRS) 9, so we took the charge outright.

    In specific terms, which areas do you think you have excelled?

    On deposits, we grew by 26 percent last year. In fact, in one year, we grew deposits by about N200 billion, which means that our market share, is increasing. Two years ago, our desire was to make sure that low-cost deposit constitutes a larger percentage of the total deposit. Today, we have largely achieved that as low-cost deposits now constitute about 82 per cent of total deposits. In the area of governance, you would have noticed how our Board has been strengthened. We brought on board some seasoned professionals. For instance, the Chairman of the Board is a former Chief Executive of a bank and a former Deputy Governor of the Central Bank of Nigeria (CBN) for 10 years. We also have with us the former Managing Director of Guinness Nigeria and another former MD of a bank. As a deliberate strategy, each time a Director retires, we replace with yet another very experienced one. We also ensure diversity. We are also very serious about succession.Therefore, we plan ahead, As you may aware, we recently appointed three Executive Directors at a go, subject to CBN’s approval.

    What role is digitalisation playing in your operations?

    We are driving our retail banking with digitilisation.About 81.5 per cent of our transactions are now done through digital channels. That is why you will see us building just one or two new branches in a year. In the past, we used to do like between 15 and 20 branches. I can’t remember the last time I went to commission a new branch or even wrote a cheque. Digitalisation has made things more efficient. We have also taken into cognisance, customers who may not have data to do their transactions, so we introduced our USSD *770#, which does not require you to have smartphone or data to carry out some banking transactions. These categories of customers do not need android phones to operate their accounts, just basic phones. This has made our cost-to-income ratio to improve significantly. Ultimately, our cost-to-income ratio is likely to drop by about 50 percent by 2022. Digitalisation will play a key role in achieving this.

    Are you not worried about the challenges associated with digitalisation, especially fraud?

    It comes with a lot of risks. Any bank that does not pay attention to cyber risks is living dangerously and I doubt if any bank will even try that. Statistics has also shown us that even in some of the areas of the north with security challenges, we have very high adoption of electronic banking, because people are sending and receiving money using their phones. A challenge actually leads to innovation and opportunity.

    You were a leading investment bank before the consolidation in the industry. Are you de-emphasising corporate banking for retail banking?

    We have just appointed a new Executive Director, Corporate Banking and that should tell you how seriously we take Corporate Banking. Fidelity Bank used to be Fidelity Union Merchant Bank and that was why most multinational companies in the country have continued to bank with us. Supporting business in this niche segment comes with a huge cost. Therefore, building up low cost deposits from the lower end of the market helps support lending to the corporate segment at rates lower than higher risk segments. We have grown our savings deposit account base from N75 billion when I became CEO on January 1, 2014, to N226 billion at present.

    What is your take on cyber security in the entire industry and what is your bank doing to tackle it?

    The entire industry is as strong as a bank with the weakest security measures. Therefore, no bank should toy with cyber security measures because there is a contagion effect. If fraudsters can penetrate one bank, what it means is that they can also affect other banks. At the Bankers Committee, we have discussed this several times. Therefore, even at regulatory level, there are certain measures you are compelled to take. For instance, building a Security Operations Centre and appointing people with certain qualifications and executive level personnel as heads of IT Security.

    What plans do you have to grow the bank?

    Our five-year plan was crafted to be based on organic growth, based on the projections we made. We also decided that we will not expand outside Nigeria until after 2022. So, our plans are based on organic growth. We also left a window that allows us to take advantage of emergent opportunities though. When these happen, we will sit down and look at them and go back to our Board to see if we need to alter anything to take advantage of such opportunities or to continue with on the organic growth path.

    Fidelity Bank recorded about 28 per cent growth in deposit base in 2018. What was responsible for this?

    The deposits came from a combination of growth in savings; growth in current and domiciliary accounts. We have a new product where you can transfer foreign exchange with your mobile phone up to the regulatory limit. It means that we have also seen growth in our domiciliary accounts because people built up funds, so that when they want to transfer, they can easily use it. We also have corporates that are in foreign currencies earning businesses. The increase in oil prices also impacted on our deposit growth as it favoured our oil and gas upstream customers.

    What are you doing to sustain loans and advances above 10 per cent?

    The environment is so challenging that growing loans double digit as we have done have prompted some people to ask us: How come we grew double digit. In 2018, we took advantage of opportunities in some sectors to grow loans. For this year we are guiding for between 7.5 and nine percent. Still talking about last year, a lot of those were to the real sector of the economy which encourages growth and creates employment.

    What is your take on payment service banks?

    You know it has been a prolonged push by the telcos to come into the banking space. We don’t have a problem with that. Let them be subjected to the same regulatory conditions that we have, because you are talking about depositors’ money. So, once all of us are subject to regulatory control, we will all do banking together. I think the sky is big enough and as banks, we are not sleeping. That is why you see some of us deepening our digital platforms.

    The stock market is still experiencing heavy foreign capital outflows post-election. What is your opinion on this?

    We just got back from London on a no-deal roadshow and the outlook on Nigeria is quite positive. Indeed, based on some of the sentiments, we were being advised to raise Eurobonds because they want to increase their emerging markets investments, especially the fixed income managers. The flows, you know European Central Bank raised rates. With the increase in rates, capital will always follow where margins have just popped up.  People generally move money to those areas just the same way when we had our treasury bills going for about 20 percent, everybody rushed in. So, that is the constant dynamics of inflows and outflows.

    What measures have you put in place to ensure that your bank is not threatened as you grow to become a Tier 1 Bank?

    We are keeping our eyes on our capital, on risk management, on governance and sustained profitability. This explains why, for instance we had enough buffers to absorb the impact of implementation of IFRS9.

    Do you plan to raise Eurobond to support capital?

    We do not plan an immediate increase in Eurobond. We are not doing any Eurobond this year, but we may consider local bond issue if necessary as part of Tier 11 capital but no size yet.

    How is Fidelity Bank leveraging Fintech to grow its franchise?

    Under our five-year plan, which was crafted in 2017 and commenced on January 1, 2018, we got one of the big four consulting firms to do a full global analysis of Fintechs and how we can collaborate with them. Part of our engagement strategy is partnership. This partnership has been on several fronts, including the deployment of a solution for a major customer of ours; an airline. We are bankers to an airline that controls about 40 percent of the industry. Initially, they had challenges with ticketing on the electronic system they were using, and they came to us. Through collaborating with Fintech,we migrated their entire transactions to the cloud. This has worked so efficiently in the last one and half years without fail. Aside from partnering Fintechs, we then decided that there was need for us to develop our internal capacities as well. We decided to build a digital lab as part of the outcomes of the strategic studies we had done with the consulting firm in the last six years. Today, we have several millennials that are IT savvy, working at solving problems with innovative solutions, under flexible hours and work environment, at our digital lab.