The Nation Newspaper

Category: THE CEO

  • ‘Cabotage is key to job creation, economic growth’

    The most talked about issue in the maritime sector today is how to end cabotage waivers, which stakeholders insist is needed to develop the industry. In this interview with OLUWAKEMI DAUDA, Nigerian Maritime Administration and Safety Agency (NIMASA) Director-General Dr Dakuku Peterside says the agency is working on enforcing the cabotage law without stifling businesses. He advised Nigerians to take advantage of the opportunities in the sector.

    What was your impression about NIMASA before your appointment and three years after, what is your impression?

    Well, before my appointment, I didn’t know much about NIMASA; the best I knew was that it is a regulatory agency in the maritime sector. But after my appointment, I researched further into NIMASA’s activities, I look at their history and where they want to be. When I got here, I interacted with my colleagues, and numerous sections were held with my colleagues. it really exposed me to the challenges NIMASA was facing. The limited opportunities that laid ahead and what we could do on NIMASA’s role in repositioning the maritime industry in Nigeria, most importantly, as the driver for the growth of the maritime industry. And I am glad to say that I have had the opportunity of working with my colleagues to see to the growth of the maritime industry in Nigeria through the regulatory and promotional perspective.

    Before your appointment, stakeholders believed that the image of NIMASA was battered, how far have you been able to redeem the image?

    I agree that much that by the time I was appointed to join NIMASA, a lot of damages have been done to the agency’s reputation, and when I sat down with my colleagues, we all admitted that something had gone wrong, and we needed to fix it. And fixing it, we believed we must start from the inside for once, we need to change the way we do things, and choose a different course. We must agree on the code of conduct, and we took very bold steps. One of the bold steps was to rebrand the agency and that is in two dimensions: internal rebranding and external rebranding. External rebranding will not be appreciated until you change the way you are perceived from inside. So, we created a new work ethic. We changed our orientation to work and began to lay emphasis on transparency and accountability. We took responsibility for our actions, embarked on a culture change from the inside and the result is what we are seeing today, where the public perceives NIMASA as a responsible organisation, contributing to the economic growth of this country, ensuring that they make our waterways safe and secure for navigation and protect the interest of Nigerians in the maritime sector.

    A few days ago, the International Maritime Bureau (IMB), a specialised department of the International Chamber of Commerce’s report for the first quarter of this year showed an increased level of safety in the Nigerian maritime domain, what is your view about the piracy report on Nigeria?

    Well, you read the latest report, even the IMB admitted that in the last one year there has been a drop in the piracy in the country. The report by IMB is not a surprise to us at NIMASA and to every watcher of maritime activities in our country and beyond, because if you consider how seriously the President Muhammadu Buhari-led Federal Government is paying attention to maritime safety and security, which led to the approval of the Deep Blue Project geared towards tackling all illegalities in the maritime sector, you would understand that these are the best times to invest in maritime in Nigeria.

    I have always complained about two things. One is that I don’t know if it is deliberate on the part of the IMB. We have been wrongly reported. Every small crime on the sea is reported as piracy. We are still not the worst in the world. We are working very hard to improve where we are. The second dimension is that they have refused to acknowledge the progress we have made in fighting piracy. This is the first time they are admitting in their latest press release that piracy has dropped drastically by 31 per cent in Nigeria. The impression given hitherto is that Nigeria is now the new hot bed of piracy in the world. But now, they have admitted that we have made a lot of progress and as last count it has dropped by 31 per cent.

    How did you achieve that?

    We have put in place a number of measures. We are not satisfied where we are in terms of maritime safety and security. We believe it is a work in progress.

    Nigeria is receiving this kind of good report almost 25 years after, why?

    The Federal Executive Council’s recent approval of the Deep Blue Project, which is all-encompassing maritime security architecture, is a clear demonstration of the fact that President Buhari is leaving no stone unturned in his determination to tackle the menace of piracy. It was based on those sincere efforts by the Federal Government that the IMB Piracy Reporting Centre said no vessel was reported hijacked in the period under review, marking the first time Nigeria had such record since the first quarter of 1994. The report noted that in the first quarter of this year, Nigeria experienced a decrease in reported piracy incidents, compared to the same period last year. The report further stated that there was a great improvement in the efforts to actively respond to incidents in the Nigerian maritime domain. The IMB Director, Pottengal Mukundan also made it known to the world that Nigeria was gaining advantage from co-ordinated responses to incidents via its maritime regulatory agency, NIMASA and the Nigerian Navy.

    We at NIMASA have also taken a number of steps. One is to create the legal framework that will give us the teeth to fight piracy and other crimes at sea. In that respect we are pushing for the early passage of a dedicated anti-piracy bill. We are also acquiring assets through the deep blue project to enable us build response capability to tackling maritime security. We are also doing a lot of collaboration with our partners in the Gulf of Guinea.

    What further assurance do you intend to give to the international community to keep the good report?

    The truth is that the Federal Government, through NIMASA will continue to do all in its powers, within the ambit of the law, to ensure that piracy in Nigerian territorial waters is  reduced drastically, if not totally eradicated.

    What is your take on collaboration with other maritime administrations in the Gulf of Guinea to boost your efforts?

    Yes. We are doing a lot of regional collaboration with our partners in the Gulf of Guinea. We are also investing in intelligence and surveillance so that our fight against piracy would be driven by technology; guided by accurate and timely information.

    What other measures are you putting in place to stem the problem?

    One of the other things we are doing, is to convey a global conference on maritime security in the Gulf of Guinea. There have been different actors doing different things. But we want to harmonise everything people are doing concerning maritime security in the Gulf of Guinea.

    So, we hope that later this year, we would convey a global conference on maritime security that will focus on piracy and crimes in the Gulf of Guinea, where we would bring our partners and other colleagues for us to issue a statement of commitment on how we intend to tackle piracy and as well reach a consensus on what needs to be done, when it would be done, who would be the actors and who are the responsible parties. That is what we intend to do in the short run.

    Why the need for regional collaboration?

    Most of our revenue is from oil. The oil and gas industry needs the maritime sector, particularly shipping, which is international in nature for it to thrive. The fact that shipping is international in nature makes collaboration, particularly at the regional level, inevitable. This will serve as a catalyst for growth in the industry and we at NIMASA have recognised this fact, thus our numerous collaborative efforts, which have begun to yield fruits.

    Is there any relationship between NIMASA, the Navy and IMO?

    Yes. We have a very strong relationship with the IMO.  We are also partnering the Nigerian Navy in different programmes, some supported by the United States. We are embarking on dedicated operations to tackle piracy and wade off maritime crime within our coastal waters. So, those are some of things we are doing with piracy because no piracy begins and ends in one jurisdiction. When there is a hot pursuit, they shift to another region, and on our part, we are determined to give it a fight. Also, in the area of ratification of IMO conventions, Nigeria has done very well, which is evident in the day-to-day running of the maritime sector in the country.

    As a maritime administrator, what are the challenges you and other maritime administrator in Africa are facing?

    There are four major challenges the maritime administration is facing. One is the dynamism of the industry. Laws change as soon as they are made. Regulations change too often. And that now takes you to the second issue; human capacity building. This is because there is new development in technology and new development in rules. You must continuously train your people and retrain your them, and in many maritime administrations, human capacity is an issue. Now, the third one is what I called harmonisation of rules. You know, maritime is global in nature and when you come up with new international regulations; you need to domesticate it in your own jurisdiction. You must get the legislature to understand your role; you must get the government of the day to also understand your role. And to harmonise the position of the executive and the legislative, stakeholders and operators in the industry, as well as maritime administrations, you will discover that  it is not an easy task. It is something you work very hard to get everybody to understand and bring everybody to the same page.

    Even from one jurisdiction to another, circumstances vary. You must also engage the people in the same cluster with you. In our case, we in Abuja MOU Zone. You have the Turkey MOU Zone, you have the Black Sea MOU Zone, you have different maritime zones. So, you must be well positioned in your country with different stakeholders, harmonise in your region, harmonise internationally. And that is a bit of a challenge. Now, the other challenge faced, that is peculiar to us in Nigeria, is the issue of maritime security. We thought that It would be history by now, but it is proving slightly or seemingly intractable. But we are doing a lot in that direction. Then, the final thing is the issue of infrastructure deficit. Maritime is capital intensive and so are the assets or building ports and building of supporting infrastructure. They are usually capital intensive and  not cheap in this part of the world. In other parts of the world you can get one,  two per cent interest rate, but that is not common here. So, those are four key challenges we are facing in the maritime sector.

    What are you doing to ensure that NIMASA performs its core responsibility?

    We are doing a lot. All of that is articulated in what we called the NIMASA medium term strategic plan and it has five pillars. Pillar number one is survey of certification, transformation strategy; the second one is environmental and security, search and rescue initiatives, the third one is capacity building and promotional initiatives while the fourth one deals with digital and the fifth one is structural. These are five anchors on which we are repositioning NIMASA to fulfill our mandate. Our mandate is two: one is regulation of the maritime industry and the second is promotion of the industry so that many Nigerians will get involve as active players in the sector.

    And I think that if anybody will modestly access us, they would agree that we have made remarkable progress in the last three years. Unprecedented, phenomenal progress that has not been seen in the recent time. Whether in the area of regulations, and we are focusing on the area of promotion, all these are giving them reasons to get involve in the maritime sector and giving them the reason to take advantage of the opportunities that exist in the sector.

    What is your take that more women should be involved in the maritime sector?

    Globally, the focus in the maritime industry today, is how to get more women involved in the sector, whether as seafarers, ship owners, etc. So, every effort to encourage women participation in the sector is supported by NIMASA. They can count on the support of NIMASA and, by extension, Nigeria. We believe and support everything that would give women a role in the maritime sector. There is no sector that would exclude 50 per cent of the population and expect that sector to thrive. If we exclude women, we are excluding 50 per cent of our population from benefitting in the economic activities in the maritime sector.

    As AMAA President, tell us African leaders’ efforts in this direction?

    There are ongoing efforts by African leaders to create economic activities in the continent by maximising the benefits of the blue economy. They all believe that nobody can ignore the role women have to play. The blue economy is one critical sector that will create employment for our people, contribute to economic growth, and give opportunities to all our people, whether they be men or women. So, it is timely and most appropriate that you asked question that is focusing on how to get 50 per cent of the continent’s population involved in the blue economy, be it fisheries, fishing, or underwater mining, aquaculture or any of the activities that go on in the blue economy. That totally aligns with our vision of making the blue economy play greater role in the economic growth of our country and our continent.

    In 2017, NIMASA remitted N18.7 billion and in  2018 you projected N109 billion. How far have you been able to achieve this?

    In 2018 we projected that we will raise revenue of N109 billion, including Cabotage which is actually not money NIMASA can utilise. But, by December 2018, we were able to rake-in over N92 billion. That is over 85 per cent of our target. You will admit if you know the operating time that we have done very well. Our contribution to the consolidated revenue fund  keeps increasing. We have been singled out by the Federal Executive Council (FEC) as one of the most improved agencies in terms of contribution to the consolidated revenue fund. And that is something worth celebrating, something worth taking note of.

    What do we expect this year?

    This year, we will definately exceed the N109 billion revenue. We are putting a lot of measures in place to grow our contribution to the consulidated revenue fund. But that is not our primary focus. Our primary focus is safety on our waterways. Are we able to reduce accidents to zero? Are we able to ensure that no substandard ship is unable to call on any port in Nigeria? Are we able to ensure that shipping does not contribute to the pollution of the marine environment? Are we going to get more Nigerians on board the vessels? Are we going to get more Cabotage vessels to be working? Are we going to ensure that our response time in case of search and rescue is minimal? That we are able to respond less than  five minutes. Are we able to reduce threat of maritime insecurity to zero? For me, those are the measures for us to be assessed and not necessarily the amount we are able to contribute.

    What assurance can you give to the indigenous and foreign ship owners using our waters?

    In terms of piracy and maritime threat, we have put in place what we call the deep blue project approved by the Federal Executive Council to tackle the issue of piracy and maritime crime. We are so pushing for the full implementation of ISPS Code approved by the IMO. We will ensure that our ports and terminals are safe. We read a report from the United States where Nigeria was indicted and that some of our facilities are not ISPS Code compliant. And we engaged the US Coast Guard and as well as the Department of Transport in the United Kingdom and they said the report has not been updated. In their updated report, which will be published later this year, you will see that almost all the facilities in Nigeria are on clear standard. Nigeria is the most improved country  in terms of ISPS Code enforcement and that is International Shipping and Ports Security code enforcement in the region of Africa. So, I have talked about the deep blue project, ISPS Code enforcement, then, the other one is the issue of our ports, flag and coastal state control responsibility, which we have taken very seriously so that vessels would be safe to navigate our waterways and our ocean would be clean to maximise the benefits of the industry.

    What is your take on the roads leading to the Lagos sea ports?

    All stakeholders are not happy, including me. The agencies too are not happy.

    What do you think should be done?

    For once, it is coming under serious consideration by the Federal Government working with maritime sector players. We all agreed  that without fixing the roads, our ports will not be competitive. It has its own multiplier effects on the competitiveness of our ports. So, it is in our best interest that the government should  fix all the roads leading to our ports. It reduces dwell time, increases revenue, enhances efficiency and reduces the time of doing transactions in the ports.

    How will you feel if you are re-appointed by President Buhari? 

    I don’t think that is under consideration now. I don’t think it is time to talk about that. I want to talk about how to move the industry forward. It is time to talk about how to drive our reform, which we have started to its logical conclusion. We have invested a lot of time in reforming NIMASA and in repositioning it. So, if there is anything that will give us joy is to see a new NIMASA that is alive to her responsibility; that is responsive to stakeholders’ yearnings and be able to deliver on her mandate. For me, that is the focus for now.

    When is the CVFF fund going to be disbursed?

    We have made a lot of progress with the Cabotage Vessel Finance Fund (CVFF). We have engaged the Presidency and the Presidency has given consent and support for us to review the CVFF guidelines and disburse the fund. The Minister of Transport has also approved the review of the CVFF guidelines and we are putting the necessary framework in place towards the disbursement of the CVFF. For us, the ultimate is for the CVFF to be able to reduce the cost of borrowing funds to do businesses in the sector so that  Nigerians would have access to capital to acquire assets,  get the infrastructure and compete with their pairs in the industry.

    How many seafarers have you trained to date? 

    We have trained a number of seafarers under the NSDP programme. We have also retrained seafarers, who are not under the NSDP programme. As at the last count, we have trained close to 2,000 seafarers under the NSDP programme and we also retrained about 6,000 seafarers and dock workers under our retraining initiative.

    How many members of staff of the agency have you promoted in recent time?

    We have done a lot in that regards. Recently, NIMASA’s Governing Board approved the promotion of the Nigerian Alternate Permanent Representative at the International Maritime Organisation (IMO), Mr. Dikko Bala, to Director. Also elevated to the position of Director in the agency was the Deputy Director, Maritime Labour Services, Mrs. Rita Uruakpa. Other beneficiaries of the promotion exercise were Mr Kazir Musa, who was promoted to Deputy Director, and 18 officers, who were elevated to Assistant Directors. Let me add that 236 other staff across all grade levels also benefited from the exercise. The promotions were ratified at a meeting of the Governing Board of the agency under the chairmanship of Major General Jonathan India Garba (rtd). Our determination to continue to motivate the agency’s workforce remains unwavering. This was a rigorous, but fair process, and in this wise, I will like to use this medium to congratulate the newly promoted staff of the agency and to say to them that the reward for hard work is more work.

    Why do you think your members of staff need to be promoted?

    On our part as Executive Management, we will continue to ensure that staff are promoted as and when due, so that they can remain motivated to give their best in the agency’s drive to reposition the maritime industry.

    How far have you gone with your CSR projects?

    Recently, we embarked on a nationwide donation of relief items to victims affected by flood in some 20 states of the country. The measure was part of the agency’s humble effort towards alleviating the suffering of the people, who were displaced through natural disasters, insurgency and other forms of conflict. This is just our way of supporting the Federal and state governments in catering for the needs of the displaced so that they do not feel abandoned in their times of need. Let me also call on other well-meaning organisations and individuals to also lend their hand of support to the displaced citizens as government cannot do it alone.

    As the current Chairman of the Association of African Maritime Administration (AAMA), kindly tell us your primary aim and what your group is doing to build a competitive maritime sector in Africa?

    Our primary aim of coming together is to continue to uphold the tenets of the African Maritime Transport Charter (AMTC) to improve among others, the capacity, capability and performance of Africa’s Maritime Administrations and the maritime/shipping sector with great emphasis on human resources development, technology and information sharing. Let me assure you and others that we will not relent in our efforts to build competitive and vibrant maritime and shipping sector and to give Africa a voice among comity of maritime nations as Africa is our hope for sustainable growth.

    Recently, stakeholders and other key players said they want NIMASA to end Cabotage waivers for non-indigenous ship owners, what is your take?

    NIMASA is determined to ensure that Cabotage waivers are stopped in the next five years. NIMASA’s mandate is all about promoting and regulating shipping in Nigeria. And we have no intentions to stifle anybody’s business. Rather, we are committed to promoting, protecting and providing the enabling environment so that the local ship owners can grow and compete with their international counterparts. We are, certainly, determined to work with our stakeholders and other key players in the industry. I, therefore, call on stakeholders to cooperate with NIMASA  to realise the Cabotage implementation because it holds a huge potential to create jobs, add to the Gross Domestic Product (GDP), and bring about a boom in the economy.

  • ‘Why agric matters’

    Agriculture is key for any country that intends to lift its population out of poverty. The Country Manager, HarvestPlus Nigeria, Dr Paul Ilona, says if Nigeria plans to alleviate poverty, hunger, improve working conditions and boost economic growth, it must support agriculture by way of better integration; sustainable value chain development and markets without boundaries. He speaks with DANIEL ESSIET.

    Give an appraisal of the agricultural sector?

    I am tempted to say that the sector is making some improvements on the flow side. But if we look at the situation with what obtains in advanced economies, then its still a far cry. One primary reason for this is that our agriculture is not recording significant improvements because it is not structured towards building markets. This is why the sector is not making progress. Today we know agriculture is positioned as a business. Everybody is growing crops for food and income. The issue is to what extent is it a business that can create sustainable means of livelihood? Why we have not achieved this is because agriculture is not yet properly organised. Unless agriculture is organised around market, we will still record low investors’ interests. The producer must have a guarantee that his investment will generate returns. Producers must be given guarantee that their produce will be uptake; otherwise, there will not be any motivation for them.  We should produce for the market. In the past, the government had tried to do some work around the need to let the market drive agriculture. The problem of agriculture is intermittent policy summersault occasioned by regime change. After four years, one government will come and change the policy. Another one will come and reverse some things in the policy. This is not helping the continuity of development in the sector.

    The other issue is regional value chain development. For instance, the reason cassava production is successful in the Southwest part of the country is that there is a linkage between farmers and industry. There is market created by industrial up takers. There are industries producing ethanol, starch, garri and other products. They source cassava from farmers. We then have those incentives that encourage them to produce without fear of market. As the farmers benefit, so does the processor. The industries are able to source high-quality cassava roots for processing. There are also cassava growers in the North, but there is poor access to markets, depriving them of higher incomes. They don’t have a commensurate established cassava processing industry. Same situation is with the Southeast. The experience in the Southwest gives us a model to deploy to promote market driven agriculture. There are many industries in the Southwest to uptake cassava.

    How about land access?

    This is another factor helping farmers in the Southwest; it is easier to access land here than in the Southsouth or Southeast. But the best access to land in this country is in the North.  If the government is to stimulate growth in agriculture, we need a better analysis of opportunities and gaps. There is attraction for agriculture with many people going into the sector to grow food for security and income. It should not be a case where somebody will use his father’s land for agriculture because not every land can be used for agriculture.

    How can farmers benefit from economies of scale in agriculture?

    You must apply the principles of economies to operate, and build businesses around gaps identified within the system. For instance, while travelling to Ibadan recently, I saw 22 trailers on the road loaded with tomatoes. All the tomatoes must have come from Kaduna and Kano. Now imagine the quantity of tomatoes transported under the sun from such distances and also the level of wastage of the product by the time they get to the market; I estimate that it would be almost 30 per cent. In this circumstance, how much do you think the farmers will get for the produce?  Sadly, the buyers will offer peanuts, which will not lift them out of penury. That is why youths are not encouraged to come into agriculture. Tomato farmers  lose a significant portion of their income to wastage. We should have a system that takes cognisance of the challenges of production .There is no reason why farmers in the Southwest should transport raw cassava to Kano. Why not process cassava in Ibadan and move as starch to Kano?

    Are you canvassing regional specialisation?

    There is a need for us to have regional specialisation. The era where farmers cultivate every crop has passed. To grow maize and inter crop with others is good for the household. But at commercial level there is the need for specialisation. We need to do national mapping of state by state crop advantage. Through mapping we can find out what the best commercial opportunities are for farmers across the states. Benue has one of the largest cassava production volumes nationwide. Benue and many other states in the Northcentral produce cassava. But tell me where we have a single industry to uptake cassava in this region as production raw material? So everything the farmers produce goes into garri and fufu. As a result, the garri sector gets over bloated, prices go down, farmers are discouraged. What I expect the government to do is to make a better analysis of the agriculture terrains with a view to identifying catalysts of sustainable agriculture. If there was a proper analysis on ground it would make no sense for the government to give cassava planting materials to Benue State or maize seeds to farmers in Kaduna. They should be given what they actually need.

    What role should the government play in further diversifying the economy from oil?

    Creating an enabling environment for farm and agribusinesses to thrive and develop should be one of the key pre-occupations of government. The agriculture sector is ripe for government but the sector is not enjoying the enabling environment to do business which the government and research should provide. People are just doing things the way they like without proper business analysis of the opportunities and gaps to determine whether it is sustainable or not. Generally for me, Nigerian agriculture has a great potential for growth. For one reason or the other we are not there. The reason we are not there is known. I am a strong critic of overwhelming influence of the public sector on the agriculture sector that should be driven by the private sector. When we say private sector, I am not looking at the multinationals. I am not looking at multimil-lion investments. I am looking at small scale investors, small scale farmers who have the best varieties to plant and get the best of yields, who are incapacitated in terms of knowledge to know what to do and who have access to markets? Small scale farmers who in the next five years, know they must go from one acre to two acres to three acres.

    Would you say frankly that Nigeria’s agriculture is growing?

    If I say the Nigerian agriculture sector is not growing I can defend it without politics. If I say the sector is growing I will be playing around figures. We need to really define what growth is. How come in the past 20 years we are still discussing visions? If the Nigerian agricultural sector is not working, I believe it is the system that is hindering the people. If you ask me what is needed to make agriculture work, I will say the environment for farming business must improve. If we say improve, we mean address the needs and challenges of the agricultural sector while simultaneously leveraging real business opportunities, catalysing private sector investment, and addressing food demand. We must take a look at the value chain that controls every crop. We look what can enhance or negatively influence each value chain, how to get each value chain effectively to real, viable markets. We link all the players in the value chain effectively. There is no reason why the value chain must not function very well. What did we do in the 50s and 60s that Nigeria was the largest producer of groundnuts, sorghum, millets oil palm cocoa and the rest of them? What did we do then that we are not doing now? If you can analyse what we did then that we are not doing now, it will become clearer to use what we need to do next.

    Let us talk about agric policies?

    For me on the face value, we have had too many agriculture policies. Every regime, every government that comes in thinks that coming up with a new policy means impact. The goal of each policy is to achieve sustainable food production so that the nation is food secured so that agriculture becomes a channel for the country to earn income. If you are not achieving that you say you need a new policy? In the 60s, we were not talking about policies. We just knew that food was produced and we were making so much money. We were told that some universities were built with money generated from cocoa. Some big structures in the South-west were built with earning from agriculture and exports. Look at the volumes we produced then and the volumes produced now. It means we should have built more universities, many more roads, and many more skyscrapers’ and so on. Things have gone wrong. For me it is a total system failure. The focus of agricultural policy should be to increase productivity, provide employment and reduce poverty.

    What are the critical gaps in the food system and how can they  be addressed?

    Today’s agriculture is the result of what we put into the system. Do you expect to plant maize and harvest pineapple? The poor state of agriculture is the result of years of truncation of our policies. Years of truncation of our development paths in agriculture, from Operations Feed the Nation to all other policies that came along the line. If you look at the contents of all the policies you will see wonderful ideas. I don’t think anybody in Nigeria should be talking about polices. If you ask me, we should stop coming up with policies. Let us implement what we have in the present policy. While implementing it we will identify the gaps and address them in the follow up policies to sustain the achievements we have made from the previous polices.

    Are you suggesting the strengthening of the value chain?

    There are extensive opportunities for value chain interventions, through upgrading, deepening and expansion. We have to look at the value chain that controls every crop and link them effectively. If we link all the players effectively, there is no way the sector will not prosper. Market in agriculture is not about an open area which you bring your goods to sell. That is not what we mean by markets in modern terms. Today we see markets as represented by supply and demand. A market analysis should start from what that the consumers need. Thus will now work back to what the farmers should produce. Food security is not about eating what is available. It is about eating what your body requires.

    Do we need to reinvent the wheel?

    I don’t think so. What is the fastest approach in marketing produce in the world today? It is to collect and connect approach? That is why the online sector is growing. In the 60s to 70s, we had very strong marketing boards. Because we were still very rural then and you needed one person to keep you out because we didn’t need to transport them and the knowledge of markets was on the low side. So a few did the job of collecting from all farmers and getting them out. Today if you have a buyer in China, who can buy your goods, you can even collect from many farmers if possible. You become a marketer on your own with or without a marketing board. We have gone from marketing boards to cooperatives in Nigeria because marketing boards were centralised, so government encouraged the establishment of such groups of market women that can come together and seek for their own markets and so on. There are smaller marketing entities. You look at Kaduna and Bauchi, you will see the activities of aggregators such as Babban Gona group, seeking to reach as many smallholder farmers as rapidly as possible.

    What can be done to benefit maximally from the exportation of raw materials?

    The government has to negotiate with multinationals that are willing to come into the country in the interests of our economic development. That is a growth structure. We produce your raw materials here but your industry must be established here. I was in Benue State not too long ago; you need to see the wastage we have in the orange sector. How come till date, Benue and neighbouring states where we have the largest producers of orange that we don’t have a single processing industry? What will it cost to put a fruit processing industry in Benue and stop unnecessary movement of fruits elsewhere? We can get fruits from Benue but not allow such level of wastage. Until we begin to put together markets, we will still have a system failure.

    Nigeria still has a record of malnourishment, especially with children. Is the solution to have greater food security growing more food grains?

    I will argue that the reason our food systems is failing is because they have neglected the most fundamental purpose of agricultural systems – to nourish people. A lot of our people are suffering from hidden hunger – most will get enough calories, which have been the metric for food systems thus far, but not enough vitamins and minerals. We know too well the global costs of this hidden hunger. Through our programmes we are supporting farmers as we see  agriculture as the primary source of sound nutrition through the food people eat.

  • How Nigeria can achieve sustainable energy security

    Debo Fagbami is Chairman, Society of Petroleum Engineers (SPE), Nigerian Council and Xenergi Limited Chief Operating Officer, an oil and gas services firm. In this interview with select reporters, he speaks on the importance of securing efficient and sustainable energy security for Nigeria, such that will be green and environmentally friendly. He talks about other challenges in the energy sector and what SPE is doing to address them. EMEKA UGWUANYI was there.

    Africa‘s energy landscape, according to analysts, has a gloomy outlook. Given this scenario, do you see prospects and what are the likely challenges in achieving them?

    Africa has witnessed a changing energy landscape in recent years, which has seen the evolution of a new wave of oil and gas producers entering the stage. Ghana, Kenya, Tanzania, Uganda and even Somalia have recently become not just prospects for new oil discoveries, but have taken up positions as crude oil exporters. Added to these emerging oil markets is the fact that attention is beginning to shift from fossil fuel as the predominant energy source to renewables with some of the new entrants such as Ghana and Senegal already actively pursuing projects in wind, thermal and solar energy to complement their foray into fossil energy.

    The traditional power house producers, such as Nigeria, Angola, Congo, Equatorial Guinea and Gabon have also started looking outside the realms of fossil fuel and are now looking at renewable energy as the next frontier to boost the energy spectrum in sub-Saharan Africa. The requirement for reliable and sustainable energy in sub-Saharan Africa cannot be over-emphasised for a region that is often and truly considered to be in a near perpetual state of energy poverty. Industries need power to operate and run machinery; students need electricity to study at home after nightfall; hospitals need steady source of power to store life-saving drugs and medical supplies and the energy deficit leaves the locals, resorting to use of unclean energy sources such as firewood as cooking fuels leading to health complications and long-term respiratory conditions.

    What is your assessment of the energy sector this year?

    This year rides on the back of two years of relative stability and progress in the energy sector. This comes against the backdrop of positive reforms in the power sector since the return to civil rule in 1999. There was an increase in daily crude oil production in 2018 from 2017 levels and a corresponding increase in revenue across the same period. The passage into law of the PIGB (a sub-set of the PIB) though awaiting Presidential sign-off, is expected to create a more efficient and effective working environment within the industry with separation of roles to create a more commercially driven and business oriented national oil entity which would in turn promote accountability and transparency across the entire value chain. This will create the right environment for oil and gas operations and investments.

    Having said this, the delayed Presidential assent of the PIGB into law is raising doubts among investors, who may begin to look outside Nigeria and into the emerging markets in other parts of the continent. Another developmental driver in Nigeria’s energy sector is the flare gas regulation that was Gazetted into law under the National Flare Gas Commercialisation Programme (NGFCP). Under the NGFCP, the Federal Government is able to take ownership of all flare points free of cost and pull into a basket for interested parties to bid competitively. This regulation will eliminate gas flares and any identified flare points post implementation will be subject to severe tax penalties on the part of successful bidders. Projects that will evolve out of the NGFCP will also further increase the energy resource base of the country with attendant job creation across the entire value chain. This will  lead to acquisition of new skill set and/or skills conversion in certain cases. Overall, the energy sector this year is geared towards positive growth and development, buoyed by the impending kick off of the PIGB as well as other innovative regulations and reforms to stimulate economic activity.

    With increasing shift from conventional sources of power to renewable sources in recent years, how will this impact Africa’s power industry between the next 10 and 15 years?

    First, the global shift to renewable sources of energy is bound to have a ripple effect on Africa. The cumulative power generation of sub-Saharan Africa currently stands at 40 gigawatts (Gw) if you exclude South Africa. According to the International Energy Agency (IEA), to meet Africa’s energy needs will  require a yearly spending of close to $50billion. The implication of this is that African countries, particularly the new kids on the block, will need to invest a significant portion of their windfall from oil sales into power generation, transmission and distribution projects. Renewables will have a significant role to play in power generation, although it is important to recognise that though the developmental costs of renewable energy projects have dropped due to advancements in research and technology, the costs remain high in comparative terms to fossil fuels, particularly for African countries.

    Power projects are infamous for taking a long time to go from planning to completion on the continent. What do you think operators and investors could do to cope with these issues? What should governments do to mitigate these problems?

    The key to ensuring successful execution of power projects lies in formulating the right policy framework (fiscal and legal) to encourage investments and drive sustainable activity in that sector. The value chain must be set up in such a way as to deliver affordable and sustained power to the last mile consumers while allowing operators to recover their investment, thus creating a viable commercial ecosystem for all stakeholders, including the government. Governments of African countries need to create an enabling environment free of severe risks to investors so as to stimulate activity and grow the sector exponentially. The Nigerian model of having a bulk electricity purchaser provides a platform for operators to sell and deliver power directly to the grid, thus ensuring security of power offtake on a grand scale.

    How can greater environmental awareness and tighter regulations result in natural gas accounting for a greater proportion of the energy mix?

    If this question is referring to Nigeria, I will posit that regulation and/or legislation has not created the desired impact in developing gas as a key portion of the energy mix. The government’s drive for enforcing the development of gas has always been linked to the negative impact of gas flaring on the environment. And from this, we have had a succession of gas flare out directives and legislations that have had little or no impact in changing the status quo. I will say that the recent initiative from the  Minister of Petroleum Resources via the National Gas Flare-out and Commercialisation Programme (NGFCP) has been by far the most encouraging and stimulating programme to drive gas development projects on a sustainable economic basis. The NGFCP is linked to an economic driver which allows for the transparent commercial bidding for all unutilised gas flares by interested parties who are able to demonstrate prior experience and capability in developing gas projects either alone, in alliance or consortium basis.

    How can offshore technology help develop stable energy sector?

    Foreign know-how and technology are enablers toward developing and establishing a stable energy sector, but this has to be done in a way and manner to ensure that there is technology transfer and development of in-country and home-grown competences. Africans, particularly Nigerians, are very smart and capable of acquiring knowledge at a rapid pace and applying technology in creative and innovative ways. The bottom line is that foreign know-how and technology with active involvement of the local population is key to a stable energy sector.

    Energy insufficiency has remained a serious obstacle to economic and human development in Nigeria. Do you see any disconnect between policy and actual business activities?

    Policy drives socio-economic development and its sustainability is largely dependent on formulation of the right policies to allow for efficient business operations. Citizens of all nations and businesses require access to reliable energy at affordable prices on a sustainable basis with minimal risk and supply interruptions. From this standpoint, Nigeria remains in a situation of serious energy deficit and the key to unlocking the power potential of a country blessed with an abundance of the resources required to deliver on its power needs, is hinged on policies that would sufficiently drive investments and enforce transparency, accountability and sound management of its resource base.

    Do you think local content regulation is necessary? What is your definition of a fair and effective local content policy?

    First, I must draw a distinction between Nigerian content and local content to put things in proper perspectives. Nigerian content is the quantum of composite value added to or created in the economy through a targeted utilisation of human and material resources, while local content is adding and/or creating value in the economy through a deliberate use of entrepreneurship in a similar context. This distinction points to the fact that without indigenous players or entrepreneurs, there is no local content. Nigerian content requirements can be met by non-Nigerian entities, but this is not the case with local content. A fair and effective local content policy must thus take into cognisance the need to grow indigenous capacity, particularly in the provision of services to the oil and gas industry. There has been an active drive by local entrepreneurs to promote local content, with the Petroleum Technology Association of Nigeria (PETAN) taking an active lead in this regard. On its part, the government, through the Nigerian Content Monitoring and Development Board (NCDMB) must create a framework to integrate government policy with the technology needs of the industry, identify competent Nigerian entities with sufficient capacity to take the drivers seat, while ensuring effective monitoring and compliance by oil and gas operators to ensure that this process is not circumvented or undermined.

    How does SPE contribute to oil and gas and national development?

    In SPE, our mission is to collect, disseminate and exchange technical knowledge concerning the exploration, development and production of oil and gas resources and related technologies for public benefits and provide opportunities for our professionals to enhance their technical and professional competence and skills.

    For instance, this year’s theme for the annual Oloibiri Lecture and Energy Forum (OLEF) will centre on energy security and sustainable development in Nigeria and the way forward. This theme was essentially coined to stimulate discussions on how Nigeria’s energy sector can move forward along the part of sustainability, not just contributing to the energy mix, but on a sustainable basis. Through this year’s OLEF, SPE is stimulating discussions on how Nigeria’s energy sector can move forward along a path to sustainability. Through OLEF, SPE is providing the platform for the government, regulatory agencies, captains of industry, and practitioners at all levels to sit together to discuss and come up with ways Nigeria can develop energy, which has little or no carbon footprint, develop efficient systems that require lesser energy to run and how we can use the oil and gas resources to support the nation’s economic growth for the benefit of all stakeholders. We believe that when Nigeria’s energy mix is developed and efficiently utilised, we will have energy security, green jobs, greater national wealth for the people and foster sustainable growth and development in Nigeria.

    Can you give an overview of SPE’s presence in Nigeria?

    SPE started in Nigeria as the Lagos Section in 1973 and since then it has evolved into five sections or geographic clusters – Abuja, Benin, Lagos, Port Harcourt and Warri. These five sections cover 34 Student Chapters, which include mainly universities and polytechnics with Petroleum Engineering as part of their curriculum. The member count in Nigeria stands in excess of 11,000 and students with membership open to all professionals engaged in energy resources development and production. Our activities in Nigeria include our traditional flagship programmes for students, young professionals and other professionals, development programmes like short courses, monthly technical meetings and distinguished lecture series.

    Finally, there are a variety of young member development programmes targeted at universities, secondary schools and primary school pupils to aid their developmental flair for science, technology, engineering and mathematics (STEM) subjects.

    What is SPE Nigeria Council’s strategy for national goals competence?

    SPE Nigeria Council’s strategy aligns with the strategic plan of SPE International (SPEi), which the president of SPEi has outlined in his focus area for the year. This involves redirecting the focus of the oil industry to ensure sustainable, affordable and cleaner hydrocarbon-based energy sources to support global economy, social development and environmental sustainability. In addition to this, the SPE strategic plan lays emphasis on promoting advances in technology and knowledge collection and dissemination to our members. We also strive to bridge the gap between industry and academia by aiding the introduction of relevant curricula to reflect advancements in technology into academic programmes. The resultant effect of the foregoing is a commitment on the part of SPE to ensure that our strategic vision is geared towards activities that impact positively on our aspirations as a nation.

    How have your relations with the industry evolved generally?

    SPENC remains actively engaged with all facets of the industry and this can be readily seen from the level of interests our various programmes generate. Attendance at the Nigeria Annual International Conference & Exhibition (NAICE) has seen a steady increase over the past decade, notwithstanding the global oil price deep in 2014 to 2016. Our partnership with the industry spans right across the National Oil Company, NNPC, the IOCs, Independent Operators, Marginal Field Operators, Regulatory bodies, Multi-National and Indigenous Oil Service Companies, Academia as well as Finance Institutions with bias for Energy projects. The SPE brand has come to stay in Nigeria and it is almost inconceivable to imagine an industry event in Nigeria without a touch of SPE attached to it.

    How long have you been in the industry?

    I have been in oil and gas industry for  22+ years and have had varied oil and gas industry experience, cutting across upstream and mid-stream ends of the energy value chain and in the process, filling various roles from field engineer to executive/corporate management and business development. I have had extensive experience in cased hole rig and non-rig work-over operations, permanent down-hole gauge installation, wireless monitoring, production operations, early production facilities, gas conversion plants and system integration. I have worked extensively in Shell, Chevron, Agip and Texaco locations and have specialties in natural gas business, change management, project management and asvalue-challenge facilitator.

  • ‘Govt needs to help insurance grow’

    The general elections have just been concluded and businesses have commenced in full gear. To Anchor Insurance Limited Managing Director Augustine Osegha Ebose, the Federal Government needs to have a deliberate plan to improve on its budget timing to help businesses, including insurance, grow. He speaks with Omobola Tolu-Kusimo.

    What are the issues affecting the growth of the insurance sector?

    I would say the industry in general has not been up and doing like the banking sector and other sectors of the economy. I think there is need for us to do more. The umbrella body of the companies, Nigeria Insurers Association (NIA) needs to do more. I believe in the personality of the new chairman who, through his innovativeness, has brought some of his experiences to bear. For any insurance company to succeed, they must be backed up by legislation. If there is no enforcement from the government, insurance business will not grow. Let us take the building policy for example. People take facilities and they don’t have insurance. If people are asked to have insurance before they can do anything in the country, everybody will have an insurance policy.

    The reason people have number plate today is because it is compulsory. The industry leadership needs to also impress it on the government that it needs to wake up and help the industry, which will in turn go a long way to help the government itself. The government does not have business to go for repair if its properties get burnt. If these properties are insured, insurance companies will come and fix it. There will be no need to budget for infrastructural repair if there are infrastructural policies in place. Most of the MDAs of government don’t have insurance and when they do, the pricing is low.

    The regulatory body, the National Insurance Commission (NAICOM) needs to do more. The commission has helped us by one step forward with the enforcement of no premium, no cover policy. But like I said, they need to do more. The NIA needs to also have collaborations with security agencies. For example, why will cars in Nigeria not have third party policies? There is need for NIA to form a formidable team and have this negotiation with the government. If possible, call for a seminar or a workshop that will involve so many policy makers in the country to move this sector forward.

    Are there other areas that need to be worked on?

    Yes. Insurance operators need to do more campaign and awareness on the importance of insurance. The issue of micro insurance should be vigorously pursued. Not everybody has the opportunity of having much to do with insurance. If you look at the economy, you will find out that the microcosm of an economy also has the microcosm population. It is not everybody that earns huge salary. Some Nigerians will tell you that they have not eaten and you are asking them to buy insurance. These are some of the things that are not helping us, but if we create awareness and let them know that it is for their benefit, it will go a long way. In other parts of the world, insurance takes care of banks, but here the reverse is the case. This then means that there is a fundamental problem in the way we manage our campaign. The government needs to also spend more on enlightenment.

    Some stakeholders have said the way forward for the sector is for operators to allow merger and acquisition among themselves to become a formidable force in the financial sub-sector. Do you agree?

    I will not totally agree with those who say the only way insurance companies can move forward is all by acquisition. In other parts of the world, insurance companies are not the same. First of all, if a merger and acquisition is carried out now and investors invest in the industry, what will be the return? Will someone bring in N2 billion dollars with the current exchange rate and break even with the naira policy payment? Secondly, what will be the expansion time and at what time can you wait for your investment to materialise before you know that the company will not go under. Thirdly, for the investors in Nigeria, do you know what they are going through having invested huge amount of money in the industry? What has been their return? There are many foreign companies that have come to Nigeria. How many of them have survived? The insurance industry cannot be in abeyance with the economy. It is a microcosm of the economy so it cannot be said that because the industry investment is not robust enough that is why we are not growing. The investors’ confidence will only be boosted if the numbers are there. I went for a conference in Houston and we were told that after insurance, the next thing is oil and gas. I asked a question that how can insurance be bigger than oil and gas? They said the premium income for Houston economy alone is about $320 billion per annum. Then you ask yourself, what infrastructure can their insurance companies not buy and if I am an agent in Houston, what will be my capacity? And so, how many people will want to invest in the Nigerian economy and make returns and when will he make the return? Why is the government not encouraging insurance companies by allowing them to access their funds from banks at a cheaper rate and improve themselves? There was a natural disaster that happened in America where there was a claim in A&G. The government paid off on the company’s behalf. Can that happen in Nigeria? So, we need to make deliberate policy statements and policies that are enduring to uplift the insurance industry.

    Where I will agree with you on this issue of merger and acquisition is in the area of reinsurance portfolio retention, which is down. But we cannot grow it by bringing foreigners and collapse some other local companies. Mind you, the industry today has employed many Nigerians and if they collapse, where will they be? So, there are implications for all these. We just need to look at it holistically. The thought by some that many of us do not want to step down from being managing directors and so, we are not interested in merger and acquisition is not true. It is not everybody that will lose being the managing director and nobody will be forever. You can only be managing director for a period of time. My own take is that if we must recapitalise, it has to be gradual.

    In 1994, before the new Act came, the position we were then is still the same position we are now because of the currency devaluation. The Commissioner for Insurance Mohammed Kari said we need to go back to recapitalisation to make the industry vibrant and, in fairness to him, I agree. But I think that there must be a process.

    NAICOM has introduced the new accounting standard the International Financial Reporting Standard (IFRS). Do you think the industry is ready and how prepared is Anchor?

    Anchor is very prepared and it has been discussed by the management. We are already putting it in place for implementation. We are not against regulation because we like to play by the rules. I think the new accounting standard will improve the industry. It will make us to adjust so that even if we are not doing some things right, we can begin to do them right. I remember when IFRS 4 policy that we were using before the new IFRS 9 came on board. We were complaining, but today we are used to it. I think we are all working to comply with the IFRS 9. Life itself is not stereotype. We should always think of development if we want to grow. Growth in every way and not just in premium income. I know that there are certain things that they want to check. Like the banking check system, which has been helpful. I believe the reason they are coming now is to improve the loss of insurance in the sector.

    What is your take on rate cutting and unhealthy competition?

    Marketing is an art of war. If you are coming into a business in an industry that is regulated, there are many things that can be done. NAICOM can regulate and say this is how it should be. But if I have to take a business for 10 per cent and I make losses, nobody is going to advise me to do a reversal. So, for those who want to do them, good luck to them. But for me, appropriate pricing is very necessary for our growth in the industry. However, my concern is not the competition of rate cutting, but more of the risk appetite of the industry in Nigeria. Like we talked about recapitalisation to improve a set objective and awareness creation. If this is done, there is no company in Nigeria that can take the risk of Nigerians. We are underinsured and these are some of the things that we are going through. Have you ever seen a competition that is fair, even in football?

    In the insurance industry, nobody gives you power because the world is so wide for everybody. I don’t believe in the category of managing directors who say there is one insurance company that wants to oppress you from growing. Nobody has the right to say that you should not grow. If they are making policies for you to fall, make policies that will make you grow. No two companies are the same. If as a managing director I come here and I have deliberate plan to grow, can another perceived big company come and tell me not to grow? No. So, my colleagues should look more at ways of improving themselves than talking about those who are cutting rate. If I cut rate and don’t pay claims, the clients will not come back to me next time. At Anchor, we insist that third party motor insurance is N5000 as stipulated by government, but how many people have complied? So like I said, marketing is an art of war.

    Nigeria just concluded its general elections and businesses have commenced in full gear. What are the macro-economic conditions that will drive Foreign Direct Investment (FDI) and economic growth?

    If government policy remains the same it will be a familiar terrain. But I think the government needs to look at deliberate plan to improve on its budget timing. If budgets are not released on time, the economy suffers. It does not lead to policy direction, but if policies are released on time, it will help businesses a lot. Even after the election, there is the fear that some ministers will leave and so many things will change. These are some of the things that investors will be looking at. If the economy does not move, insurance policies will not move as well. We look forward to the government coming up with deliberate plan to improve the micro-economic policies such as employment and not increasing taxes.

    But the Federal Government is already mulling the idea of increasing tax to fund minimum wage. Is it a bad idea?

    For me, I will not say increase in tax is not good, but increasing it at this time will be counter-productive. Besides, it has its advantages and disadvantages. The more people you employ; the more group life policies will be underwritten and so there is a multiplier effect concept. But having to increase tax now would be counter-productive for me as a person and not as a company. Nigerians as it is today have a lot of tax that they are paying. The government can look for other ways. It can look at increasing tax on goods like tobacco, wine and other things that are not compulsory, but habits. If you want to smoke, drink, or use make-up, you should pay heavily for it. But things that have to do with life and deliberate life policies should not be increased. If the government increases VAT generally on all services and goods, it will be killing investors’ spirit. People will not invest when at the end of the day they will not have risk returns. So, too much taxes are not good for the economy.

    Should the government embrace insurance more if we go by the dictum that ‘charity begins at home’?

    Of course, there should be a deliberate policy for governments at all levels to insure all asset of governments. What stops the government from having a broking firm that will bring returns for it? Why will government spend so much on recurrent expenditure because there is fire outbreak in a building? Why will government not have content policy for its software and copyright and other items? Why will government not insure the lives of its workers? I think there should be a deliberate policy by the government that all assets of government should be insured. Every member of staff in Anchor is insured and it should be so for every entity.

    You were appointed Anchor’s managing director in February, 2018. Can you let us into what you have done to drive the company’s growth?

    Like you rightly said, I was appointed by our Board of Directors in February, 2018 and got confirmed by NAICOM in March, 2018. For any new MD/CEO, you will want to see how changes can be made in the company. You want to see where the company was, where you want to be and where you want to go. One thing I identified was to look at the company itself and the human capital within the system to see where we need strength, where the weakness was, where our strength was and where opportunity would also be.

    What we did in my first one hundred days in office was to look at these things and identify them. First, we identified that we needed to have a robust ICT infrastructure to help us grow our online retail business like the third-party policy. We looked at our underwriting processes because it’s a major issue in the industry. We also visited our claims and look at those that were not paid and why they were not paid. We paid all outstanding claims and negotiated where necessary, paid and moved on with the business. We moved on and grew premium income in three months by 82 per cent. I am not sure there is any company that has accomplished such growth in a short space of time.

    Our policy holder’s portfolio has increased, we now have a branch network in Gombe to look at the deep north of the country because we are already in Kaduna and other parts of the country. We have an ICT system for all our branches to have daily interactions within the branches. We also look at infrastructure; we had to move away from our old office to a business district area like Ahmed Onibudo in Victoria Island. I believe that environment is key to growth and that necessitated our relocation. Our premium income and staff strength have grown tremendously. We have effected other changes like product innovation and I can boldly say that things are looking up. This and many more are the things we have been able to accomplish in one year of taking over the baton.

    What fundamental strategy as a CEO do you think will make Anchor competitive among other competitors?

    One thing I discovered when I joined the company as executive director is that the company was not well known. That was why we had to embark on awareness creation and came up with a lot of TV commercials. If you want to do business with someone, you have to know him or her and so it is for a company. If you don’t know a system you cannot deal with it. The staff attitudes towards business negotiations were also looked into, among many other strategies that we deployed.

    How strong is Anchor in terms of revenue generation and claims profile?

    Strong is relative except you are doing a comparision. But if Anchor were to compete with itself, I will tell you that we have made a giant stride in terms of where we were and where we are now. The premium income as at 2017 and 2018 was a paltry N1.9 billion to N2.1. But in the last one year, we did N3.4 billion and in any mathematics indices, the growth is geometric. We were able to change our indices because of the human capacity development and some of the innovations we developed. And again as regards the claim, we have strengthened our reinsurance. I found out that our reinsurance was not so deep in terms of part of the reinsurance processes to cover our liability in area of claim. We have also paid off all our reinsurance payments, so in case of eventualities we will not be left bare. One thing we have also done is to look at our surveys and probe into claims made by our clients. This is because fraudulent claims come in various ways. We also devised a strategy to put our scripting in terms of our payout and it has paid off. We now have robust pre loss survey and post surveys attitude while we increased our security appetite in terms of physical evaluation of some of these things, not just hearsay. And we have put that across the country to make sure that we tell our loss adjusters our way forward. With all of these, our claims level for this year dropped considerably. We are very serious with our claims responses, except when there are few arguments. In claims processes, it is neither here nor there because the onus is on you to prove that you have a genuine claim. For example, somebody had an issue with us with our branch in Ibadan. We found out that the car that we insured was not the car that got burnt. So, such a person cannot claim to have a valid case. But we will pay valid claims immediately. If we don’t pay claims, then we have no business to be in insurance industry. We sell services to make clients happy and the fact is that if you make someone happy, he or she will never forget you.

    Are you investing in a portfolio of technology investments that are aligned with future opportunities?

    We are going virtual/iCloud in the next two weeks. The new server we ordered will be here very soon. We have also engaged a foreign organisation in terms of our Customer Relationship Management (CRM). This will revolutionise our office. Once we go on iCloud, some of the things we do will become very robust and speedy.

    What stands your company out?

    We have many policies that meet Nigerians’ daily need. We are the first company to enlist loss of employment policy. We realised that people lose their jobs and may not be able to meet their daily needs again. We designed the product to help quell the pains within the period that they are out of job. As it is now, we just signed an agreement with a bank to insure all their staff against the loss of employment and to also be part of their investment. If you take a soft loan from the bank to buy a car for instance, and in the process you lose your job, we will pay one percent of the loan as a salary, which, of course, is very good for the staff. We will pay the one per cent to the bank on your behalf and your life is at peace. More so, we are also coming up with some deliberate policies that will help the lives of Nigerians like the micro insurance and agric policies. As we speak, we are already in partnership with three major agric organisations and we will be having meetings soon to look at areas where we can help. We want to improve farmers in the areas of ICT. We want to be able to access claims made by farmers by sending a drone to assess the place to see if what the person is saying is true. We don’t necessarily have to be there. So, we are going virtual.

    Where do you see the industry in the next five years?

    For Anchor, the next five years will be glorious. I also expect that with the evolution of new ideas, technology and other new trends, insurance companies will thrive. In the next five years, I see insurance companies growing to at least 50 per cent of what we are doing at the moment, based on the new trends and awareness that are coming up. The next five years are looking very bright.

  • ‘We must invest more in infrastructure, services’

    Mr. Adediran Adetunji, a fellow of the Nigeria Institution of Estate Surveyors & Valuers, is the Principal Partner of Diran Adetunji & Associates, an Abuja-based estate surveying firm. He speaks on the roles of surveyors in the growth of the economy, quackery, building collapse and other challenges facing the construction sector and the way forward. OKWY IROEGBU-CHIKEZIE met him.

    Who is an estate surveyor and valuer?

    To be known and addressed as an estate surveyor and valuer, you must have been trained and certified, qualified through a process called election into the professional membership of the NIESV, registered with the regulatory body,  the Estate Surveyors and Valuers Registration Board of Nigeria (ESVRBON) to practise estate surveying and valuation in Nigeria. ESVARBON is the only body with the statutory power to register and empower people to practise the profession of Estate Surveying and Valuation in Nigeria. The empowerment primarily comes through the official stamp and seal issued by ESVARBON, with his registration number inscribed on it, because it is not transferable, and with which he validates all Valuation reports that emanate from him, or which he undertakes. Without this, his official report of valuations is of no effect. An estate surveyor and valuer is daily engaged in the following endeavours among several others; valuation of all assets, project management, estate agency and brokerage, property management, land administration and real estate consultancy.

    How does an estate surveyor impact the economy?

    First and foremost, let us look at the crucial issue of employment.  Estate surveyors and valuers are employers of labour, and as employers of labour, we complement government’s efforts, thereby assisting to reduce unemployment. We have over 1,000 practising firms and each of the firms trains and employs personnel, both professional and administrative. By doing this, we have made significant contributions to the nation’s economy.

    The roles of estate surveyors and valuers in social and economic development of Nigeria cannot be overemphasised. Their roles centre mainly on land and all structures on the land, making both the rural and urban dwellers to require our services, particularly in the areas of management and development of estates, determination of values of all descriptions on properties, carrying out feasibility studies and the appraisals of investments’ proposal and schemes affecting land and buildings. We offer professional advice to clients on real estate matters in other not to be misguided or misled in buying, selling and leasing of land and landed properties.

    This is one of the most difficult tasks estate surveyors and valuers handle, but it has helped the clients to take wise and appropriate decisions. We advise clients on sales and purchase of land and landed properties bought or sold, help clients to investigate title documents of the land and landed properties to be purchased, help clients advertise their land and landed properties to prospective buyers and act in the best interest of clients in land matters. We play tremendous roles in revitalising the national economy and are actively involved in stimulating and sustaining the economic growth of the nation.

    Estate surveyors and valuers have played visible roles in internally generated revenue and economic development by providing valuation database for the assessment and collection of property taxes through property rating at the local government level and property registration and  administration by the state government. As land administrators and land economists, estate surveyors and valuers have always played vital roles in the formulation of development master plan at all levels, in addition to identification of urban and rural issues and concerns in carrying out infrastructural development schemes in the country. In a nutshell, we act as land economists for infrastructural development schemes. The list is endless.

    Would you say that members of your professional body are equipped to provide best real estate services in line with modern trends?

    Training is a lifelong process, what sociologists call socialisation, a process whereby you start learning from birth and stop at death.  The way it goes with our profession is this; after obtaining a degree in Estate Management or related courses from the tertiary institution, you register with The NIESV as a probationer or graduate member, you are required to go through a mandatory two year period of tutelage in an estate surveying and valuation firm, under the supervision of an estate surveyor and valuer of a minimum of five years professional qualification to put you through practical trainings in the core areas of the profession. Then you must write and pass your professional qualifying examinations, provide evidence of two years practical training in your Log Book and Diary, interviewed for professional competence by a team of senior members, and if you pass the interview, you are admitted into the professional membership of the institution.

    Thereafter, you go for another round of professional competence interview with the ESVRBON, who gives you the stamp and seal to practise if it is satisfied with your professional competence. You can see that it is a detailed and rigorous process, spanning years. One cannot come out of this process successfully and remain lacking in the knowledge of the profession. Meanwhile, his training continues through attendance of Mandatory Professional Development programmes put in place to further equip him with modern trends in the practice of the profession. He is also required to join at least three faculties in the Institution, and encouraged to join one or two international real estate bodies to which our institution is affiliated. So, our members are sufficiently trained to provide best real estate services.

    Quackery is still a challenge in your profession. Why do you think people patronise quacks?

    There is no profession that is free of quackery. There are quacks in the medical profession; does it mean people don’t have confidence in the doctors, to the extent of playing risks with their lives in the hands of untrained people? A few months ago, a man was arrested within the premises of the Lagos High Court. He claimed to be a lawyer, and had been representing clients in the court, but he was actually a quack. So, quackery is not peculiar to our profession, and it has nothing to do with the competence or otherwise of our members. I think it is largely due to ignorance or lack of awareness. Even the Holy Bible says my people perish due to lack of knowledge. Ignorance of who is a professional Estate Surveyor and Valuer, ignorance of the risks involved in engaging a non professional, and putting several millions of naira in his custody. Many unsuspecting and innocent people have cried in the hands of quacks. So, quackery has nothing to do with competence of our members. Be that as it may, we are not resting on our oars in the fight against quackery. The law is there, and as many are found to have crossed the line would be handled legally. Then we have stepped up our advocacy drive to create awareness for our profession, professional services, and the dangers in dealing with non professionals for real estate services. We are seeing and getting positive results, and kudos must be given to the current administration in our institution for that.

    Is there any other challenge confronting your professional body?

    One challenge confronting our profession which I will keep talking about is the absence of data. We require data for effective professional services. We are in a technology-driven world. Data is essential, data is critical. As a professional estate surveyor and valuer, it is not good enough to give clients advice that is not methodically based- an advice that you cannot defend. Projections hinge on veritable information, which is data. In the absence of data, verification becomes a problem. I have heard of 17 million housing deficit for instance, but my question is; how did we arrive at the figure? We need to take the important issue of data generation, maintenance and storage with all level of seriousness. In advanced countries, when you need information on a property in a place like Maitama, all you need to do is to go to your device and goggle the rate of different types of property; it will give you the information with all required details. To be able to serve our clients better, we need data. To be able to increase the integrity and proficiency of our discipline, we need data. Without data, we will continue to operate within the rudimentary practice of Estate Surveying and Valuation whereby you give a client an advice or information without basis, and there will be no transparency. Estate Surveying and Valuation profession requires you to carry out some bits of analyses, bits of economics, bits of science, and markets analysis in order to come out with something credible, defendable and something that will assist the profession. We just have to work on this requirement in the interest of the profession.

    How relevant was “A city that works” as the theme of the just- concluded annual conference of NIESV to the Nigerian society?

    As a result of rapid urbanisation, in the last two centuries, about half of the entire world population now lives in cities, and the visible fallout of this could be seen in numerous commuters traveling towards city centres for employment, entertainment, and edification. Structures, institutions, infrastructures are developed overtime, progressively and continuously in the developed countries of Europe and America to meet the demands of the ever increasing population of the cities and the urban settlements. Some of us have travelled to cities across the world, and we have seen how their cities work, we have seen the cohesion in their structures, institutions and systems. But in Nigeria, while the population of the cities is rapidly increasing, there has been no corresponding increase in the provision of facilities which would support the growth and increase, particularly in the very important and crucial aspects of housing, infrastructures, tourism, agriculture and agro allied industries and transportation. You should not be surprised that we are lagging behind in growth, development, industrialisation and every aspect of life, but increasing in crime, social malaises, poverty, ignorance and diseases. The situation must be arrested if we really want to meet up with the most prosperous economies in the world. We must begin to invest more in infrastructure, transportation, communication, technology, education, social services and utilities. Government alone cannot shoulder the responsibilities, no single government agency or any one organisation can create meaningful change working alone. Change in our society requires residents, philanthropy, the private sector and government working together to address pressing problems.

    There must be collaboration between the government, private sector and with the professionals, particularly the Estate Surveyors and Valuers. This is how our cities can work; this is what bothers us as professionals and this is what we re-emphasised to the government. The special guest of honour, Mr. Babatunde Raji Fashola, the Federal Minister of Power, Works and Housing spoke on the importance of data, law and order, and other key issues without which a city cannot work. Discussions on what a model city should be and how it should work, taken into consideration our peculiarities was incisive, instructive, educating and insightful. To drive home our point, aims and objectives, we invited dignitaries, speakers and discussants from government and the private sector to the conference, and not only that, a communiqué will be forwarded to the government.

    How would you compare real estate practising firms in Nigeria with foreign ones?

    The world is fast changing and changing very rapidly. The 21st century would definitely be driven largely by technological changes and artificial intelligence. In the not too distant future, electric cars will become prominent in Europe, America and even Asia. Fuel would no longer be required to power cars. You must also have heard of the unmanned aerial vehicles, otherwise known as drones which have been used commercially now since the early 1980s. The point I am trying to make is that practices in the developed countries, are driven and enabled by technology, unlike in Africa and Nigeria, where we are still largely manual in our ways of conducting business. Failure to embrace partnerships and mega practices by professionals, not only in our profession, is also matter of concern to many of us. In the developed world, businesses thrive more because they embrace partnerships; they collaborate and form big conglomerates. And their businesses endure, even long after the demise of the founders. As a professional body, it is important for us to take a critical look at the situation and see where we must start aligning to changes in order to improve on our services and mode of operation. Ground breaking discoveries are coming out on a daily basis with a lot of challenges for us, particularly in this part of the world. We must strategise and fashion out ways of aligning our nation and our profession alongside, if we want to remain relevant.

    Where do you see Estate Surveying and Valuation practice in the country in another 50 years?

    I see a standardised, scientific and technology driven profession, where the practitioners are thoroughly professionals both in training and provision of quality services.

  • ‘Digital finance key to achieving financial inclusion’

    Mrs Ololade Adesola is the Country Representative of the United Kingdom based The Microfinance Association (MA), a global professional body that caters to the needs of microfinance operators. The MA is also dedicated to the development and promotion of the microfinance sector. She speaks to DANIEL ESSIET on digital finance, financial inclusion and poverty alleviation.

    Do you agree that over the last decade, Africa has witnessed more poverty than any other part of the world?

    Sadly, it is true. Economic growth has not affected the ordinary African. Population is growing faster than GDP in many countries so the effect of economic growth is wiped out. Besides, issues like healthcare, basic education and food sufficiency, which are the main drivers of poverty reduction, have sadly been neglected by many national and sub-national governments.

    Do you think the best way to solve problems of poverty in Africa is by throwing money at it by financial institutions?

    I am not sure it is the financial institutions that make this assertion. More like African governments and some international NGOs. My interactions have shown that if people are not taught how to correctly to utilise the funds given to them, they mismanage the monies and soon return to their initial levels. Financial literacy is the foundation upon which grants disbursements should be built.

    Large infrastructure projects are considered by experts as prerequisite for poverty reduction. How correct is this?

    Certainly. Firstly, during construction, the sites become sources of income for various types of micro-entrepreneurs (e.g. food vendors) and casual workers. Upon completion, they enhance the ease of doing business, which in turn empowers existing businesses to expand, and new ones to spring up; leading to additional employment opportunities for the poor.

    Would you say the economy has fared well compared to last year – in terms of capital importation, whether as equity investment and portfolio investment?

    We are grateful that the economy was able to grow in 2018, but we all know that a lot still needs to be done to bring it to where it ought to be among its peers

     As a key player and stakeholder in the economy, what are you doing to raise investors’confidence and what, in your opinion, should be done to attract investors?

    What individual business people can do is advocacy within our networks. Another thing is to demonstrate high standards of professionalism, integrity and excellence so as to erode the myths about Nigeria and Nigerians.

    The governments, both at national and sub-national levels, need to ensure effective and efficient implementations of policies. We all know that we are never short of good policies, but somehow seem to trip when it comes to implementation and obtaining good results. Governments at all levels need to enhance the productivity of their implementation machinery

    How significant would you say  the World Bank report on Ease  Doing Business Index is in terms of how investors view the country?

    For newcomers, it is very important because they have no experience of anything else. Investors, who are already in Nigeria, may be able to overlook such reports because they have learnt to adapt to the environment but new investors consider such reports as one of their major due diligence tools

    In your view, what are the main drivers of economic growth in Nigeria?

    Sadly, the main driver continues to be the improved price of crude oil. It seems nothing has changed in that regard. Other less important drivers are the CBN interventions that make cheap funds available to MSMEs, stable value of the Naira, availability of Foreign Exchange and political spending.

    How does government’s huge infrastructure projects and budget commitments fit into the growth scenario?

    These are laudable programmes, but since they would be mostly funded by more borrowing, the government must ensure that the finances are well structured so that their repayments do not stifle economic growth in future years. In addition, the projects must be brought to full completion within the stipulated periods so that the economy can begin to harness the growth ripple effects that such projects were designed to deliver.

    How would you characterise the nation’s banking industry? Do you expect the sector to undergo any consolidation in the future?

    The banking sector seems to have recovered from the recent issues that affected it as a result of the last currency devaluation. Consolidation is a decision of individual management as we do not expect the CBN to induce any consolidation. However, many banks need additional capital to continue to play relevant roles in an economy of this size. They would raise the capital via equity, debt or a combination of both.

    Microfinance has been around  since the 70s. But often, it is not well understood. Could you explain what it means and how it has evolved over the years?

    Microfinance has been around for centuries, but the formally structured version was introduced in Bangladesh in 1976. Microfinance started as providing micro-loans to the commercially active poor. But it has since evolved to the provision of different types of financial services; hence the evolution of micro-insurance, micro-pension etc. Microfinance is the major tool for the achievement of financial inclusion. Financial inclusion, though not one of the SDGs, is a catalyst for the achievement of about eight of the 17 SDGs. So, financial inclusion and microfinance services are extremely important.

    How big is the market now and which parts of the market are evolving the faster?

    According to the latest EFINA Financial Inclusion Report, Nigeria has 36.8million entrepreneurs and only two per cent of Nigerians have access to credit. So, we can see that the size of the market is enormous. Financial inclusion is improving, but 79 per cent of the financially excluded live in rural areas. The growth seems to be side-stepping our rural communities and measures must be taken to change this narrative if we want to meet the 2030 SDGs.

    How would you characterise the last 12 months in terms of how the microfinance sector has developed?

    The CBN has introduced new minimum capital requirements, so those who would have been categorised as doing well now have the bar raised and would need to strategise and synergise with other industry players to meet the CBN requirements. The major risk in the industry at large had always been capital inadequacy. Hopefully, the MFBs that emerge from the recapitalisation process would be much better empowered to deliver microfinance.

    However, we know that in Nigeria we have the MFBs and the MFIs. The MFIs are not controlled by the CBN because they are not supposed to be deposit-taking institutions. The MFIs have no recapitalisation requirements. This uneven playing field continues to be a major source of concern to industry watchers.

    How developed is the microfinance sector in Nigeria, and what unique offerings do you believe they can give borrowers?

    In my view, the microfinance industry in Nigeria is not yet mature. Corporate governance is lacking in many MFBs and MFis. There are some that are professionally run and we can be proud of, but those are a tiny minority.

    How are the political and regulatory disruptions impacting the market?

    Microfinance is one of the most highly favoured and protected sectors in Nigeria. Every government introduces different schemes to provide funding to the commercially active poor. Our problem, like with every other sector, has been in the implementation of these schemes so that they can deliver the desired results.

    With the number of microfinance banks in the country, do you think there is enough to serve the whole country or there is a need for more?

    At the last count, we have about 900 MFBs. We have three different categories National MFB with a licence to operate nationally. There are about 20 of such. State MFBs with licences to operate within a state; there are about 100 of such, and unit MFBs, which can only operate in one location. The 18 national MFBs control almost half of the microfinance business. Meanwhile the total assets of all the 900 MFBs is less than the total assets of a commercial bank like Zenith Bank.

    From this, we see that we do not need more MFBs what we need are stronger MFBs. The MFIs on the other hand are also playing their part. They control about one third of the micro-credit business, but that is still a far cry from what our 36.8m entrepreneurs need.

    What is the role of technology in developing the microfinance banks and making their services more acceptable?

    Technology is helping MFBs manage their banks better through the use of bespoke software that have been created to meet their peculiar needs. Financial planning, forecasting and reporting, performance management, delinquency management and many more are now better managed.

    What are the trends and  technologies driving the sector?

    In Nigeria, the National Association for Microfinance Banks( NAMB) and the Association for Non-Bank Microfinance Institutions of Nigeria have each set up digital platforms that their members can upload their information on and carry on their financial services. NAMB has NAMB-UIT and ANMFIN has ANMFIN Cloud Express.

    Another trend in the industry is professionalisation. Microfinance is fast becoming a stand-alone subsector in the financial sector and the practitioners are now obtaining professional certification just like insurance, accounting, banking and other financial subsectors. The Chartered Institute of Bankers have a certification programme, while The UK Microfinance Association has its own.

    What impact has financial technology had on microfinance?

    FINTECH is the future of Banking; whether commercial banking or microfinance. A digitalised financial product enables the roll-out of on a large scale, at lower costs per unit. It also simplifies monitoring and control. For the customers, it delivers convenience, accessibility and immediacy. M-Pesa and M-Shwari in Kenya are excellent examples of the undeniable successes that digital finance can deliver.

    What emerging technologies do you think will help enable unbanked consumers to use digital financial services (DFS)?

    The main thing is for our Mobile Network Operators (MNOs) to provide the robust and reliable infrastructure on which DFS would run. Nationwide roll-outs must be achieved. Down times must be eliminated.  Once these are in place FINTECH companies would collaborate with banks to ensure that all types of products for our unbanked in all the various categories of financial services.

    Micro insurance is expected to grow in Africa, what are the contributing factors to this and why should customers consider it?

    The growth of micro-insurance would be driven by customers’ demand. There is a need for index-based insurance for smallholder farmers. Poor people need access to good medical services and this can only be provided by effective health insurance products. Other forms of micro-insurance are also desperately required by micro-entrepreneurs.

    What is the nexus between microfinance and sustainable development?

    Like I said earlier, microfinance is the major tool for financial inclusion, while financial inclusion is the facilitator of sustainable human and economic development. SDGs like eradicating poverty, achieving food security, promoting health, promoting employment, and empowering woman would only be achieved through the provision of various microfinance products like micro-credits, micro-insurance, mocro-pension etc.

    How can today’s digital revolution help reach the 2030 Sustainable Development Goals (SDGs)?

    Digitalisation is an enabler. Development initiatives and processes can be digitalised so that they can reach a wider population quicker and cheaper.

    What are the opportunities for trade finance in the country?

    Trade finance still continues to be elusive to many entrepreneurs. Those who can access it are traders because the tenors are very short; usually 90 days or less

    What are the risk factors associated with international trade finance and what is the best way to counter them?

    The major risks have always been product quality. How to ascertain that products imported and exported meet the expected standards. If goods do not meet required minimum standards, payment may not be made. For Nigerian exporters, the solution is to understand the markets they are exporting to and prepare the products to meet all the standards established for such products, not just by their business partners, but also by the regulatory agencies.

    What are the opportunities available to domestic producers win terms of export financing and how do microfinance banks support them?

    The CBN does not permit MFBs to be involved in FX transactions. However, micro-entrepreneurs could borrow from MFBs in Naira to prepare their products for export. The export processing would then be done by a commercial bank.

    How easy is it to get loans from the microfinance banks?

    It is actually easy to obtain microcredits. However many of our MFBs are cash strapped and cannot expand their loan portfolios due to capital constraints, hence the the CBN recapitalisation agenda. However, MFIs have not such constraints and are usually able to meet the needs of their members.

    Many people relate with Deposit Money Banks; only a few patronise microfinance banks. Why is this so?

    The first reason is inadequate knowledge of what MFBs are doing. Secondly MFBs need to improve their collective reputation and rebuild public trust. The current trend of recapitalisation and professionalisation are geared towards improving the reputations of MFbs and MFIs.

    SMEs constitute a large percentage of  businesses in Nigeria. Do you think microfi-nance institutions are satisfying the needs of this sector?

    Certainly not. Hopefully with the recapitalisation exercise, our MFBs would be better empowered to meet the needs of our MSMEs.

    Can you tell us about some of the unique partnerships you have with others to support entrepreneurs?

    Working with the Microfinance Association, we have raised millions of dollars for MFBs to lend to their customers, and so contributed to the loanable funds available to Nigerian micro-entrepreneurs. We have provided training for boards, managements and members of staff of MFBs and MFIs and so helped to improve the quality of the people who manage Nigeria’s microfinance subsector.

    Is financial inclusion making great strides?

    I would not call the strides great. We are falling short of targets we ourselves set. More creative solutions need to be developed and implemented speedily.

    Give five reasons to be optimistic that full financial inclusion is possible through digital payments?

    It reaches a wider spectrum of customers faster. Unit deployment price/ customer is very low. DFS are easily scalable, so the expansion of outreach is easier and faster. They promise convenience and ease of use, once available in the rural areas (where 78per cent of excluded Nigerians live), uptake by customers would be almost total. The largest age groups financially excluded in Nigeria are those between 18 -25 years; digital payment systems are the surest way to attract them into the formal system and this will immediately improve our financial inclusion performance.

    How can Lagos and other cities win digital payments?

    It would require careful planning, identifying who the key players would be, allocating resources and implementing the plan religiously. There would be co-operation across ministries and MDAs, public-private partnership would be the main driver of the plan.

    Do you see digital payments as a game-changer for farmers?

    Indeed, it worked with fertiliser and input allocation in the past. But for me, the best thing our farmers need is working Commodity Exchange where they can confirm produce prices and get value for their labour. A functioning commodity exchange would also serve financiers as it would facilitate price stability and ultimately reduce loan defaults that arise from price fluctuations.

    How are farmers benefiting from making and receiving digital payments?

    This is not yet widespread in Nigeria as the mobile networks are unreliable in the rural areas where our farmers live.

    Where do you see the impact of digital payments in the sector in the next 10years?

    Not just in agriculture, in all sectors, digital payments would change the way we conduct payments unidentifiably. Let me quote Bill Gates here – “We would not always have banks, but we would always have banking”.

    Your association’s mandate requires helping to fight poverty on the continent. How much of this has been achieved over the years?

    Our influence is indirect. We empower those who empower the poor. We are careful to monitor our partners, especially those we facilitate funding for, to ensure that the funds produce the required outcomes. We must say that we are largely pleased with our results in Africa and in particular in Nigeria. An MFI would received $3m to provide funding for women micro-entrepreneurs.

    What are the main objectives of the association and how will it support the long-term goal of promoting sustainable growth in Africa’s agriculture sector?

    Our main objectives are centred on the development of the microfinance subsector. We do this by firstly, developing the practitioners through capacity development, certifications and advocacy for professionalism. Then we support the capacities of the institutions by helping them to institutionalise global best practices.

    Following the group’s efforts to reduce poverty on the continent through financial inclusion, what policy advice would you provide to the government to enhance these efforts?

    Financial literacy and entrepreneurship should be part of our schools’ curricula at all levels. Our people need to know how money works and be taught how to develop good money habits that would lead them out of poverty.

  • ‘We’re in hurry to recover N5.4tr AMCON debt’

    By the Act of its establishment, the Asset Management Corporation of Nigeria (AMCON) is to recover bad debts owed by institutions – private or public – on behalf of the Federal Government. By the end of February, the debt profile was said to be in excess of N5.4 trillion. How far can AMCON go in this task? Its Managing Director, Ahmed Kuru, says the corporation has taken strategic steps to ensure more debts are recovered through negotiations and resolutions, using cash recoveries, asset forfeitures and capital restructuring for short to mid-term exits, including deploying Joint Venture arrangements for asset operations and land development. Kuru, in this interview with COLLINS NWEZE, talks about the planned sale of Polaris Bank Limited, the state of the aviation industry and other issues.

    What prompted the change in the recovery plan of the Asset Management Corporation of Nigeria (AMCON) and why is it coming at this time after nearly eight years of operation?

    We changed because we have done enough of negotiations with obligors of AMCON who have remained not just difficult but recalcitrant in nearly eight years. From all indications and with what we now know about them, we have realised that most of them are just unwilling to pay. As an organisation with a clear mandate, we cannot continue to sit in our offices and listen to these ever winding stories from our obligors because it is no longer helping us. We are now in a hurry to meet our mandate. As a dynamic corporation, we must continually evaluate our processes and seek for improved ways of delivering better results. We have critically reviewed the old strategy and have come to the realisation that it will not take us far. But in a deeper sense of the change in our strategy, which we recently adopted, do not forget the fact that AMCON has a time period when it is expected to wind down; so there is need for speed; there is need for us to move faster as we get closer to sunset. The assumption when the AMCON was established was that within a period of 10 years, it would have liquidated and wound up its operations. This is the eighth year and we still have a huge outstanding meaning we cannot be doing the same thing repeatedly and then be expecting to arrive at a different result.

    What are some of the provisions of the Act that established AMCON and would you say you have followed its provisions to the letter?

    The Act that established AMCON recognised the fact that, if obligors are not in a position to pay, AMCON should at the least have recourse to the collaterals. The Act also recognises that if AMCON is going to have recourse to the collaterals, there must be a process where AMCON must first of all go to court, and get an order to take over the property. So, we cannot continue with the old practice where obligors come over here to tell us stories that do not add up. That was why we changed our resolution strategy to more of enforcement, which we believe is more effective.

    What we are saying in essence is that we will not continue with the initial recovery strategy that has been in place since AMCON was created because it is no longer yielding the desired recovery results. For us, it does not make any sense anymore. At the earlier stage, an obligor can tell us stories because we had many years ahead to hear those sorts of stories. Nigerians will attest to the fact that we have heard these stories now for seven years, and based on those stories, the performance is not as impressive as we expected. Interestingly too, the Act anticipated that when the corporation gets closer to sunset and things are the way they are now, then the corporation is under obligation to call up the collaterals through court process. So we are now going through court process.

    It is estimated that 350 obligors owe 80 per cent, amounting to N3 trillion, of your total debt profile. Who are these people and what is AMCON doing to make them pay?

    We are doing everything within the powers of our mandate (the AMCON Act) and within the powers of the laws of the land to recover the debt. The people are the same so-called big men and women that are known to all Nigerians- people in politics, top businessmen and women as well as private individuals. The debt is huge and if we do not recover the outstanding, which is about N5.4trillion, you will agree with me that the negative impact of that on the economy and on tax payers would be unimaginable. The huge debt profile is not a healthy development for the economy of this country. Secondly, we are very conscious of the devastating consequences of systemic failure in the banking sector, the economy as well as on the country’s social instability, which the government considered before establishing the Corporation. AMCON’s creation or intervention, if you like, was in response to the global economic crisis of 2008/2009; coupled with poor corporate governance practice in the Nigerian banking sector at the time, which had severe adverse effect on the banking system. Prior to the establishment of AMCON in 2010, the banking sector was assailed by a myriad of problems, the greatest of which were an all-time high non-performing loans (NPLs) ratio of more than 40 per cent, poor corporate governance practices, poor risk management, low liquidity as well as insufficient capital adequacy ratio just to mention a few. The change in strategy therefore is a major step in the right direction because it focuses on enforcement against obligors who are not willing to settle amicably because we cannot afford to fail to recover this debt. On our part, we are determined to meet our mandate not minding the machinery of fake news and manipulation set up by obligors to fight-back and to distract public attention from the actual huge debt they owe. These debtors as far as we are concerned are the real enemies of Nigeria, which was why we will continue to name and shame them so that Nigerians will know those that are truly sabotaging the whole economic growth thereby making life meaningless for the citizens. That was why some time ago we published 105 names of top delinquent debtors of AMCON that owe the corporation a total of N906, 109, 840, 662.99.  The publication became necessary because all avenues AMCON provided for the debtors to propose acceptable resolution terms have failed. Nevertheless AMCON is still open to amicable resolution of these debts within a reasonable time, failing which we will continue to exercise all powers as provided by law to recover the debts. As you must have noticed, we have received a lot of fight-backs from some of the obligors since that list was published. We will not be deterred by that. We will continue to carry out the tough assignment, which we have been mandated to do. But I will not tell you our next steps. That is what we have been doing in a nutshell. But as I said recently, the success of this drive would require the constant support of the judiciary.

    When is AMCON going to complete Polaris Bank Limited sale?

    We published a notice to all debtors of Polaris Bank Limited where we demanded that all non-performing debtors of the bank should come and settle their outstanding obligations with the bank. As the new owners of the bank, AMCON is now saddled with the statutory responsibility of recovering all troubled debts of the bank. We do not have time on our hands as we have entered into a new phase in our recovery drive, so it is in the interest of all debtors of the bank to urgently take steps at reaching out for an amicable resolution before our next steps that would address the issues and the debtors. We hope to dispose the bank in the next two years.

    What is the level of support you are getting from the judiciary?

    As a management, it must be acknowledged that the judiciary in Nigeria has been tremendous in their support to the Corporation as they have continually shown understanding of the purpose of the establishment of AMCON, the spirit of the legislation and the application of the respective practice directions. I can tell you that with their support, AMCON has made remarkable progress because we have recovered over N759 billion out of the original N3.7 trillion, which is now around N5.4 trillion. However, substantial part of the recovery is through assets seizure, forfeiture or outright cash payment. It has not been easy. Sincerely, the job we do at AMCON is quite challenging but it is a national assignment. We also recognise the fact that there are no nice ways of recovering money from difficult and recalcitrant obligors who are flying around the globe in their private jets and driving around Nigeria in top of the range cars to the detriment of the Nigerian economy.

    What is your assessment of the Nigerian aviation sector?

    The aviation sector is a catalyst for the economic development of nations. It is a wheel that drives economic activities. It facilitates trade, tourism, boosts productivity in the economy, improves efficiency in the supply chain, it is an enabler for investments and can spur innovation. Critically, it is a source of quality employment. It is a strategic sector deserving of a careful plot to greatness if Nigeria is to occupy its rightful place in the comity of nations. A recent newspaper publication said there are 160 failed airlines in Nigeria. I have seen a long list of 42 airlines that have graced our air ways with a lot of fanfare but collapsed afterwards to the shock of many. It will interest you to know that if you look particularly from the date the airlines commenced operations to the date they ceased operations, you will notice with sadness that they operated for mostly less than 10 years.  The aviation industry remains in the throes of airlines burdened with debts, under administration or in borderline of collapse. The only time airlines are viable in Nigeria are usually at the point of take-off. Indeed, we have become so used to failure that no matter how well an airline seems to be running, we are economical with praise because we do not know if it is just another bubble waiting to happen.

    What do you think is needed to run an effective airline?

    The airline business is complex, capital intensive, low naira return on capital with very low tolerance for failure and incompetence. It requires a high level of competence and discipline. Indeed, many reasons may account for the failure of airlines in the country. Unfortunately in our clime, this is not peculiar to aviation, businesses hardly last 50 years in Nigeria.  These range from macroeconomic factors, poor capital size and structure, poor reserves to replace major aircraft parts, limited access to leasing opportunities, regulatory changes, among other factors. Operators will readily point to lack of adequate government support, the burden of taxes, poor infrastructure, among others. I agree. However, from our first-hand experience as major stakeholders in the aviation sector, we see that the cardinal point behind the failure of a good number of these airlines is because they were established without deep-rooted corporate governance principles that can make the companies last and prosper like their counterparts in other countries of the world. Corporate governance is all about the rules and practices, which promote accountability, fairness and transparency in all stakeholders’ dealings and engagements. These days, it has been extended to include competence. The framework involves contracts with stakeholders relating to responsibilities, rights and rewards, balancing the various conditions and procedures for supervision, control and information flow.  It is a system of checks and balances.

    What are  the biggest challenges facing the aviation industry in Nigeria?

    I believe that there are two major problems with the airlines in Nigeria; one being lack of an effective board of directors, thereby affecting internal policies and discipline. The other problem has to do with regulation. Given the ownership structure of most airlines in Nigeria, the board’s veritable check on management and excesses of airline owners who show very little patience for orderly and planned conduct of business, is practically absent. A functional board is necessary for the effective operations of airlines with long term survival and profitability objectives. On the other hand, regulations are either weak and lack the courage to enforce compliance based on current standards or need more fine tuning to ensure effectiveness of the airline. The aviation industry is as important as the health industry because it deals with the lives of travellers. It requires more regulations than even the banking sector. It is only in Nigeria that an airline can abandon you at the airport for more than five hours without any recourse. I cannot recall any airline punished in the recent past by the aviation authorities for unprofessional treatment of its passengers. Equally disturbing is the state of the aviation infrastructure in the country. The state of the airports, from the toilets to the jet bridge – it is rather pathetic! This is why some of us cannot understand why we have issues with concessioning our airports. We have proven that we cannot manage even our toilets at airports. It is common practice all over the world that the airports are privately managed. We should not spend our energy on who owns the concession company as long as our airports are managed according to global best practice. Lagos for instance, is strategically positioned to be the African hub, linking the Americans and the rest of the world but we are not maximising that advantage.

    Where do you think the strong regulation of the aviation industry should begin?

    A starting point can be the domestication of the draft Nigerian Code of Corporate Governance 2018. I sincerely believe that if a few airlines can demonstrate uncommon, transparent and effective corporate governance, they may position themselves for support from the federal government of Nigeria and make the creation of a government driven national carrier unnecessary. If we go by the abuse seen in the use of the last major CBN-Bank of Industry Aviation Industry Intervention Fund, there remains a huge trust gap between government and airlines that may only be bridged by innovative and sound corporate governance. The funds were abused due to lack of corporate governance in the airlines. I can tell you authoritatively that the funds made available for the project were generally diverted.

  • ‘Identity management will solve many problems’

    Chams Plc is the country’s first information and communication technology company to be quoted on the Nigerian Stock Exchange (NSE). In this panel interview, its Group Managing Director Mr Femi Williams speaks on financial inclusion, corporate challenges, among others. Capital Market Editor, Taofik Salako was there.

    As the first indigenous company to evolve from computer hardware maintenance to a wholly Information Communication Technology (ICT) company, how has the experience been?

    The question is very apt and interesting. It has been challenging and interesting. Chams Plc started business about 34 years ago, in 1985, as a Computer Hardware Maintenance Services company; hence our name Chams, that’s the meaning of Chams. Then we transited from being a hardware company to a network company. Networking became the key or the major project demand of that time, so what we did was to refocus the company into networking. We provided services in the area of wide area networking and local area networking. We’re actually the first indigenous company in that sector. Around 2000, we moved to smartcard technology and that was what led to the formation of Value Card in those days. We were the first to go into it.

    After that episode, we moved into identity management solution. That was what led us to the National Identity Card project. Fortunately, that was about the time we went public. We committed a huge amount of money into the project because we believed so much in the solution and we believed it was meant to solve Nigeria’s problems and that if we had gotten it right, many of the challenges we’re still battling with at this age and time, would have disappeared a long time ago.  Nigerians are gentlemen. Many of the people that perpetrate frauds, they’re doing it because they know they would not be caught. We’re very religious, gentle, kind-hearted people but because the system is porous and we don’t know ourselves; as such, it’s difficult for the government to plan on one hand and it’s difficult to apprehend people who do bad practices. So, we put a lot of efforts on the project and we actually won the contract and invested heavily on it. But in the wisdom of the government, the project was messed up. We went to court and we made our case over and over in different publications and declarations; we did advertorials, and so many things to get reasons to prevail to no avail. But the cost of litigation was also out of this world. It is very difficult to fight with government. So, as a responsible organisation, we chose to focus on our business and we settled out of court. This accounted for most of the losses we had seen in the past years, because we had to bite the bullet and write off those investments. The last one being the approval we got at the extraordinary general meeting last year. We had gone through the process of balance sheet restructuring and it ended well. So, we have very clean books now. I cannot forecast or predict what the audit will come up with, because our books are being audited now. In the next few weeks, that would be released. But what we are saying is that we are very bold to say that our investors have good reasons to smile, because all the past accumulated debts have been taken off our books for now.

    We are a resilient brand. It is a company that has come to stay. We have gone through a lot. We have had transition of first chairman, number two and number three. We have had also transition of Managing Director from the founder to myself, and we are still much focused and doing well as the leading services provider in the country. We are committed to our core mandate despite all the challenges.

    Specifically, what are the challenges facing the ICT sector?

    In terms of sectoral challenges, ICT industry is very challenging. It has its own peculiar dynamics and it changes rapidly. Before you close your eyes and open it there is a new technology, there is a new opportunity, there is a new infrastructure, and there is a new version, a new megabyte or gigabyte. So, it takes a company that is focused to remain on what they planned to do. Three years ago, we changed the business focus to providing intelligence business solutions and that was what led us to the pilot we are doing with the pharmaceuticals now. We have a project that is running in real estate industry. We are also working with the Computer Village, Newcomers, that is powering Computer Village. We are sure that stakeholders and investors will have reasons to smile. We are going to launch our real estate solution soon. So, you can look at the operating challenges in terms of the rapidly changing products and services, cost and need for continuous retooling to keep up with the pace, not only locally but globally.

    How can we adapt technology to solve national problems?

    As I said before, our commitment to the National Identity Card project was due to our belief in the potential of identity management as major enabler for national development. Trust me, the problem with the electoral system in Nigeria is partly technological. I’m sure by the time the identity management problem is solved, things would be normal. Now, I have a Bank Verification Number (BVN), you can do business with that number knowing full that there is a human being behind it. I think the National ID number should be something that is unique and important. The day we are able to make that system work, then you will see many things settling well. Luckily, with the job we have done with the BVN in the financial sector, there is a number that people trust. If I tell you this is my BVN number, there is a lot you can know about me even without meeting me. Actually, we are a stakeholder in this, along with a lot of organisations. We are part of the development of the National ID registry through one of our products. Once I give you the number, you can trust it; you can do business with that number knowing full that there is a person somewhere behind that cannot repudiate the transaction. The BVN has demonstrated that it is not impossible. The National ID is going to make it go beyond the banking sector to the other sectors.

    So, when we have an identity management settled, there is nothing that stops me from voting from my phone because that number and the person behind it is known and I cannot have two of it. You will realise that you will need a fraction of all the kind of money that is being spent on election. You need zero effort in terms of logistics. I can imagine looking at the eyes of the Independent National Electoral Commission (INEC) Chairman when he was giving his report on the election postponement, though I was also angry like other Nigerians, but I could connect to some of the pains. If you have more than 147,000 devices you want to bring to a centre and configure them, whatever they have to set, let’s even assume you spent 10 minutes doing one; that is 1.47 million minutes. That’s a horrendous task. How do you move all those materials? Nigeria is a very complicated place where you cannot send the materials to every local government area and keep them there for a week before the day of election. You have to move most of them that morning. So, I can connect to some of the challenges they are having. All these will disappear if we use technology to vote.

    Even in terms of cost of electioneering and political campaigns, we can see drastic reduction overtime as the new generations of voters embrace electronic campaign, e-campaign. Already, this has started, though it can only work in metropolises, in few areas. There are still villages where there are no electricity and communication facilities, and the funny part is that these are the people that voted most. The people in the remote towns are very religious with their votes. I’m sure as the new generations take over, everything will almost be e-campaign because it is cheaper, it can go farther and more effective. But as it is, many still believe in posters to reach out to people and that may be one of the challenges the new entrants into politics may face.

    What will aid technological changes is also change in the composition of the population. I was told about 20 million new voters were registered between 2015 and now. Now those set we don’t know their profiles but if you look at population dynamic, I will assume that 65 per cent of those newly registered voters would be between 18and 40 years. I believe that we are going to learn more from the data after this election. We may not know who they are but we are sure majority of them are youths. They used intensely a lot of social media. I can promise you that in the next two decades, the use of posters will reduce significantly because it’s expensive, the logistics is not easy and it’s dirty; after election somebody has to pack the waste, even though it creates jobs for some people too.

    But with more than 80 million voters, can your system deliver on an assignment of such magnitude?

    Yes, we have the capacity, tested technology that is working. Our innovative e-voting platform called VOTA is being used by several organisations and we are very hopeful that in the near future, this solution will be used to conduct the nation’s election. The Institute of Chartered Accountants of Nigeria (ICAN) has been using our VOTA electronic voting system for seven years. We have also been using this for the Chartered Institute of Taxation of Nigeria (CITN) for two years. The Central Bank of Nigeria (CBN) Cooperatives also used it for their elections and there were no problems. So, we have the technology and the capability to deliver once the law that restricts use of technology is taken out, and once the identity management problem is solved. We will do our elections without going on holidays and we won’t shut down the country, everybody will be able to vote, even Nigerians in the Diaspora will do it from wherever they are residing. You can vote in the comfort of your room, you don’t need to go and queue under the sun. It can be done, it has been tested and we have the technology here. Technology is very simple, we have an existing system. What we will need to do is to scale up to the demand of any new project. People will have more confidence in the electoral system. The system we are using has audit bank that generates audit trail, which you can use to trace and audit the voters to the last person, such that if anybody is not satisfied with the results, you can trace back.

    We can look back at our pedigree and be proud that we are a leader in the ICT industry. We brought Nigeria into the Guinness Book of Records through the establishment of two largest Digital malls in the world, a record which still holds till date. Chams has been a part of every major success story in identity management in Nigeria. With the experience and expertise garnered over the years, we have built robust, secure and adaptable platforms that drive identity management, identity transactions and verification services for public and private sector initiatives and businesses. We have leveraged our internal capacity to develop intelligent solutions that are capable of managing and delivering an unprecedented result to the various challenges identified in the technology industry.

    Have you benefited in any way from the local content policy?

    The local content policy is a very good policy with good intentions. But the implementation, I doubt if we have benefited from the policy. However, the real economic situation in Nigeria is forcing everybody, all customers to look inward. As I told you, we don’t go after government contracts anymore; we do partnerships. We have technologies and we call ourselves computer mechanics. We are very good in technology; so we are always looking for people who have challenges/problems that we can partner so that we can deliver solutions. So, it is the economic reality that is making local content to come to a reality, not the policy implementation itself. Check it out; a lot of organisations are opting for local solutions as alternatives to cut costs.

    What are those incentives that you think companies like yours need?

    In terms of incentives, we have a lot of partners and what I have learnt overtime is how other countries support businesses. Recently, there was a Polish company that came to solicit our partnership. Trust me, the foreign trade attaché at the Polish Embassy was here with them. Imagine, we did not invite this company; they were just trying to form a new business and thought they should talk to us. But the foreign trade mission followed a business partner to a meeting, it carried a lot of weight but we don’t have that.

    When we got the National ID project, United States, Germany and France ambassadors followed us to go and defend the project. We had issues with the National ID, we had issues with our foreign partners, we have no support from our government, zero support and I am very bold to say it. We settled out of court, but some of foreign partners, we will still go after them. Besides every other thing, the government moral support for companies can help to boost their competitiveness and sense of corporate social responsibility.

    On incentives, there are many other ones that concern all of us; power is still an issue, communication is getting better and that can make business better for us and a whole of other issues under the purview of Ease of Doing Business.

    Do you have any plan to partner  strategic investors knowing that ICT is global?

    Partnership is a very important part of our ICT industry. If you cannot partner others, you cannot make it. What we don’t do is to take foreign technology and deploy it. We always customise it and turn it to a Nigerian product. In fact, of all the solutions that we have, none of them has up to 20 per cent foreign component. We get foreign components and parts but the core engine will always be of Nigerians and for Nigerians.

    How far have you gone with your corporate restructuring?

    As I told you earlier, we ran into problem with the botched National ID project. We had invested and got everything set. We had built a mega registration centre for the National ID, where anybody could walk in and walk out with his ID card, all within five minutes. We were set but as I said, what they called ‘wisdom of government’ didn’t make it happen. So, we had huge losses from that venture that affected the company seriously. We then opted to restructure our business. This exercise covers our business model, products and financials. The company’s business model was modified from identity management to intelligent business solutions, thereby carving a niche for us to be more innovative in providing solutions and platforms for private and public sector organisations.

    We are very bold to say we are out of the wood. The last tranche of the corporate restructuring was the balance sheet restructuring. We have cleaned our books and we are set on new path of growth. We are  undergoing development of two innovative solutions that will be rolled out into the market soon. Our Pharm IT Platform was successfully launched in December 2018 at the Pharmaceutical Society of Nigeria (PSN) conference. It is a technology solution developed for the pharmaceuticals industry to enhance and manage drug distribution. Our subsidiaries have also achieved several commendable feats. We have turned around these subsidiaries to position them for geometric growth and profitability. We have been a faithful company to our shareholders and stakeholders, even when we were making losses, we were telling the whole world why we were making losses. Now the reasons have disappeared. We are in a turnaround mode for continuous growth and profitability by the grace of God.

    On balance sheet restructuring, will you consider new capital injection?

    Yes, we are working on new capital injection. At the last extraordinary general meeting, we actually got approval to raise new capital and the process is ongoing. Though it is not concluded, it is coming very soon. Let me assure our shareholders that the repositioning has begun to pay off. Despite the challenging, we are positive that our top line and bottom line as well as other major performance indicators shall justify the substance and essence of the restructuring and put smiles on the faces of our stakeholders. I wish to reiterate the commitment of our board and executive management to the growth of the company as we work tirelessly to ensure worthy returns to the investors.

  • ‘It’s criminal to pay below N30,000 minimum wage’

    Nigeria Employers Consultative Association (NECA) Director-General Mr Timothy Olawale, in this interview with Correspondent TOBA AGBOOLA, urges employers to pay the N30,000 minimum wage. He implores the government to look into multiple taxation and other issues affecting businesses.

    Why is the Nigeria Employers Consultative Association (NECA) in support of the new minimum wage?

    We stuck out our neck on the new minimum wage because it came out as a result of a process in which we are actively involved. We are actively part of the discussion, decision and we agree and believe in the discussion of the Tripartite Committee. The second reason is that when you think about the welfare of workers, we believe N30,000 is ideal and that anything below that is inappropriate. Employers have the responsibility of taking care of their employees before they can increase productivity. You are not making life meaningful for them if you don’t pay them good salary.

    Can you say that N30,000 is enough for workers with the  situation in the economy?

    The question we should ask ourselves is how far will the N30,000 go in taking care of a worker and his or her entire family. By the time a worker go to and fro from his/ her working place everyday, that N30,000 would have been substantially depleted. Don’t forget that there is also other basic needs like shelter, feeding, medicals, education for the children. So, when you benchmark all those with the said amount, it can’t go far. And I want to say that anything below that is criminal.

    Some of the governors are saying N30,000 is enough. How many of the politicians who have Alsatian dogs can maintain them with N30,000 per month? I asked one at a committee meeting if N50,000 could feed his dog a month. He laughed and backslapped me, saying ‘O boy, let’s leave that one. I am not talking as myself. I am talking as a government representative.’ Another governor said he  paid more than N30,000 to his domestic employee. So, if you are convinced that they deserved that, so that they will not steal from you, why not do that at the national level? You are talking about fighting corruption when you don’t address fundamental issues, such as what can sustain people. How, then, can you talk of fighting corruption when you are creating hunger in people and you are saying they should not look for any other way to sustain themselves? They should not do anything outside their official job or steal. I am not condoling stealing, but you are exposing them to temptation.

    Generally speaking, what do you think is going to be the effect of this N30,000?

    Yes, there is going to be a consequential effect, but it is going to be minimal and it is going to be controlled. One of the effects is that there is insufficient enlightenment to the public to let them know that the fact that there is new minimum wage, does not mean that everywhere will be awash with money. Because based on that belief, there will be a jerk up in the prices of goods and services. Everyone, both market women and men, will want to benefit directly from the new minimum wage. And when those happen, the effect is that workers welfare will be lost. What it means is that the new minimum wage will not have any positive effect on the workers. One of the disadvantages of this is the prolonged process in arriving at the new minimum wage. Because everybody who doesn’t even know what minimum wage is all about before is aware now and is anticipating for when it will take effect so that they can also benefit. It is so unfortunate, but that is a Nigerian for you.

    How are you sure that members of the organised private sector will pay the minimum wage?

    There is no reason members of the organised private sector should not pay N30,000 minimum wage. This is because they (Organise Private sector) agreed after due consultation. So, we are saying authoritatively that all members of the organised private sector will implement N30,000.

    NACCIMA once said it is not in support of the minimum wage. What is your take on this?

    On the unfortunate response from the representative of NACCIMA, the person did not speak on behalf of NACCIMA as a body. The position has since been denied by the body she represented. They said that they never sent her. The speaker said she was on her own and that she was never sent. And for her to have said that, it is only her that can explain. They also said that the position of the Organised Sector is okay by them and that they are in line with it.

    How will the N30,000 minimum wage affect NECA members?

    The simple truth is that 70 per cent of the organised labour is paying way above N30,000 as minimum wage. So, the consequential impact is very minimal, if not nil, because it is supposed to affect the chain or review, where your benchmark is below N30,000. So, if you are paying way above N30,000, you need not bother, except if you want to enter what we call a ‘sweetheart agreement’ with your workers and you decide to raise their salaries. As we speak, some sectors have started negotiating without waiting for the government’s decision on the N30,000 proposal. My concern, however, is the informal sector – the Small and Medium-scale Enterprises – which are struggling and don’t have enough support from the government and its agencies to survive. The question is: are they well positioned to absorb the effect of N30,000? Can they implement it? We have encouraged them to embrace the plan of relevant bodies like the International Labour Organisation, which NECA is a part of, to help them transit from informal to formal sector. This will help their businesses and deepen their access to capital.

    Also, they need to engage their workers because the major problem that has reflected in the rate of unemployment is that what Nigerians are even looking for is to leave their houses and have a means of survival in the first instance. Majority of our teeming population are out of jobs. Abraham Maslow’s hierarchy of needs talks about subsistence level. In other words, the physiological need is: ‘Let me even have somewhere to go and have something to sustain myself and my family.’ It is after meeting that need that you start thinking of how to improve on it and, then, maybe the issue of minimum wage will arise. Our focus – and what we have always told the government – is for us to have a situation where majority are gainfully employed in the first instance.

    Then, we can talk about improving on it. We have also advised the SMEs to broaden their scope so that more people can get into the employment net through their activities. Then, you can bother about the issue of minimum wage. It also came up in our discussion at the National Minimum Wage Tripartite Committee, I mean the issue of enforcement. Because it is one thing to have a law, it is another to enforce it.

    How is the organised sector faring under the economy?

    We have to start by commending the government for doing everything possible to make businesses thrive. Specifically, we commend the Office of the Vice President for the efforts to ensure that we have a favourable economic environment to operate. Having said all these, there are instances whereby some agencies of the government have not keyed into the good work the government is doing. Some of them are not in line with the vision of the government in ensuring that  there is ease of doing business. But the good news is that while the leadership of those agencies are mounting their onslaught on business through regulating of business outside the rule of law(because we are not against regulation), the government has been very responsive in calling them to order anytime we raise an issue with them, which is also commendable. In time past, we complained, raised issues, but nobody listened to us. So, we commend this government for listening to us when some were issues raised. When you have an avenue or window to complain about the situations of things, I think it’s a wonderful thing.

    How do you rate the government in terms of economic policy and job creation?

    We think that the government should look at the policies on the banking sector. Banks are not playing their role in ensuring that those small businesses thrive. Banks will rather lend money to the government or big business where they know the returns will be big. We commend the initiatives of this government. It has tried to create jobs, like the N-Power and TraderMoni. But I dare say that what they are doing is just a scratch on the surface of the epidemic that has confronted our nation and that scourge is massive youth unemployment. That is why many of them are ready-made tools in the hands of Boko Haram because there are many frustrated youths that are just roaming about in the North. Just a little inducement and they are ready to cause unrest. That is why in the course of all these political activities, you also have ready-made thugs; many idle hands out there. You give them N1,000 and they go to the bus stops to drink alcohol and they are ready to cause mayhem.Unfortunately, that is the situation we have found ourselves and that is why you see the police parade graduates who are involved in kidnapping and terrorism-related activities. In those days, even before you finish your course in the university, industries and government agencies would be begging you to work for them. But this is where we have found ourselves.

    Although this problem cannot be blamed on this government,  when you agree to serve, you have agreed to solve problems; not to start casting aspersions on the past government. You have been called to serve and solve problems, notwithstanding the creator of the problem. They have tried, but their attempts are not good enough. They have created jobs, but they are not the jobs that can endure.

    The debt burden keeps rising. Don’t you see this as dangerous for the economy?

    Figures released by the  Debt Management Office (DMO) showed that the Federal Government’s domestic debt profile rose to N15.814 trillion in September 2018 from N15.629 trillion in June 2018. That is 1.19 per cent increase. This figure becomes more worrisome when we look at the total public debt stock, comprising external and domestic debts of the FGN, the 36 states and the FCT hitting $73.208 billion (N22.38 trillion) recorded in June 2018. This trend, which is very disturbing, could have a negative effect on the developmental capacity of Nigeria, despite the government’s financial managers’ argument that the rate of increase is within a manageable limit. Financial experts at the International Monetary Fund (IMF), and the World Bank have, in fact, advised that the revenue-to-debt ratio is unsustainable and it portends a serious danger for the future generation. While the effect of the increasing debt may not be immediate, it could be catastrophic in the long term with a chunk of revenue consumed by debt servicing to the detriment of infrastructural development.

    This, sadly, is the reality as N2.140 trillion from the N8.8 trillion proposed 2019 budget, has been earmarked for debt servicing, representing about 25 per cent of the total budget allocation. The size of government borrowing in the domestic financial market also continues to be a major source of concern as this has in no small measure, affected the chances of the real sector to access funding at a reasonable cost.

    If you cannot leave a credit legacy for the future generation, at least you should not put them in bondage by putting a chain of debt around their neck which will strangulate them.

    What will you suggest as the way out of this debt predicament?

    The federal and state governments, as a matter of urgency, must take deliberate steps aimed at cutting the cost of governance and recurrent expenditure. The government also needs to start paying serious attention to workable investment schemes, collaborating strongly with the private sector, which is the engine room for economic growth. The government has to recognise the important role of the private sector in building a robust economy, as oil revenue alone is not enough to place the country on the path of sustainable development. The government must, therefore, make commitment to facilitate a favourable environment with policies that will attract private investors.

    What is your take on the 2019 budget?

    The budget was benchmarked against $60 per barrel of oil at 2.3 million barrels per day, an exchange rate of N305 to $1, an inflation rate of 9.98 per cent and a GDP growth rate of 3.01 per cent. These assumptions negate the reality of oil price volatility. Oil industry experts had rightly warned that the political dynamics of the Middle East might drive down the price of crude. True to prediction, a barrel of crude today sells for less than the benchmarked price of $60bpd. Also, it is yet unknown how government will increase our present 2.09mbpd crude production to 2.3mbpd in 2019 with recent challenges at the Niger Delta and OPEC’s resolution on cut in oil production pegging Nigeria’s daily output at 1.7mbpd.

    A cursory look at budgetary allocation to some critical sectors raises some germane questions about our readiness, as a nation to address certain fundamental questions. Human capital development has been noted as critical to a nation’s development. It is, therefore, worrisome that education was allocated N462.24 billion, which is less than six percent of the entire budget.This is a far cry from the UNESCO’s benchmark of 26 per cent of the national budget. A healthy nation is said to be a prosperous nation. The N315.62 billion, which represents a meagre 4.1 percent of the budget, tends to negate this mantra. This allocation also contrasts the pledge made by member-countries of African Union (AU) to commit a minimum of 15 percent of their yearly budget to their health sector.

    What is your take on multiple taxation?

    There is no doubt that multiple taxation is killing businesses in the country. Businesses in Nigeria are encumbered with the payment of over 55 different taxes at the three levels of government. The incidence of double taxation, particularly consumption tax, has assumed a very dangerous dimension. We expect the government to rein in through an appropriate statutory or policy declaration. The government should not make mistakes of generating revenue through tax increase. We know that the government will want to meet up with its revenue requirement. If you increase tax, it will increase cost of goods and services and it is the consumers that will suffer for it.  You don’t make people poorer by adding to their burden. So, the government must be very careful when it says that it want to generate more revenue internally. Rather than increase the tax, I think what government should do is to widen the tax gap between the rich and the poor or average Nigerian. Some companies and well-to- do individual are not paying tax. The government should also focus on luxury goods, most especially foreign goods that we can do away with.  But the government should those goods that has direct effect on the common man.

    Do you think the Economic Growth and Recovery Plan (ERGP) is recording expected success?

    It is a laudable programme and we have repeatedly said so. With steady implementation, it is going well. However, sustainability and persistency in the implementation is what is important. The government should be consistent and sustain the steam at which it is implementing it. There should not be a relapse and gradually we will get out of the woods.

    Can firms actually survive in this challenging environment? What can the government do to provide enabling environment for businesses?

    It is indeed very challenging and troubling not only because of our deficit in infrastructure, but also because of some other human element that is also compounding the matter especially regulatory onslaught on organised businesses.

    Regulators are supposed to be service platform to nurture businesses and guide them into compliance and organised businesses are not against such regulations. However, rather than been collaborative and supportive what you discover is that most of these regulatory agencies are pecuniary-driven.

    They are also not operating within the ambit of law and that is why you see instances where arbitrariness, without recourse to the provisions of the enabling acts setting up those regulatory bodies, they shut down businesses and cause damages that are difficult to mitigate on businesses. And this counters the government’s enthusiasm in improving Nigeria ranking in the ease of doing business.

    We have repeatedly said the government cannot be working on the ease of doing business in one hand and some other agencies of government are working to pull it down. However, good enough, the government has instituted a platform for us to continuously engage with them on a quarterly basis. We will continue to review situation with them and to see how government can call to order the leadership of those agencies.

    What are your plans for NECA?

    NECA’s mandate revolves around just one principle and that is ‘service to members’. You are as relevant as a business membership organisation as much as you continue to serve your members and deliver to them on those mandates that they have committed into your hands. That is what NECA has been doing since 1957 and building upon and that is what we will continue to do.

    Deepening our service portfolio to members, enriching that portfolio and improving on what we have been delivering to them so that we will sustain our relevance. In specific terms, these are services that are connected with the competitiveness of business and sustainability of those services. It is one thing for businesses to be competitive in short time and another thing for the business to be sustainable in the long time.

    The other aspect is that in driving that, NECA’s core value of being a responsible corporate entity, by doing whatever it wants to achieve through legal and legitimate means, it would be sustained. In other words, we are not going to vie outside legality and legitimacy.

    Finally, we have good financial standing for the organisation. We didn’t inherit an organisation that is bankrupt and we do not intend to go that route. We make sure the organisation continue to be on a sound and steady footing through the period of my service at the highest level.

    One of the hallmarks of your predecessor was women empowerment. What does your administration have for young entrepreneurs?

    We have just started a project we tagged ‘NECApreneur’. It is an online solution to reach out to young graduates and that are still in tertiary institutions to imbibe in them the traits of entrepreneur. You are aware that the scourge of unemployment is huge and the only way out is to dissuade youths from chasing white-collar jobs. Instead, they can be entrepreneurs and even be employers in their own little right. The initiative is done online and divided into three segments.

    We have the foundation, intermediate and advance levels. We also give them the opportunity of internship for them to understand the practical aspect of it leveraging our membership network. We believe they should be in good standing to start their  business. We are also into technical skills development where eventually by the time they pass through the tutelage of those training institutions or companies. They will be in a position to start their own businesses based on the skills they have acquired.

    With these two interventions, we will actually go a long way in taking care of the youths and the upcoming young executives. With regards to the women employment, it is an on-going initiative. We can only continue to deepen and build on what we have achieved so far. It is still work in progress. It is not as if it is done and dusted. If you don’t continue to nurture and grow it, there is a possibility that it will die.

     

  • ‘We shouldn’t compromise safety in ground handling sector’

    Ground handling is competitive, with operators using pricing to attract clients. But, that should not compromise the business, taking it out of regulatory controls. Group Managing Director, Nigerian Aviation Handling Company (NAHCO), Aviance Plc, Mrs Olatokunbo Fagbemi, tells KELVIN OSA-OKUNBOR why ground handling firms must review their strategies to remain relevant amid other contending issues.

    Despite the fact that ground  handling business has become more competitive, global airlines are divesting from it. What is responsible for this?

    Ground handling business, just like any business endeavour in the air transport value chain, is globally taking different shapes, twists and turns. Only organisations that could think out of the box can survive the increasingly competitive environment. This is purely about how business owners now draw a relationship between costs and returns. For most businesses, which are now core ventures, for instance, an airline involved in ground handling services, the managers have to seriously weigh cost and returns, and if the returns are not worth the huge investments, the better decision is to divest and outsource such arm of the business to another concern. This is fast becoming the trend in the global arena, where bigger airlines are now leaving ground handling business to concentrate on their core mandate of flying passengers.

    Infrastructure upgrade and technology are becoming defining template for driving patronage in aviation sector. How does this apply to ground handling business?

    Over the world, technology is changing the way organisations do business. Only companies that believe they have to modernise operational infrastructure are companies of the future. One good way of doing this, we have realised, is to continue to invest in the operational equipment that will give us the competing edge. If we fail to do this, clients will move to where the business is better organised. That is the secret of the business.

    In Nigeria, ground handling have also imbibed this culture of investment in technology, else they will be left behind in business. This explains why for instance, the Nigerian Aviation Handling Company (NAHCO) Plc, plans to invest over N1.9 billion in operational infrastructure. Without huge investment in equipment, you cannot escalate the growth and development of any company.

    Regulation and compliance are assuming new dimensions in an effort to ramp up operations in aviation and allied sectors. How does this apply to the Nigerian environment?

    Fundamentally, in any sector or business, where there are no regulations, there will be no standards for people to comply with. In the aviation sector, all operations are guided by rules prescribed by both international and local regulators. In Nigeria, all ground handling companies comply with rules set by the International Civil Aviation Organisation and the International Air Transport Association. Compliance is compulsory because of certification issues.

    Interestingly, the Nigerian Civil Aviation Authority is there to ensure that all ground handling companies do the right thing. Besides, the civil aviation regulator, there is also the Federal Airports Authority of Nigeria, which insists that ground handling companies comply with the standard operating procedures. Any failure is often met with stiff penalties. This is an established template that operators understand.

    What is your take on issues of competition and price war among ground handling companies that could compromise safety?

    Every business throws up its issues whether it is price war or competition. What is important is the strategy put in place to handle it without having any negative effects on safety and security of operations. In the Nigerian environment, I do not think there is animosity among the ground handling companies, because of airlines moving from one to another. This is the basis of  a competitive environment. There are areas of competitions and there are also areas operators in ground handling business need to cooperate. In terms of determining prices for the services rendered, operators need to worry about issues of anti-trust. However, there has to be a part where we need to get the regulators to look at, such that we do not compete in such a manner that affects safety and security because that is the most important thing when it comes to air transport. We need the regulators to help in ensuring that there is clear understanding on issues like this, that no matter the level of competition among operators, it should not have any negative effects on the safety and security of ground handling operations at the airport. This is important, because safety and security are critical premium in air transport business.

    People, policy and programmes are pivotal to the growth and development of the aviation business. How applicable is this model in the running of ground handling activities?

    The hallmark of any good manager is the ability to deploy human and material resources to achieve success. One of the best ways of doing this is to put in place policies and programmes that will bring about a conducive business environment for people to thrive. Specifically, they should come from the industry regulator, the airport authority and other service providers to make it convenient and cost friendly for business to carry out ground handling in Nigerian airports. If this is done, the industry will be big enough for the anticipated growth.

    Recently, some changes took place in your organisation. What informed such initiative?

    Sometime in the middle of last year, we had some changes in the ownership structure of NAHCO. As a result of that change, the board of directors changed also. I joined the board as a non-executive sometime in August. One of the things I tried to do with the former MD was to look at the business review of the business itself because at every point in time, it is important for business like ours to go forward. We cannot plan to move forward if we do not know where we are.

    What were the steps taken to achieve the new drive in the company?

    We had to invest and we are still investing with KPMG on a business review and as part of that review, is that we have a new vision and mission and a new core statement and value, and we decided that we will run as a group structure.

    What has changed in the corporate values needed to change the narrative?

    Our new vision is not too far from the old vision, which is to be the leading service provider and reshaping our chosen market. Our mission is to consistently provide exceptional services, using professional teams, cutting edge technologies and leading practices to deliver value to all stakeholders, and our differentiating competent is service excellence.

    We have added empathy to our core value. Our core values are safety, integrity, reliability, respect and empathy. Empathy for us is very important because we want to operate in the place of excellence so that we are not just saying we are delivering customer service, but delivering customer service from the perspective of ‘how do you feel?’ and hopefully we believe that whether it is for the internal or external customer that come, it will be a great place for people to work in and a learning organisation. We want our turnover to grow by over five times and we want to grow across the Africa continent. We have a  five-year strategic plan.

    How do you hope to achieve this objective?

    We are going to invest heavily in our people and in automation. Automation does not mean that people will be laid off. Despite automation, people will still be employed. I know usually when we have changes like this, the first thing is that people are afraid, but things will be different and we will bring more professionalism. NAHCO today is the leader in this industry and we want to maintain that leadership, but we don’t want to be the leader without using excellent service. We want to be the leader, driving the business with innovations, with the right systems and right processes and using service excellence. In a nutshell, this is my story and it is very simple.

    In your five-year plan, what do you intend to invest in your business and human resource? What is expected as revenue?

    We are still fine-tuning the plan, which is why we are doing this with KPMG and we are going to set up a programme management office to drive it. We are looking at growth in the region of five to seven times, which is achievable, given the plans that we have. In terms of investment in equipment, in the last couple of months, we have invested about N1.9 billion in equipment. You will begin to see the equipment by the end of the first quarter. By the end of the year, we will have spent about N3.6 billion in equipment. By September, we will have the next set of equipment coming in , that is what we are doing in terms of equipment. We are going to have a master plan for our facilities. I cannot give you the figure for this because it is based on what comes out of the master plan, but what we are doing immediately is to ensure that we refurbish what we have in terms of our facilities. We will make them look better, these include our buildings, the warehouses among others and improve on all the processes within the system. We are also drawing up a people’s plan for our people. These things are strategic for us.

    What steps are you taking to ensure that you bring back customers you have lost in the past few years?

    I am sure in business you lose customers, so I won’t say it is due to internal challenges because I have not done enough study to be able to tell you what the reasons are. What I will tell you is that we will do everything to retain the customers that we have. We will do everything to attract customers. We want to set new standards, bring professionalism into this service business. We know that as we improve on professionalism, the deserving customers will come to us.

    Are you looking at leveraging price to attract customers?

    In terms of price war, we are in a business where our customers are stronger than us. Most of them are the airlines, and that is the challenge in this ground handling business. Most of these strong customers are implementing the cost-cutting strategies. So, essentially, there is no secret that this brings a lot of pressure on pricing. But one thing that I have begun to discuss is that we should ensure that pressure on price does not drive any company in terms of safety and security in the provision of services. I will champion everything to ensure that the pressure on price does not compromise safety and security.

    Why are airlines divesting from ground handling companies?

    If you cast your mind back, a few years ago, most of the airlines began to divest from ground handling companies it had nothing to do with Nigeria or Nigerian Aviation Handling Company Plc. It had to do with decisions taken from the headquarters for each of the airlines to say which business do we invest in and which business do  we not invest in.

    So, each airline left NAHCO based on the decisions that were made at corporate levels to exit ground handling not just in Nigeria, but all over. dnata has picked up a lot of these airlines and that is why dnata has been able to get a lot of work. dnata is the arm of ground handling owned by Emirates. Lufthansa also in 2016 took that decision, so leaving NAHCO was corporate decision taken in 2016 that finally came to this in 2018.

    I don’t see why a decision taken in Frankfurt, Germany and the United Kingdom (UK), and used for every country should be an issue, if there is no mischief in telling the story and mischief in receiving it. If the truth is taken the way it is, that somebody in Frankfurt took a decision, I do not see why it affects our image. If the truth is told the way it is, it will not be interpreted another way. However, if the truth is told in another way, it will be interpreted as it is told. It is important to know that if Lufthansa had issues with us, they will not be doing business with us.