Category: THE CEO

  • ‘Mutual Funds present opportunities to investors’

    The capital market is not likely to see a strong recovery until next year. But there are still huge opportunities in the market for savvy investors, especially in the Mutual Funds space. United Capital Plc Group Chief Executive Officer Peter Ashade speaks with COLLINS NWEZE on the investment outlook for this year, need for multiple exchange rates review and how regulators and operators can deepen the market.

    Looking back at the performance of the stock market in 2018, are you surprised that it could not sustain what it did in the previous year?

    Actually, I am not surprised. There are lots of factors that supported the performance of 2017 market position. For instance, the market grew by 42 per cent in 2017, and you saw the temperament even at the global level. But give or take, in 2018, a lot of parameter changed. When you looked at the global financial market, outlook tends to favour more of advanced community more than emerging markets. Also, in the case of Nigeria, the build up towards the 2019 election had started in the second half of last year, and really hit up the polity. So, the direction, in terms of 2018 outlook, was quite expected.That is why, to a very large extent, when you see what is happening in the global scene, again, the oil sector, and the political terrain in Nigeria really affected the performance of the market.

    Given that those factors that shaped market performance last year are still present, are you optimistic that we may see a recovery this year?

    Quite well, I can tell you that I am optimistic. This year, in terms of performance, there is likely to be an elevation in the market. Why do I say so? Give or take, considering both local and global scene too, there are lots of factors that could affect the performance. However, the election is definitely going to come in the first half of the year and the euphoria will end in the first half of the year. So, regardless of the party that eventually becomes the ruling party, I am quite optimistic. But, in terms of recovery, that we are looking at, it may not be strong recovery. But it is going to gradually recovery. By the time we will be feeling the impact of the recovery it will be 2020 upwards.

    It is expected that in the second half of the year, the market will enjoy a rebound.

    Despite that the equities market offers high returns, investors are still skeptical. What can be done to encourage more investors into it?

    One thing that is key in the capital market is that it is not a scene for short-term players. Capital market is for medium and long-term funds. So, each player must have that at the back of his mind. And it is not another gamble or bait. As you come into the market, one thing that is key to sustain the interest is investors’education.

    Investors will know that as they are coming into the market, it is not where they will make 100 per cent in one day. It could happen. But you have to have it at the back of your mind that it is a market for medium and long term players. When you come into the market, you will be careful, patient to drive through the growth and volatility that we see within the market.

    So, to a very large extent, if you want to build equity market, two things will happen. We have the regulator side and the investor side. The regulator needs to put structure in place to deepen the market. The depth of the market in terms of even coming up with different products that investors can play in.

    The second part is investors’education, which could be driven by the regulator or operator in the market. This market belongs to all of us. As far as the market is concerned, it has come to stay.

    Given that there is volatility in the market, what will be your advice to investors on the best way to go?

    The investor must, firstly, understand the market. Even if you do not understand where you are playing, there is no way you are going to take advantage of what is happening. Volatility is part of the capital market antics. When you have understanding that the market could go up and down. Secondly, is that you must have a clear objective of why you are investing in the market. Some may want to invest because of revenue, others may invest because of capital appreciation. You must have clarity. Thirdly is that you must not be greedy. Greed sometimes affect investors. So, when you set up your investment objective, you must be clear about it and stand by it. For instance, you can say if I have 10 per cent, I think I have made my day. I should leave. You now discover that the share price of your investment has started moving, it gets to that 10 per cent, but you still see that the market’s rally, and you decided to wait a little, then greed is coming in. And in waiting a little, it goes to 11, 12 per cent and before you know what is going on, you find yourself at seven per cent. So, the area of greed also needs to be addressed. You must identify your objective, and ensure that you are not greedy in terms of your investment outlook.

    Is United Capital doing anything to deepen the market?

    Sincerely, we are doing a lot. United Capital has been in this space for a very long time. We have at different times, played our roles in supporting the regulator in deepening the market. We have participated in various investors’ education that is being orchestrated by the regulator. On our part, we have ensured that we decentralised our investment platform. We are very stop on the social media.

    How far are you playing in the Mutual fund Market and the potentials you see in that market?

    One of our business lines, United Capital Asset Management, specialises in Mutual Funds. Mutual Funds market has potential for stable return for even low value investments. And we see the huge potential for growth that the market holds. The mutual funds market deepened last year, with most of the funds recording strong performance. Mutual Funds is the way to go especially in encouraging savings and investment habits among a large population, even for low income earners. At United Capital Asset Management, we currently have six Mutual Funds running and all of them are doing quite great. Between 2017 and 2018, we had triple digit growth in our Mutual Funds portfolio. We have a Mutual Fund targeted at women – Wealth for Women Fund – and the Eurobond fund, which is dollar-denominated fund. Our Eurobond Fund portfolio crossed $8 million in 2018 from $3.6 million in 2017 and that’s more than 100 per cent growth. So, what we are saying in essence is that the funds are really growing and that underscored why we won three awards last year alone including Best Mutual Funds at the 2018 BusinessDay Awards. As far as we are concerned, there is more to be achieved in the mutual  fund market.

    How do you see the entry of foreigners into the Mutual Funds Market. Do you see it as a challenge or opportunity for the local players?

    Foreigners coming to play in the local market, have often conducted extensive feasibility studies to see existing opportunities within their risk appetite. That means there are still huge opportunities in the mutual funds space, otherwise foreigners will not come and want to play in that market. What that means for us as an organization is that we are in the right direction. It also signals that we need to do more. As we execute our innovative strategies, we will create more products that will be available for the market. So, to answer your question specifically, we view this in a positive light, and not in a negative at all. We are poised to tap into  growth opportunities that we see in that space.

    What factors will define the economy and businesses this year?

    In 2019, we expect three dominant themes to shape events in the economy. Clearly, the general elections come ahead of others as the outcome will shape policy and overall momentum of growth. A possible change of guard at the office of the Central Bank of Nigeria (CBN), considering that CBN Governor Godwin Emefiele’s first five-year tenure ends in June. Finally, depending on the outcome of the election, we expect some policy and structural changes.

    What is your advice for investors in the capital market and fixed income securities?

    The risk that spooked investors from naira assets in 2018 can majorly be classified into global and domestic risks. However, while global risks are expected to remain in 2019, the domestic risks are expected to reduce in second quarter of this year,  especially after the winner of the presidential election is known.  Overall, financial market activities in 2019 will be driven by elevated uncertainties in local and global environment. We expect this to drive the yield environment higher in first quarter of this year ahead of the election. On the other hand, yields on fixed income should retrace after the election as clarity returns to the economy.  The Stock market is also unlikely to rebound until after the election due to weak sentiment and the continued flight to safety. However, we expect some decent rebound in the post-election and transition period as Foreign Portfolio Investment  flow return to the economy. The downside risk to this view remains the continued volatility in the global economy. Accordingly, investor should take advantage of cheap market prices before the election to benefit from the rally that may follow the post-election and transition period.

    Could you tell us about United Capital and its major area of focus for this year?

    We are a financial services group providing integrated financial solutions along the financial services value chain to governments, corporates and individuals. We have a wide range of services for all our different categories of clients. Our investment banking business has a proven track record of raising capital for governments and corporates and we intend to scale up on that with more bespoke, innovative solutions for each client. We will also scale up on our play in the Small and Medium Enterprises space with our services in the structured finance space. In our asset management business, we offer customised portfolio management services for corporates.We also have a wide range of mutual funds for individuals looking to invest. We intend to grow our funds with the use of our online investment platform, InvestNow.Ng ,which we launched last September. Our wealth management business is also strategically positioned to provide top notch wealth management services for our ultra-high net worth and high net worth clients. We will partner institutions in Nigeria and abroad to ensure that we provide world-class wealth management services to them.

    For our securities brokerage business, we expect that, after the elections, the pre-election bearish sentiments will simmer and the stock market will gradually recover. We plan to power our play in this space. We won the Pearl Award for the Stockbroking firm of the year 2018 and the team is ready to top this performance in the coming year.  Our Trust business is a market leader in the trust space and we will not rest on our oars. When we launched InvestNow last September, we also introduced Online Wills, which allow users to write a will easily on the platform. We will continue thinking up ways to make life easy for our clients through innovative thinking. One key strategic priority for us in the coming year is to power up our play in the retail space which we will do with the use of technology. We already launched a much-improved version of our online platform and we will continue building on it as well as develop other digital channels to make investing much easier for our clients. This is also in line with our unwavering commitment to financial inclusion, not just in Nigeria, but also in Africa. Also, we have had pan-African aspirations for a while and we expect to gain some more traction in this space in the coming months. We will also continue scoping the market for emerging opportunities and we hope to add a few innovative products to our repertoire in the coming year. In a nutshell, we will hit the ground running in 2019 as we take more deliberate steps towards the achievement of our corporate goal of being the financial and investment role model across Africa, deploying innovation, technology and specialist skills to exceed client expectations while creating superior value for all stakeholders.

    Are we likely to see a new area of focus in United Capital, especially in expansion in new market segments?

    Over the years, we have largely focused on institutional and retail clients. We intend to significantly scale up our service offering the retail segment using digital and non-digital channels in response to changing consumer preferences and emerging lifestyles. Nigeria’s teeming youth population provides a huge market and we are interested in helping young people develop a culture of investing by offering products in a way that suit their needs and lifestyle while guaranteeing significant returns on investment. In September 2018, we launched InvestNow (Investnow.ng and InvestNow Mobile app) our flagship digital channel which offers diverse financial and investment solutions to a fast growing client base across multiple geographies. We will continue to launch new offerings on this platform to bring more players into the capital market while enjoying the benefits of scale.

    What are your thoughts on the state of the naira, including regulatory policies, to keep it stable? Do you foresee the local currency doing weakening in the year and what should be further done to protect it against other world currencies?

    Currency market conditions were mostly stable in 2018 on the apex bank’s commitment to Naira stability via frequent interventions at the interbank and BDC segments of the market. Although this has pressured the external reserves significantly, the naira has been relatively stable compared to peer economies. The CBN also commenced the sale the Chinese Yuan in H2-2018, following the currency swap agreement signed with the Peoples Bank of China in April-2018. We expect the naira to remain relatively stable in first half of this year, considering Emefiele’s obvious resolve to defend the local unit supported by a strong dollar reserve position. Things might change in H2-2019 considering the change at the CBN from Jul-2019. Overall, Nigeria is still in a good position considering the size of the reserves at over $40 billion.

    What are your views on the inflow of hot money into the economy, and what can be done to achieve a more stable investment climate for the country?

    Inflow of funds into the Nigerian economy is not expected to improve significantly in first half of 2019 amid election uncertainties as well as an Emerging market wide rout. However, we expect a net capital inflow in H2-19 regardless of the election outcome. Downside risk to this outlook includes changes in the policy environment due to possible changes at the apex bank as well as the overall development in the polity. Increased pressure forex and net capital outflow in first half of 2019 points to further depletion of the external reserves; we imagine another $5billion to $7 billion decline, if recent trend is anything to go by. If this holds true, the CBN should be left with $38billion-$40 billion  reserves going into second half of 2019. Nonetheless, we expect pressure on the reserves to ease in second half of the year on the back of increased capital inflow. That said, in the absence of a profound changes in the policy environment, FPIs funds in search for cheap naira assets will dominate capita importation into Nigeria. FDIs, on the other hand, may remain on the side line, as the await policy signal from the authorities to make their move.

    Tell us United Capital areas of strength and impact it has made in building sustainable wealth for its clients?

    As a financial services group listed on the Nigerian Stock Exchange, we are held to the highest governance standards. This ensures, among other things, that we operate a credible and resilient organisation focused on value creation for all stakeholder groups including our clients. We pride ourselves as being the intelligent choice for every financial and investment decision by our various clients. This means that we are able to provide top notch services to clients based on the client’s investment objectives and we have consistently done this over the years and we intend to do much more. We were awarded “Best Money Market Fund” at the 2018 Businessday Awards

    What is the biggest challenge you see confronting the investment industry and how can that be addressed?

    As noted above, the uncertainties around the election and transition period, who become the next CBN governor and the need to implement bold policy changes are the biggest issues for investors. Uncertainties around election and key appointment at the CBN are dependent on political actors. On the other hand, the only way to address the badly needed policies changes is to take bold decision and implement them. Now this will include a review of the multiple forex regime, the necessary reforms in the oil and gas sector as well as the power sector. If these are done, we expect the investment climate to feel the impact significantly. This is because reforms in these sectors can boost Foreign Direct Investments into the economy and trigger massive capital market activities.

    Are you worried by the level of bad loans in the industry? What should be done for banks to create better loans?

    The banking sector was hugely impacted by the 2016 recession, which resulted in a spike in non-performing loans, especially in the oil sector, yet banks have shown resilience owing to strong regulations by the CBN and risk diversification strategies employed by most banks. The improvement in data collection capabilities, Bank Verification Number, advancements in digital platforms and development of analytical competencies should translate towards better decision making in the loan process.

    However, an accelerated recovery of the domestic economy would drive down the rate of non-performing loans in the banking industry, as the credit profile of both consumers and businesses improves under favourable economic conditions.

  • ‘PenCom working to keep pension funds safe, profitable’

    The pension fund has hit N8.5 trillion and it keeps rising. What should be done with this huge cash reserve? National Pension Commission (NPC) Acting Director-General Mrs Aisha Dahir-Umar urges caution in investing the fund, as she speaks on its status, backlogs of pension payments, Retirement Savings Account and access to residential mortgage. OMOBOLA TOLU-KUSIMO met her.

    Contrary to the provisions of the Pension Reform Act 2004, retirees have not received their pensions for over five years. What caused this and what are you doing to clear the backlog?

    Section 39 (2) of the Pension Reform Act (PRA) 2014 mandates the Federal Government to pay into the Retirement Benefits Bond Redemption Fund Account, not less than five per cent of the monthly wage bill paid to employees in the Public Service of the Federation to redeem the accrued pension right of Federal Government of Nigeria (FGN) retirees. However, in the last five years, budgetary funding and releases have not been regular and adequate for the payment of outstanding accrued pension rights over this period as a result of the decline in government revenue.

    Also, in 2017, only 44.4 per cent of the total amount requested by the Commission was approved and released by the Federal Government for paying accrued pension. This shortfall has been responsible for the accumulation of several months and backlog of unpaid accrued pension rights. However, with the full release of the total amount approved in the 2018 FGN budget by the Federal Ministry of Finance, the Commission has paid Federal Government employees who retired up to last February as at January 23, 2019. We are also processing the payment of employees who retired up to last May and 1,079 employees who retired but missed the previous general enrolment. In essence, by the end of last month, retirement benefits of the Federal Government employees who retired between June 2018 and January 2019 will be outstanding due to shortfall in budgetary provisions in 2017 by the Federal Government.The Commission has been engaging the relevant authorities to ensure funding of the outstanding accrued right liabilities, especially the shortfall in 2017 budget. A submission has been made to the Federal Government during the Inter-Ministerial Committee meeting in 2017 to consider the issuance of Bond through the Debt Management Office (DMO) to fund these arrears as aa alternative to budgetary allocations.

    The commission started the Multi-Fund Structure last July. How successful is it?

    The Retirement Savings Account (RSA) Multi-Fund Structure was conceived by the commission to align with contributors’risk appetite with their investment horizon, at each stage of their life cycle. The main objectives of the RSA Multi-Fund Structure are to achieve optimum returns for contributors by aligning their pension savings with their individual risk/return profiles, provide investment portfolio choices to Contributors, and enhance safety of pension assets through adequate portfolio diversification, through increased investment in equities and alternative assets, such as infrastructure and private equity. We have recorded some successes so far. As at December 31, 2018, the RSA Fund had been successfully split into four funds, while the sensitisation of RSA contributors is still ongoing to create awareness on the features of the RSA Multi-Fund Structure. At present, RSA contributors  now have the opportunity to choose a Fund that best suits their risk-return profile. I would say the challenges so far have been low public education and awareness. There is low public awareness of the workings and benefits of the  Contributory Pension Scheme (CPS). There are also limited Investible Securities. The Bond Market is dominated by FGN Bonds, which offer relatively high yields, and thus crowding out non-government bonds.

    Similarly, there is a dearth of alternative assets, such as infrastructure funds, private equity and real estate that meet the investment requirements of pension funds. However, the RSA Multi-Fund Structure is still at the very early stage of implementation,with just six months of commencement.

    Investment of pension fund seems to be going more into FGN securities, by about 70 per cent. Why? Why has it not been  put into other projects?

    The regulation on investment of pension fund assets prescribes allowable asset classes and investment limits for pension fund assets. Accordingly, pension funds may be invested in securities, such as Quoted Ordinary Shares; FGN Securities (FGN Bonds, Treasury Bills, Agency Bonds, Sukuk Bonds, Green Bonds); State Government Securities; Corporate Debt Securities (Corporate Bonds, Corporate Infrastructure Bonds); Money Market Securities (Commercial Papers, Bank Deposit/Placements etc.); Mutual Funds (Open-Close End Funds, REITs, etc.); Private Equity Funds; and Infrastructure Funds. Meanwhile, the major objectives of pension fund investment are “safety” and “fair returns”. FGN Securities are viewed as “risk-free” securities, and over the last couple of years, the fixed income market had been dominated by FGN Securities, which offer relatively high yields. The high yields and low risks offered by FGN Securities, as well as the volatility of the stock market in recent years, influenced the “flight-to-safety” approach adopted by pension fund managers to safeguard the value of pension assets and minimise losses to contributors.

    What are the trends in the market that will make good impact in the next five years?

    The commission recently embarked on a number of initiatives, which would impact positively on the financial market and economic development in the mid- to long-term. These initiatives include the introduction of micro pension and non-interest funds and access to RSA for residential mortgage. The Commission is in the final stages of preparation for the launch of the micro pension scheme, which aims to provide pensions for Nigerians in the informal sector not covered under the CPS. Similarly, the introduction of the non-interest fund is aimed at enhancing financial inclusion by targeting pension contributors who would prefer access to non-interest financial services. These initiatives are expected to impact the workers and the economy as follows: expand the coverage of the CPS; increase financial inclusion; additional membership/contributor in the Contributory Pension Scheme; increase the pool of pension funds, available for investment and economic development; and increased financial market development, for non-interest products.

    Also, the commission is working assiduously to ensure that contributors can have access to their RSA for residential mortgage.The main objective of Section 89 (2) of the Pension Reform Act (PRA) 2014 is to facilitate access by RSA holders to residential mortgages as well as stimulate the housing and mortgage finance sector. The Commission is working with the Central Bank of Nigeria (CBN) and stakeholders in the mortgage sector to develop appropriate “Guidelines on Accessing Retirement Savings Accounts towards Payment of Equity Contribution for Residential Mortgage by Holders of Retirement Savings Accounts”. The guidelines are expected to be issued in the year.

    Many firms are not remitting pension after deducting from their employee’s salaries. What are you doing about this?

    The commission, in line with the provision of the PRA 2014, has developed a Framework for Recovery of Outstanding Pension Contributions with penalty for defaulting employers.  Based on the Framework, the commission has engaged recovery agents for continuous enrolment into the CPS and recovery of unremitted pension contributions plus penalty from defaulting employers. The recovery, which has been largely successful,has boosted the confidence of contributors and by extension encouraged non-participating employees and employers to embrace the Scheme. Through the initiative of recovery agent,  N15.31 billion representing a principal contribution of N7.85 billion and penalty of N7.46 billion have been recovered from defaulting employers. Both the principal contributions and penalty have been credited into the workers’ RSA accounts. The penalty is meant to compensate for the income that would have been earned if the contributions were remitted as and when due. The commission is also prosecuting recalcitrant employers who fail to remit their employees’ pension contributions into their RSAs.  As at today, the commission has instituted legal actions against 167 recalcitrant employers. Of that number, 78 have opted to settle out of court, 34 judgments have been obtained and 23 are at different stages in the courts.

    Meanwhile, the commission has a fully functional Complaints Monitoring and Resolution Team, which attends to complaints on non/late/under-remittance of pension contributions into employees RSAs.

    Your commission has been trying to capture the informal sector through the Micro Pension Scheme. Please give us an update on the scheme?

    The Micro Pension Plan is fallout of the Commission’s corporate strategy of inclusive and expanded coverage of the CPS. The micro pension initiative started in accordance with Section 2(3) of the PRA 2014, which provides that employees of organisations with less than three employees as well as self-employed persons shall be entitled to participate under the scheme in accordance with the guidelines issued by the commission. This gave rise to the creation of the Micro Pension Plan with the attendant formulation and development of the framework and guidelines for the plan. The guidelines have been approved by the Federal Government and issued to the operators. The guidelines have also been hosted on the commission’s website for public use. The department has been involved in reaching out to prospective stakeholders as well as collaborating with relevant institutions to create awareness about Micro Pension Plan. Enlightenment materials on the plan are being put together by the commission and both the commission and the operators are working on payment platform for flexible contributions and withdrawals on the plan. The guidelines on the investment of micro pension fund will soon be issued. Also, structures are being put in place to ensure effective monitoring and regulation of the plan. PenCom and operators are collaborating to come up with modalities for a hitch-free launch and eventual implementation of the Micro Pension Plan. It is expected that the launch of the Micro Pension plan will take place in the first quarter of the year.

    Does the commission have adequate capacity to monitor fund operators?

    The Commission has sufficient capacity to monitor the activities of all licensed pension fund operators as its key objective is to ensure that every person who worked in the public service of the federation, state government or the private sector receives his/her retirement benefits as and when due. In that regard, the commission issued a regulation for the administration of retirement and terminal benefits, which clearly specified period within which operators are to contact intending retirees and notify them on documentation needed, mode of retirement and time frame for the processing and crediting of the RSA of the beneficiaries. In addition, operators are mandated to render monthly pension payment returns to the commission as well as benefit payments made within the period, which include the details of the retiree, RSA number, date of payment and amount paid, among others. Furthermore, the commission conducts on-site routine examination of licensed operators to review the benefits administration of the PFAs, including timeliness for benefit payments. However, sometimes the delay in payment of benefits by some operators could be attributed to incomplete documentation from retirees, incorrect bank details; and delayed payments or remittance of accrued rights for employees of Treasury Funded Ministries Departments and Agencies (MDAs) of FGN prior to 2004.

    What assurances do you have for retirees awaiting their pension?

    We thank them for their patience and assure them that everything is been done to settle all arrears. The government is also putting structures in place to ensure it remains in payments moving forward. In other words, paying in arrears will soon be a thing of the past.

  • ‘TCN has achieved grid stability’

    To Transmission Company of Nigeria (TCN) Managing Director, Mr. Mohammed Gur Usman, the commission has achieved stability in power transmission. But distribution has been epileptic, according to him, because distribution companies (Discos) were sold to inexperienced operators. He speaks with John Ofikhenua and Moses Emorinken on this and many other issues.

    Can you give us an update on the affairs of the West African Power Pool (WAPP) after your meeting in Abuja last month?

    I am the Chairman of the West African Power Pool (WAPP). I believe the last meeting we had in Abuja was on the frequency control because the Transmission Company of Nigeria (TCN) wrote to WAPP and asked for the synchronisation of the network so that power can flow in these three islands. We have three islands now where the power are landed because of the problem of frequency, and  that was why we wrote to WAPP and asked them to synchronise. WAPP sought and got the support of the World Bank to finance a committee that would do the synchronisation programme. They organised series of workshops. One of the workshops was what took place here in Abuja. It was sometime in December. At that workshop we took a decision to take all the steps that we needed to ensure that we have a synchronised grid. That will require us to meet the frequency control of the WAPP  standard, which are 49.2Hz and 50.2Hz. The intention is that if the utilities can achieve 60 per cent of that standard, then we can synchronise. At the point of the meeting, Ghana and other islands, which involves Côte d’Ivoire, have met that standard. We could have synchronised with them if we also achieved the standard. A day after the workshop, I set up a committee, which reported directly to me and charged them to work towards the achievement of the WAPP standard. I am happy to tell you that, if you look at the frequency control, from three weeks ago till date, the frequency is between 49.8Hz and 50.2Hz for 75 per cent of the time, which is far above the Ghana signal. This is the best in West Africa so far now. We have never achieved this in the history of Nigeria. So, what  we are working on is not only to expand the grid, but to ensure that there is stability of the grid. So, that is what we achieved in the last workshop, which held here in Abuja.

    What is your  relationship with supply of power to neighbouring countries? Has there been a review due to non-payment of outstanding bills?

    Our relationship is that we wheel power across and outside the country. We take energy outside Nigeria. Currently, we have two or three points where we supply energy to Niger from the Northern part. One of them is through Maiduguri to Damasai and then through Doso. That one is not working now because the network was destroyed by the terrorist element of Boko Haram. The supply is done at the level of distribution companies (DisCos). It is not at our level. It is Yola DisCo that supplies that energy. The next one is the one we supply to Niger through Katsina. It goes to a town called Maradi and Doso. That one is 60Mw of electricity that we send on a daily basis to Maradi and Gazawa. The next one is the one from Birnin-Kebbi to Yamai and this is 120Mw, and on a daily basis we send this energy to those places. The other point where we send energy to outside Nigeria is through Ikeja west to Sakete. For this we are sending the following power: 200Mw to  Community Electric du Benin (CEB) under the agreement we have signed with them, which is a bilateral agreement between the government of Nigeria and the government of Benin and Togo. The other one is the 60Mw that we send to Societe Beninoise d’Energie Electrique (SBEE). SBEE is the electric distribution company of Benin Republic. We have been sending it on a consistent basis. Concerning the issue of payment, I think we have very little problem with Niger, their payment is always up-to-date. Where we have significant problem is on the CEB side, but we have agreed with them on how they are going to liquidate the payment, and I think they are making serious efforts to make all the payments. The one that is Paras Energy is the bilateral agreement between Paras and SBEE. As far as I am concerned, I believe the payment is up-to-date, because Faras is not owing TCN for the payment of transmission charges. So, that is where we are now as far as international customers are concerned.

    Sometime in 2017 you sent a request for an increase in extraordinary tariffs to the Nigerian Electricity Regulatory Commission (NERC), what do you think is responsible for the delay in approval, and how has it affected TCN’s operation ?

    When we newly came in , we did a presentation to Nigerian Electricity Regulatory Commission (NERC), with a compelling reason that showed that TCN is underfunded. The NERC agreed that we should come and present a case for extra-ordinary tarrif review, this was in 2017. We sought and got the support of Power Africa, which gave us some consultants that support our staff to prepare the case for extra-ordinary tariff review, which we did. We submitted to NERC, and there was a tentative agreement with NERC that our tariff is low and that it should go up. There were a few points of disagreement, but since that time we have not heard anything from NERC.

    I think it will be interesting if you can go and speak to NERC why they have not done it. We need extra-ordinary tariff review to be able to operate TCN and to meet our own liability. If you remember, the Transmission Expansion Rehabilitation Programme under which we sought and got support from international donors, TCN is going to repay all those loans, and we are going to pay it through the wheeling  charges that we have. So, definitely, we require the NERC to act on this. If you look at the industry now, there is none that is as hard working as the TCN. TCN’s engineers are the most hardworking staff you can see. We have become the game changer. Remember, this is the same TCN that was believed that you need to bring foreigners to manage it. Manitoba Hydro was brought here to manage this place, and in four years that they were here, Manitoba did not bring a single investment into TCN. Nigeria (officially) paid Manitoba Hydro $32million for managing TCN. For the four years that they managed TCN, they did not carry out a single audit of TCN. For the frequency control I just told you, one of them has sent an email to me to congratulate us for achieving it, saying that this is something they contemplated of achieving, but they could not. They could not even come close to it.  So, all these things we are doing, I think there should be some motivation on the side of government and the regulator. But if you look at it now, TCN is the least paid in the industry. I don’t think it makes sense because we operate high voltage. Look at it from the point of risk, TCN is exposed to more risks than anyone in the sector. I think I will be happy if from your side you can put pressure on the government, the regulator and find out from them why they are not approving our extraordinary tariff review.

    What is TCN’s wheeling capacity?

    You have to give credit to this government for some of the actions they took, including reconstituting TCN management. I remember that they inherited all those structures from the previous government and some of the decisions they took, including bringing someone like me to come on board to see how we can fix the power sector. When we came in February 2017, the capacity of TCN was around 5,000Mw. As at December 2017 when we simulated the grid, it was 7,124Mw. The last simulation which we did in December 2018, the capacity of the grid was 8,100Mw. We are on track to moving the grip to at least 20,000Mw by 2021. These are some of the achievements that we have recorded. Also, we have installed more transformers in the last one and half years to two years, more than what was done in previous 15 years. How did we do it? We met stranded containers of about 800 at the port; some of them had been there for over 15 years. Some of them had been auctioned. Manitoba was just looking at those things and did nothing to them. As at now, we have recovered 708 of the 800 containers, and we have also come up with strategies to remove the remaining ones.

    Some of the equipment recovered will encourage TCN engineers to do the installations themselves. In many cases, the TCN engineers do the installations at the rate of 10 per cent of the time that we normally spend on contractors, and at the rate of about 10 per cent of the money that we normally spend on contractors. This is where we achieve so much more than what has been achieved in the past. I can tell you that it is sustainable, and they are not doing below standard work. In reality what we discovered is that most of the contracts executed in the past  were done by TCN staff. So, we decided to empower them directly, and because they are using TCN engineers, who work for TCN most of the time, they don’t work on weekend and public holidays. That is why it takes long time for them to finish the job. But now they are doing it directly and we are achieving a lot of results. We have also decided to support contractors that are doing well, and are willing to work with us and are not willing to fight us. We enter and  support them to complete the project and pay whatever we owe them. But we have stopped variation of that kind of contracts. That is how we were able to finish Kukwaba here in Abuja. That is how we were able to finish the first segment: Katsina, Daura 132kv line and several others. Last week we entered Gagarawa and we are going to complete Gagarawa like that.

    There are some contractors that don’t want to cooperate with us. They want to continue to stay in the old regime. For your information, before the coming of Buhari administration, most of the contracts given in the power sector were not given with the hope of completing them. The objective was to empower people and make them rich. And that is why capacity and experience do not matter. You see some people, who have never done the project they give them. Some of those projects have been funded 100 per cent, LC money removed from them and you cannot see the material commensurate with the money that has been paid: no erection, nothing.  I can give you example of one of these.

    For example, the 330 KV line from Alaoji to Owerri, Owerri to Ihiala, from Ihiala to Onitsha was given like that, and there is nothing on ground now. Now, the government is going to borrow to build that line again after it was given to some people and they abandoned it. Such contractors that have refused to complete their work, we sometimes enter forcefully, take over the job and complete it. I, also can tell you that no contractor took us to court and succeeded because we are very good in project management. We understand how to intervene, and how to enter and take over. So, when we are cancelling such contracts that have such problem we don’t validate them. We leave them where they are. When we are cancelling we say we are not understanding so there is no contract for you to see us for. This is how we were able to forcefully take over Damaturu. Precisely, Damaturu was awarded in 2006, with a completion period of 24 months. As at last year up to June, Damaturu was not completed; so we forcefully entered and completed the project. It is supplies at 330KV now. Invariably, by completing Damaturu, Maiduguri, which  was actually completed but because Damaturu was not completed was not supplied, Maiduguri got supply. I can tell you in the Northeast now the government of President Muhammadu Buhari  has put 100 per cent capacity of power in the Northeast. Before now, the whole of Northeast had only two 330KV substation in Yola and Gombe. Now, we have another 330KV in Maiduguri and Damaturu. We also took over Wudil and completed it. Next week we are going to commission it. We also took over Yauri. It is going to be completed in the next one or two weeks. They have started the pre-commissioning test. We have forcefully taken over Nineth Mile in Enugu State and we are going to complete it. So, this is how it is. I can tell you that no contractor holds us to ransom now. I can also tell you that TCN engineers are building a 132KV substation in Lagos on an island called Ilase; they are the one carrying every equipment to the sea and the job is 98 per cent completed.

    Is your penchant for engaging in-house engineers generating any bad blood in the industry?

    Why should it generate bad blood? When contracts are not working, there are people benefiting from it. Those people who are benefiting from it would be angry, of course. If a system is not working, it is the majority of the people that will suffer. So, you have included those few people who are not benefiting and supported the majority of the people that are benefiting.

    There was an assessment pool done by either China, where they did a population poll; more than 70 per cent of Nigerians say their lives have improved with the improvement of power supply. I think it is important. What is more important is that we have created a system where TCN engineers are testing their capacity. No nation should be depending on foreigners and other people. So, we are building the capacity of our people.

    Why is distribution still low (between 4,000Mw to 5,000Mw) despite the increase in generation between 7,000Mw and 8,000Mw?

    I will tell you that the kind of privatisation that was done by the previous government has never been done in any part of the world. If you ask the people who did the privatisation, they will tell you that they used the Indian model. The Indian privatisation model is such that they privatised one state called the state of Orisa. It is the experience from the state of Orisa that they used to privatise Delhi. In the industry, the most important segment you have to work properly is the distribution because they are the one that collect the money. It is the money from distribution that is supposed to go to all other places. So, they  privatised state of Orisa and the experience learnt from it is what they used for Delhi. Nigerians have this report, but we went and sold everything at the same time and put a continual  liability of $5.4 billion. So, what most people don’t know is that when they are gauging Buhari administration, they are gauging it from the point of what it has achieved. Nobody is looking at the hole that the previous administrations put Nigeria into. This is what this government has inherited. Now the option of cancelling the privatisation is the option of paying $5.4billion

    I agree with this government that they didn’t tamper with the reform of previous government, if they had done that, it will also send a wrong signal to the international community that the government is against reform. But the government has done a lot of work. The privatised segments are generating but   generation is no longer a problem. Transmission was the weakest link in the power value chain. It was also the biggest problem in the power value chain. But today, it is no longer the problem. We are not saying transmission has solved all its problems, but anywhere we have problems, at least, we have a plan to fix it. We are working on putting nil contingency across the country; meaning any part of Nigeria where one line or equipment goes out, it should not affect the supply. That is consistent with the transmission expansion programme that we are doing, and that is the standard worldwide and we are on track.  What remains is the last mile, which is the Discos. If you remember, the government also came out with N72billion investment in DisCos, which TCN is in charge of managing the investment. We are actually working to stabilise the DisCos. I also want to assure you that every step to stabilise the DisCos is being taken by this government and I am telling you that in the next level that is where we are going to fix it.

    Are you still calling for the recapitalisation of the DisCos?

    Of course, that is what is required. Government has recapitalised TCN; we have raised $1.623bn so far in investments in transmission, so DisCos need to recapitalise. There is need for them to find the regulatory and policy environment that will force this recapitalisation of the DisCos. Let me tell you why the DisCos have to recapitalise. When we did the simulation with the Transmission Expansion Rehabilitation Programme, we also simulated up to 33KVA network, and the finding is that for the DisCos to pick successfully the load we have and put all the required protection, they need at least $4.2bn worth of investments for them to successfully take the power. Where will that money come from? The money is supposed to come from recapitalisation. I also want to tell you that some of the mistakes we have made in the past. Infrastructure financing requires long term finance. Part of the problem we have with the DisCos is that most of the funding that they have came from  commercial banks, which are short term in nature and very expensive. We need funding that will have repayment period of at least 10 years moratorium period; you can’t get it from financial market. So, we are not talking about recapitalisation by bringing all those short-terms. Short terms are expensive and they will not be able to build the infrastructure successfully. If you look at our interface now, we have 738 interfaces across the country. Out of these 738 interfaces we have only 421 that are fully protected. What do I mean?  Only 421 are the distributions that have their own injection substations. You know the power industry works with what you call protection and that is why if you go to your house you have what is called ELCB. If you have a problem in your house it will trip. That is the nature of power work. If your house doesn’t trip it will  burn the transformer. So, all of them need to work and if they don’t work there is going to be a problem.  The remaining interfaces, some  have protection, some don’t have. For the balance of 179 there is no protection at all. In recent times we have been having problems with our transformers in some stations. In Abuja, in Karu we lost one transformer, we have replaced it. In Kubwa, we also lost a transformer. In Benin we had two not too long ago. We have one in Onitsha. All are those networks that are not protected meaning faults in people’s house can come and hit our transformers. So, that requires investments. They have to put investments to be able to do this. This is the existing infrastructure and we are moving it from 8000mw to 20,000Mw. So, even TCN investments cannot be protected if we don’t have significant investments in DisCos.

    What is the level of demand for power?

    The fact is that transmission has a capacity of 8,100Mw, and generation has a capacity of 7,500Mw, and the DisCos can pick only 4,000Mw – 5,000Mw. That is what you will generate; you can’t generate more than that. So, we need to fix the last mile to ensure that we optimise the use of electricity and all the efforts are being made. We are expanding generation and we have  every plan to make generation work. Most of these power plants, we are rehabilitating their capacities. Mainstream is expanding Kainji and Jebba. So, they are putting what is called floating solar. You know about Zungeru, it is going to be completed before the end of this year or early next year, and that is 700mw.  Mambilla, which we have been talking about for several years has been resolved. We also have to give credit to this government. Any other thing you read in the papers are all lies. We have got approval to evacuate Mambilla through the Eastern Backbone. You heard about the QIPP, you heard of Agip, it is doing phase two, which is going to be about 510mw.  All these are coming on board. Transmission is outstanding. We are building network. We are even building a cord line, which has never happened in the history of this country. That is going to be double of the circuit line.

    Benin Electricity Distribution Company (BEDC) says its problem with its customers that are complaining has to do with TCN. What do you say to this?

    I don’t know which location they are saying but you know that Benin DisCo admitted that one of the last transformers that got spoilt in Benin was caused by them. They even wrote to us to say that they are willing to fix it. The point is that do you fix a transformer in one day?  So, we have to carry a transformer from somewhere and fix it. The problem we have with most of the distribution companies is that we sold our companies mostly to those that have no experience.   And they don’t have capacity to raise enough investments. Of course, there are also some issues that   have to do with tariff which the government has not completely fixed.  But I can also tell you that many of them are operating auto-closers, where they are also keeping people outside the supply. Except you can tell me which specific place. But I can tell you generally that we have enough supply that Benin is not taking.  As I told you, it is not as if there are no places we have problems. There must be one or two places where we have problems. But I told you anywhere we have a problem we have a plan of fixing it. So passing the buck like that doesn’t make sense. If there are specifics let us know. I can tell you we are on top of our plans.

  • ‘Use pension funds to finance real estate’

    Is the housing challenge defying all logic? No, says a former President of the Nigeria Institution of Estate Surveyors & Valuers (NIESV) and Principal Partner, Bode Adediji & Partnership, Mr. Bode Adediji. Rather, he suggests that the country should use the Pension Fund as a first tier finance for real estate development. He believes that overhauling of the Land Use Act as well as ensuring a sound mortgage system, including effective policies on housing, will go a long way in tackling the over 17 million housing deficit afflicting the country. Adediji speaks on various issues, including the need for a ‘Made-in-Nigeria’ house, in this interview with Assistant Editor OKWY IROEGBU-CHIKEZIE.

    What is your opinion on asset declaration provision and the Code of Conduct Bureau? Of recent, top civil servants and influential politicians have fallen foul of this particular requirement. What is your opinion on this? 

    The challenge we have is what is generally with us. As a people, we are not lacking in laws, guidelines and policies, but the implementation of stipulated laws and policies is where there is a challenge. When agencies are set up to achieve a particular noble cause that will benefit the people, the compliance level is usually very low. The functions and provisions of the Code of Conduct Bureau should be sacrosanct to political office holders, civil servants and, indeed, any category of persons, who by law, are required to abide by its status in preventing or sanctioning corruption in the country. It is an area of our constitution that must not be taken for granted because it defines a lot of things about us as a people.

    The continued existence of the Land Use Act is said to have cost the nation about $300 billion. Do you agree that this Act should be repealed or improved upon?

    It has been a matter of controversy since it was enacted. If there is any document or law that would have propelled us from a third- world country to a developed country, it would have been this piece of law in terms of assets own culture. The Land Use Decree struggled that to bring normalcy to land ownership, it ensured that rights, entitlements and titles to land was not trampled upon. But, unfortunately, governments in different states rather than deploy it as income generating, have influenced peddling and generating undocumented income either to themselves or cronies, stripping it of its original idea and thereby making the whole essence of the Act defeated. This hampered the efficiency and delivery on its mandate. The clamour to repeal or discard it in my mind is an attempt to throw the baby away with the bath water. For us in the Nigeria Institution of Estate Surveyors & Valuers (NIESV) and at individual levels, we are canvassing for the overhauling of the Act and fundamental amendment to those areas we find not workable. The position paper on this is in the closet of the National Assembly and until we have a government that is concerned with the development of the real estate sector, justice will not be pursued and done to stimulate the private sector.

    There has been a preponderance of rental defaults. What is responsible for this?

    Once there is prolonged recession like we have had, it affects political, moral and institutional aspects of our national life. The economy is in recession and when there is recession people grapple with a lot of things, such as financial, social and other challenges. Fundamental areas of people’s lives are affected during recession, including the ability to house themselves, pay their children’s schools fees, feed and generally meet their immediate needs. However, many countries have fashioned out how to deal with this kind of things because some people can hide under this to shun their obligation because paying your rent is an obligation. No doubt, there are insensitive landlords who increase their rent yearly not considering the difficulties they may be putting their tenants, but on the other hand, some recalcitrant tenants refuse to pay their rentals even while buying new cars, these are realities in third world countries. But we can learn from how other countries came out of that particular situation. Some countries have come out boldly to fashion out rules and regulations to identify those who might want to hide under recession or economic hardship to avoid paying their rentals. However, in a situation where there is a national malaise of indiscipline such as ours, some tenants will want to stand up to their landlords without paying, the landlord suffers more, though some landlords also increase their rent unnecessarily without a care.

    Some years back in Dubai and Abu Dhabi,  when there was tendency for tenants, where tenants move into a place and refuse to pay nor moving out of the property, the government set up a process and guidelines to resolve such impasse. The government also put in place the machinery to resolve such and to discourage tenancy disputes in conventional court, I think that is what Nigeria needs. In extreme case like that of Florida, USA, if a tenant owes his rental and the landlord fails to collect his rent as a result of the reluctance of the tenant to pay, the local government will intervene to ensure that justice is done  by investigating if the man has lost his job or debilitated by illness. Upon satisfactory investigation, the government will compel him to pay or vacate the premises.

    There seems to be property glut in the market, such that is a huge number of vacant properties adorning the country’s landscape. What is responsible for this?

    The proportion of the glut in the market is not directly as a result of the recession per se. Largely speaking, it has to with our collective lack of foresight. Real estate investments and projects are always seen in all countries as a medium to long term projects. But where we see that the rate of economic growth and the migration of people from certain income class to another is either not improving but retrogressing. In this scenario, building for a particular class of people, which may be referred to as endangered species and also for people you cannot foretell their abilities to take such products in the near future, for me, is the main problem  that we have had in Nigeria. So far, those who are building are building for a class of people who  are either expatriate staff coming or  people migrating  from low to medium and high-income areas to premium areas. For these set of people as soon as there is recession there will be no effective demand for such products.

    To avoid this, developers and real estate investors like other businesses, should be proactive and futuristic in concept, planning, financing, development and construction. If a developer goes to a bank to borrow money to build luxury estate for a class of people that are no longer available or dwindling, then such developer is courting crises from day one. On a specific note, the way I see the country and, particularly Lagos State, is that they have failed to embark on complementary services that would encourage private sector participation in real estate development. There are things the government ought to have done to provide an enabling environment for the private sector to ensure that whatever product is rolled out by the private sector, the burden of infrastructure development should be taken away from them. Such infrastructural provision of power supply, road network, and water adds cost on the final product and by extension it becomes unaffordable to some categories of tenant that would have expressed interest on such product.

    Lagos, unfortunately, has been encouraged to develop on the platform of mono axis. There was a time and largely speaking, that is, still the case where the residential outlook focused on the Lekki/Epe axis to the neglect of other areas such as Badagry and other areas that are not fully developed in the state or even encourage developments outside the state, such as in Ota, Ogun State and the Lagos-Ibadan Expressway. But because this was not done it caused a lot of environmental and physical anomalies that is so evident in the real estate development in the state. People trooped to build in the axis, but the income and unemployment level continued to dwindle in building for the class of people that are not available to take up such properties.

    Where is the vacancy challenge more pronounced – in commercial office space or residential accommodation?

    Location by location, I would say. If you look at Ikoyi, for instance, predominantly, most of the first class office spaces are empty. But where you have small scale office spaces, the percentage of void is less. Victoria Island and part of Lekki is passing through a transition where largely speaking even residential areas are transformed and converted to office use. Whenever you have recession the first target that is hit is commercial office space because recession always brings about sporadic business closures and when you close down you close down. The highest rate of failure for upstart companies normally happens during recession and so if you have built for people who have just taken off, the response from the market feedback is that there is no effective demand for such a space.

    What would you recommend to a real estate developer in Lagos?

    My position is that a-would- be developer should select his location carefully and professionally. The mere fact that you want to join the bandwagon of Lekki/Epe axis developer does not mean that you should neglect other areas where you have ready or emerging markets. Generally speaking, people cut their coat according to their cloth. The tendency to build all these five and six bedroom flats, terrace houses should be curtailed. Families now prefer two or in maximum cases three bedroom flats and in some cases, mini-flats, where common services can be shared. The other one that is important is that the idea of encouraging individualistic self-development approach in real estate is a problem on its own. Nigerians have forgotten to implement what we learnt in school known as the economy of scale.

    In many countries, the role of building where a man is going to live has been shifted from his neck to that of developer but in Lagos today and many parts of the country, the individualistic housing development is still the main focus of every one. In a situation where you have developers in different categories of small, medium and large scale then the burdens and cost associated with individuals building their own houses should be transferred on their necks and the prices will go down, the ability to pay the rent becomes enhanced. But as long as we allow individuals to acquire their land and struggle to build it on his own even when he is able to build one or two units and let one out, the proportionate cost becomes so high that prospective tenants cannot afford it. Where you have large scale housing, construction cost per housing goes down and expected rental income from such rental property becomes modified.

    People, for some reasons and belief, want to have this satisfaction that they built their house themselves. What is your take on this?

    I agree with that because it is a cultural problem, but for how long should we run our lives based on cultural inclinations when you know it is a problem? Shouldn’t we borrow the good things from overseas just as we borrowed their education? Why can’t we borrow their culture that subscribes to communal project development and living? I think that is the way Nigeria should go. In fairness there are so many companies currently that are specialised in small, medium and large scale housing estate development and they have been successful. What the government should have done is to focus her attention and place more emphasis in terms of how they allocate land, roll out infrastructure etc. But what we have is that some private and government lay-outs and individuals are encouraged to do their designs, seek their contractors or construct themselves, costs begin to rise and rental expectation will not be met just like we are witnessing.

    Wouldn’t it be as a result of not having a functional mortgage sector?

    There are so many problems associated with it and mortgage system is part of it, including the Land Use Allocation Policy. It should  be done in such a way that a particular registered developer would be assigned terms and conditions to roll out specific projects within a specified time and to be able to sell to those who have access to mortgage. This will ensure that the nation’s housing problem is being looked at in a very holistic manner and the result is we will be successful at the end of the day.

    Why is there a preponderance of quacks in the real estate sector? Some stakeholders attribute this to the fact that would be clients prefer cheaper agency fees compared to the registered agents who insist on 10 percent commission for their services?

    I don’t think that observation is correct. There are several reasons why clients patronise more quacks than registered surveyors. Firstly, the percentage of registered surveyors vis-a-vis potential customers is disproportionately low compared to the prevalence of quacks. If for example a prospective client’s first access is to a quack, then that is where he will go. I cannot think of any registered surveyor’s firm that is still very rigid on the percentage of professional fees that should be paid. You can do that during the boom but not now, nobody that is realistic can insist on that during recession as we have it now. Really, quackery will continue to grow in this country for so many reasons including lack of good job opportunities. The increase in the retirement patterns of able-bodied men and women in many respects particularly in urban centers has fuelled the practice. You cannot find an able bodied young man sitting down and idling away when he knows that he can print complimentary cards to persuade, encourage or deceive somebody to give him an assignment to go and look for a house; for these set of people their first port of call is foraying into petty trading or quackery in consultancy. These set of people by their modus operandi have greater mobility and accessibility. For as long as you have this kind of recession in Nigeria, it will spring up a large quantity of quacks because again, they have more fighting spirit than the registered estate surveyors, they are aware that their sustenance and livelihood depends on  how hard they work.

    Are you satisfied with engagement of the private sector with the government in terms of housing provision?

    In terms of patronage and engagement, there has not been any government in the last 30 years that is pro-professionals and my challenge is that until professionals find themselves in the corridors of power  and within the government apparatus, we should not expect a change in the way that the government relate with us. I suspect that if there is no change, the neglect that we suffer from government will continue to rise. But, for example, if an estate Surveyor and Valuer becomes a Senator of the Federal Republic of Nigeria tomorrow, his perception of the housing crises will be different. Again, if a registered Town Planner, an Engineer, or an Architect becomes a President or  Chief of Staff in the Presidency, the kind of  reception he will give to professional opinions in critical matters of housing and urban development will be different.  Until we have that setting and avoid walking far away from the corridor of power, it means that we can only talk while other makes the difference.

    There are so many abandoned Federal Government buildings especially after the movement of the Federal capital to Abuja? Why have they not been  put into profitable use rather than allowing the buildings to rot?

    There are some of them that are still going through legal dispute or crises while some seen physically as belonging to government has actually been sold. An example is the Federal Government houses at Bishop Oluwole in Victoria Island sold over 10 years ago. I will not blame anybody who bought and refused to do anything about it. But the abandonment is a sad development especially for a country that says it wants change and is pro-development. I have not seen any fundamental change in government policies concerning abandoned projects and properties all over the country in concrete terms. I have never seen any government in the last three or four regimes that has actually factored in their calculus this vibrant sector of the economy that can be used to check youth unemployment. If a government is pro building and pro development, people who leave school and trained as architects, engineers, technicians can actually have a place to go and work. Not only that, majority of Nigerians in Diaspora who have capacity to buy houses, if there is a functional mortgage system can expand that. But the truth of the matter is that it has never been part and parcel of any government policy to see housing intervention beyond the clamour to say we are putting roof on peoples head to embrace a more serious and wider goal of empowering people by providing employment for the young people. Once we have that, the Land Use Act perspective will change including the treatment of the Pension Fund that has accumulated to over N8 trillion. Things like entrepreneurship support system will change. The last one that I know that we talk about always instead of addressing the challenge is looking into the architecture of our housing problems and solutions to the extent that we have spoken about our concentrating on what we have to build rather than the dependency on foreign products which has been on for the past 50 years.

    Is it possible to have a ‘Made-in-Nigeria house’?

    Until we take a look at the local building materials we have and enforce it on people to build houses, housing cost will continue to rise and decent housing may continue to elude a greater percentage of the people.  We can ensure that 80 per cent of the material to be used to build anything in Nigeria is made in Nigeria if we have the political will. New technologies will be encouraged, no doubt, to ensure that our timber in the forest accounts for 70 per cent of our building materials either in terms of our walls, windows or floor . If other countries have done this successfully, we must not attempt to reinvent the wheel.

    What best use can the Pension Fund be put into judging from the fact that it runs into trillions of Naira now?

    Pension fund can be used to take care of short-term housing needs.  As at a year ago, the Pension Fund managers were prohibited from engaging in long term investment. But I believe that there can be improvement on that law by categorising for instance, some real estate development that can take about 24 months as not too long a time to fit into the laws that set up the fund. Where there can be a certainty I believe and advise that the idle fund in the Pension purse should be deployed into housing provision with short gestation period. It’s not for real estate financing that can take 10 or 15 years it can even be used as first tier finance for a particular project. It is when a nation cannot take a creative look into what their challenges and concerns are that makes the problem to persist. Look at the issue of dearth of hostel accommodation for students in the universities, why can’t the government encourage developers and assist them by making it possible for them to draw from the fund to build hostels; no doubt, the students will pay and a great need would have been met.

    Why are people holding on to the concept of family houses, abandoning houses for years and living them as relics instead of earning rental income from them?

    They are littered all over the place and that is an area I have never seen a government agency looking into. Those in the villages, historically and culturally, are understandable. For instance when Mr. X was making waves he lived in Abuja and went home to build a house but unfortunately the same Mr. X never encouraged his children to holiday in the village. Unfortunately when he passes on, it becomes automatically an abandoned country home occupied by cockroaches, lizards and snakes because the focus of his children are different. In this country, we lay more emphasis on entitlement policy as far as heritage is concerned than transforming a particular asset into functionality and utility. That is why you find out that most personal houses and buildings abandoned are underpinned by family squabbles. Those without family squabbles don’t have capacity to transform them into money yielding asset. It is a whole gamut of challenges that make the concept of family houses embarrassing and prevalent. It is important for government to find a way of encouraging some NGOs to go into advisory services that people can tap into where for example a family of three or four is having a squabble over a property they can be advised as to the channels they can explore raise fund and the kind of property they can redevelop the building into to yield income and everybody will be happy. In a case that the children are all abroad they and have no confidence on their relative they can be advised to appoint an independent estate management advisory agent to manage the property. The only way we can achieve the objective is for government to see the loss encountered by these families as not only theirs but that of the nation in general.

    Why is the Federal Secretariat in Ikoyi still abandoned?

    I don’t have information on why the Federal Secretariat in Ikoyi is still the way it is now that we have the same political party in Lagos and Abuja. Whatever may have been the crises before now on the management of the property ought  to have been resolved because at the end of the day, it is not only the developer, the state and Federal Government, but the entire  that is losing through the abandonment of such strategic and massive asset.

  • ‘Fuel subsidy stalls economic growth’

    Unreliable refineries, reliance on imported products, weak infrastructure and shortage of gas – the oil sector is challenged. The Managing Director of the Nigerian arm of Petrocam Trading Company, Petrocam Nigeria Limited , Patrick Ilo, in this interview with AKINOLA AJIBADE, speaks on the industry’s challenges.

    What is your assessment of the global oil market?

    The industry, like any other, is growing and requires time and commitment of every stake-holder in the country to see to the rightful implementation of the policies that are put in place by both the government and the private sector in order to strengthen it. Globally, the oil industry, has experienced difficult times, as evident by the falling prices of crude  since 2008.

    Nigeria had its own share of the problems. International prices of crude oil was at its lowest point at a period, as crude oil was exchanged for as low as $20 per barrel, a development, which has constrained the spending of the Federal Government.

    Though the global oil industry experienced some breakthroughs in 2017 and greater parts of 2018, as international price of crude between $65 and  $74 per barrel, the feat was shortlived as the price began a downward journey. However, with patience, perservance and absence of volatilities in the market, the price would pick up again and oil producing countries, including Nigeria, would be better for it.

    What is the likelihood that Nigeria’s crude oil production will hit 2.5 million barrels per day or more?

    The probability is high and the reasons are not farfetched. The major reason lies in the peaceful nature of the oil producing Niger- Delta region. Once Nigeria exceeds the cap period placed on it and Libya, by the Organisation Petroleum Exporting Countries(OPEC). The decision by the Federal Government, to restore peace in the region through engagements with stakeholders, especially communities, where oil is produced came in handy.

    At present, Nigeria’s daily crude production is in the region of between 1.75 million and 1.8million barrel of oil. It would be a different ball game for Nigeria, whenever it increases daily crude production.

    How much does it cost the government to import fuel into the country?

    To answer the question would be difficult, as I’m not in the government to know the amount spent on importation of fuel. Petrocam is a private entity and as a result of this, I’ m a private operator. However, the landing cost of fuel is in the region of N175 per litre or more. This is the cost at which fuel is brought to the country. The government has been magnanimous to import fuel at N175 per barrel and directed marketers to sell at the regulated price of N145 per barrel.

    How can Nigeria overcome the problems of importation?

    The country can fix its refineries, build new ones and pay the outstanding of the debts owed marketers, by the Federal Government, in form of unpaid subsidy arrears. The government has licensed some private operators to build modular and traditional refineries, which would refine crude oil at higher capacity. This is done in a bid to stop the problems recorded through the importation of fuel. The problems include funding, rising foreign exchange, inability by the Federal Government to fully deregulate the oil and gas industry. Above all, the government must try and pay the debts it owes marketers.

    What would happen to marketers if the government is unable to clear their arrears?

    Inability of the government to pay the subsidy arrears owed marketers, is going to have dire consequences on their operation. The effects are multidimensional. First, many businesses that are either owned or partly owned by the fuel marketers would die natural death. The reason being that marketers get the bulk of their capital from their fuel imports and inability to get money to finance their operation would kill their businesses. Mind you marketers neither have their own refineries nor enjoy any financial backings outside the country. It is the money, which  they generate from the sales of petroleum products that keep them going and the moment that source is closed, it means the end of their operation.

    Also, marketers would experience a drop in the sales of fuel once they do not have enough capital to create new businesses or sustain the ones they are doing. Besides, the issue would lead to increase in the interest rates charged by banks.  Often times, financial institutions capitalise on the demands made by companies in need of loans. The moment a bank realises that clients are in dire need of money, what the banks do is to look at the portfolios of the firm and provide the firm with facility needed for operation. Once the portfolio is big enough, banks would increase the rates at which its giving out loans to the company in question. Conversely, if the prospective loan seeker has a small portfolio, the bank may not increase the lending rate. But in most cases, banks respond to the needs of their clients, by increasing the lending rates.

    What are the benefits of the full deregulation of oil and gas?

    The benefits are many and varied. First, a fully deregulated oil and gas sub-sector will open up opportunities for operators to improve investments and create new ones. For operators who have opened retail outlets, it would be easier for them to introduce some innovative measures, with a view to improving their businesses. Measures such as introduction of Point of Sales (PoS) and other strategies for their customers came in handy. The measures include, but not limited to production of   their own lubricants, as part of winning more customers.

    Secondly, a fully deregulated market would engender competitions among operators. The issue would bring more players into the industry. Once more operators are doing the same business, as in the case of selling fuel to consumers, the tendency to compete with one another is high. Of note is the issue of Kerosene and Diesel, the two products that are not regulated by the government, and this has resulted in the huge prices commanded by the two products.

    So, in the event that the government fully deregulates the sub-sector, more people would go into importation and sales of the products. The more the number of operators in the business, the more the competition and by extension, the lower the prices of those products. This would bring about what I called Demand Push, Supply Push syndrome. This means the more the demand placed on fuel by consumers, the higher the supply of the product in the market.

    Thirdly, full deregulation would bring about investments in refineries. Marketers, like any other businessmen, are more comfortable with cheaper products to expensive ones. Once the marketers know that they can get refined petroleum products locally and cheaper, they would certainly pool resources together to invest in either modular or bigger refineries. They know full well that the refineries,  no matter how small their capacity,would get fuel to sell. This would make them to invest in refineries. When this happens, the country would depend less on imported fuel.

    But payment of subsidies is good sometimes, as it makes marketers incur fewer expenses.

    There is no doubt about that. The payment of subsidies to marketers has saved them from incurring some cost. By paying subsidies, the government is indirectly defraying the cost  which marketers incur on importation of fuel. The only period, in which marketers complain about subsidy, is when the government fails to pay it. A typical example is the face-off between the government and the marketers over the issue of unpaid subsidies.

    But the price of fuel is still very high, despite the payment of  subsidies?

    Marketers do not own vessels that brought the product to Nigeria. They hire vessels and pay them. The cost of shipping fuel is often times high and needs to be factored into the cost of doing business. Why would the price of fuel not be high, except the price is deregulated like that of PMS, which is N145 per litre. Even those consumers are still complaining. Look at the unregulated products such as kerosene and disesls. You would observe that the two products are being sold between N210 to N225 per litre.

    Some stakeholders are calling on the government to cancel subsidies and fix the refineries?

    It would be good, if the government would listen to such calls and do the needful, by cancelling subsidies paid to marketers. The payment of subsidies is a drain on the pockets of the government. Imagine in a situation, where government is paying billions of naira as an arrears on the subsidy owed the marketers. The government has neglected infrastructural development for subsidies. Roads were left untarred, hospitals are dilapidated and many other infrastructure programmes were unattended to, following the decision by the government to pay subsidies owed marketers. This is not good enough for the economy that is grasping for breath.

    Are there countries that have implemented full deregulation?

    Yes, there are countries. Dubai and Canada are some of the countries. Different people can be selling fuel at different prices. I can sell fuel at a price, which I think is good for me; so also any other person. The most important is that people are looking for areas where they would be given the best services to identify with.

    What are the other benefits? How economical are the calls by marketers that Vitol and other foreign firms should invest in refineries in Nigeria?

    Once the industry is fully deregu-lated, investors would come into invest in refineries, knowing full well that they are going to make their profits. Deregulation is preventing investors from investing in refineries in Nigeria and once the government fully deregulates the sector, it means that the coast is clear for operators to invest in refineries and other facilities that would strengthen activities in the industry. When crude oil is refined locally, the refiners would minimise losses and they would sell their products at prices that are beneficial to the people that is consumers, in the sector. But as long as the price cap is on the petroleum products are still there, due to absence of full regulation of the sector, the price of fuel would remain high.

    What are the factors hindering fuel importation?

    The problems are many and varied. First is the scarcity of foreign exchange in the country. Inability of firms to get enough dollars has hampered their operation. For instance, the rising cost of naira to dollar has denied operators in the oil sector, especially marketers the opportunity to import fuel into the country. The development has provided the Nigerian National Petroleum Corporation (NNPC), which has the opportunity to access enough dollars to be the sole importer of fuel in the country. Being a Federal Government owned institution and a regulator for that matter, the job has been easier to control importation.

    Does that mean that NNPC has barred other companies from importing fuel?

    No, NNPC did not stop anybody from bringing fuel to Nigeria. As I said earlier, forex and the rising landing cost of fuel problems affecting importation. The landing cost is in the neighbourhood of N175 per litre of fuel or more, while the regulated price of fuel is N145 per litre. Based on this, the landing cost of petroleum products is higher than the pump price of the product, because of the subsidy regime. Recall that the Federal Government has pegged the price of petrol at N145 per litre, a development, which means that nobody must sell the product above that price. This implies governmet that bring fuel into the country would be selling at a loss, going by the landing cost of N175 and N145 retail price of the product in the country. The government has been magnanimous enough by directing NNPC to supply fuel to everybody. The Product Petroleum marketing Company (PPMC) gets fuel from NNPC and sells it to marketers. It is only kerosene and diesels that are not regulated a development that allows Nigerians to import them into the country.

    Is NNPC not part of the problems?

    No. NNPC is not part of the problem. The Corporation should not be blamed for the offence it has not committed. The issue of importation is not economically viable for the operators, due to the huge foreign exchange and landing cost, which many operators unable to bear.

    How did Petrocam begin in Nigeria?

    Petrocam is a South African firm, with specialty in the trading of crude oil and other commodities in Africa. Established in 2004, the firm has traded in oil with some notable companies in Africa. Due to successes recorded in its activities, the firm decided to expand its operation to Ghana, Nigeria and other countries in Africa. This resulted in the establishment of Petrocam Trading Company Limited in Nigeria.

    Initially, Petrocam Nigeria was trading oil with local and international oil companies in Nigeria. To play a more active role in the country, the firm invested in the downstream sub-sector of the oil and gas industry, by opening retail and distribution outlets in Lagos. One area, in which Petrocam has performed well was when the Nigerian National Petroleum Corporation (NNPC) introduced an idea known as Direct Sales Direct Purchase (DSDP), in order to ensure availability of fuel entry.  This culminated in the opening of retail outlets, by Petrocam, in Lagos state.

    How many firms were approved by NNPC to engage in DSDP?

    Petrocam and 10 other firms were licensed by the Federal Government, to participate in the Direct Sales and Direct Purchase model.

    What are the names of the multinational oil companies in DSDP?

    The number of the firms approved to participate in the scheme was 11, including Petrocam. However, it is not ideal for me to mention their names on the pages of the newspapers.

    What is the Unique Selling Point (UPS) of Petrocam?

    The unique selling point of the firm lies in its ambience. The firm has a beautiful and uniform structure. The firm’s structure is different from any other operators; so also the services it renders to the people. The firm built its outlets facing the equator in order to generate its own electricity, through solar means. Through this, the firm is able to store kilowatts of electricity annually, in order to render its services effectively to the people that are buying fuel and others. For instance, the firm provides electricity free to residents of the streets adjoining, where the outlets are located. We believe that filling station is about services, trust and we have never shied away from them.

    How many stations have been set up by Petrocam?

    The firm has built seven fuel stations in Lagos. The stations are in Idimu, Aja, Epe and other areas of the state. The retail outlet was commissioned recently, and the firm is planning to build three more stations in early 2019, in order to bring the figure to 10.

     Do you partner with refining companies abroad?

    What we do is that we give crude oil to refiners to process it into petroleum products, before we ship them to Nigeria. However, when crude is refined locally, marketers would stop relying on importation. They would have access to fuel, without paying landing cost on the product.

    Does Petrocam operate a tank farm, where fuel is accessed for onward distribution to consumers?

    No, Petrocam does not own a tank farm. The reason is not because the firm does not have the  financial wherewithals to build a tank farm. It is just that the company does not believe in operating a tank farm, before it can perform creditably in the downstream sub-sector. What Petrocam does is that it uses tank farms owned by other operators and has no regret over it.

  • ‘Intra-African trade needs proper definition for effectiveness’

    Trade liberalisation within African countries has been on the front burner for a while. At the just-concluded Intra-African Trade Fair in Cairo, Egypt, Manufacturers Association of Nigeria (MAN) President and Executive Director, Stakeholder Management and Coporate Communications, Dangote Industries Limited, Mansur Ahmed gave reasons the initiative should be supported by African leaders if the continent is to become an economic power house. Group Business Editor SIMEON EBULU was there.

    You have traversed various sectors of the economy. What has it been like?

    It’s been very interesting, sometimes a bit frustrating, sometimes inspiring. I started from the mid- sector – that’s the academy moved to the business sector, then to the public sector and the private sector; then the public sector and then back to the private sector. It’s been quite interesting to see the various facets and dimensions of the economy and the politics and to see all the great opportunities we have missed and the great potential we are yet to realise.

    You talked about missed opportunities. What are some of them?

    We can recall that in the late 1990s, we started an exercise on envisioning a new Nigeria. That was called Vision 2010. It looked at Nigeria in the medium term setting 2010 as a sort of target. It was a tremendous opportunity to begin a transformation, to begin a nation building process. Many Nigerians across all sectors and all cadres participated.

    I remember there were probably close to 300 participants on that exercise led by variably seniors public and private sector leaders and over a period of about a year, the team drew a vision for Nigeria, which addressed most of the key issues Nigerians are still facing. Unfortunately, that was the first missed opportunity because the document was completed in 1997 and handed over to the head of state then, General Abubakar Abusalam (rtd).

    But he obviously didn’t have much time because of the transition programme to civilian rule. But when the new government settled in, we didn’t know what happened, apparently the document was just laid aside and so we missed a great opportunity to begin a nation building that I think by now would have placed us well close to the targeted destination.

    The Vision 2010 document included looking at building a united democratic harmonious nation driven by the economy, by the private sector, with the public sector acting as the facilitator and the enabler. I think if we had done that by now, we would have a great economy. Certainly, that vision is still the vision and that’s the missed opportunity I’m talking about. We’ve tried other things; we’ve tried NEEDS; Vision 20:2020 and now we trying the Economy Recovery and Growth Plan (ERGP). Now the interesting thing, to me, is that all these exercises and subsequent ones, to a large extent, are inspirations from that Vision 2020.

    As an operator in the private sector, what  are your major challenges in the Dangote Group going by your submissions?

    The big challenges for Dangote Group and indeed for the business sector, generally, is that our economy is still  not sufficiently conducive for rapid investment and private sector group. To me, the public sector plays too much dominant role in economic liaison and many of the efforts being made to move the economy forward, to create opportunities for growth, particularly growth that is inclusive, tends to be stunted by the fact that the public sector seems to lead the process, control the process, embrace the process in a way that there is no enough room for the private sector to operate and to really exploit the private sector capacity and the private sector initiative.

    Dangote Group seems to have overcome these constraints because it is the biggest investor in the country’s economy. How was this achieved?

    To be honest, I think we have to admit that Dangote Group, particularly the President, Alhaji Aliko Dangote, is a unique man. Where most people see challenges, he sees opportunities and unlike many investors he is not held back by a sense of impairment; he moves despite the challenges; he invests despite what other investors will see as monumental incapacities to investment and I think that is why he has uniquely been able to do a lot of the things he has been doing.

    Dangote Petro-chemical presents a veritable platform to achieving the intra-African trade initiative. How have you been able to capitalise on this to espouse the opportunities that can come out from that industry, even if it has not been fully completed?

    The process is just starting. The petrochemical industry is like a mother industry; it creates opportunities for a lot of other downstream industries to grow and, certainly, it creates opportunities for a lot of other business. It links with other substances, so what we are doing is basically setting the basic industry or hub as it were to refine chemical products, fertiliser and gas.

    Those are the things that feed so many industries; fertiliser feeds the agricultural industries; petrochemical feeds a lot of downstream industries like the plastic industries; pharmaceuticals and many other industries that use either the output or the iutput of the industries. So, our approach is to create this hub and as we do, we expect that investors who are watching on the downstream will open to us and, perhaps, on the interrelated industries for instance, agriculture, we want to acquire not only the fertiliser, but plastic, bagging industries for packaging.

    This is the first intra-Africa trade and exhibition. What opportunities can your organisation get leveraging this platform?

    I think for Nigeria, it is important that we are able to recognise what this kind of cross border and international trade requires. It is also important for each country to really understand what it wants to get out of it and to prepare itself to focus on those opportunities that it can create for its economy and also to make sure that it works with its business sector with the private sector to ensure that those opportunities are realised because at the end of the day trade does not happen between countries, it happens between business, between people. The role of the government is to facilitate, to create conducive environment where trade happens. That means ensuring your legal and regulatory environment is trade friendly; that means that your operatives of the economy, your regulators and administrators, understand their role and play that role well. There is a strong partnership or collaboration between the business sector and public sector aimed at achieving the goals of the economy, particularly with regards to trading with other countries. We need to understand what we’re going into, what opportunities exist, what risks exist because there are no opportunities without risks and, therefore, we need to be prepared to be in a position to mitigate the risks and to exploit opportunities.

    What constraints do you foresee for Africa coming together? How do you see your competitors or other nations where your firm operates resisting your entry?

    We are happy where we see opportunities to invest in other foreign countries or to trade with partners in other countries and we see tremendous opportunities in this.

    If we take cement as an example, this is the area that we have built significant competence and ability to produce high quality cement at very low price. We know that the base element, the basic input for cement is limestone.

    Nigeria has tremendous limestone deposit and we are using that to create the largest cement industry in Africa. Today, we are the largest African producer of cement. And, so naturally, if the system works, if the trade relationship works, it will work to our advantage. It will also give us the opportunity to invest in our country.

    So, apart from free trade, we also want to see an environment for easier investment so that we can go and invest in those countries that we see opportunities where there are limestone and they have demands which is not being met.

    So, this openness creates a lot of opportunities for us in that spectrum. I think that out of the legacy of colonialism, certain countries have taken control of some of our sister countries in Africa and their business sectors, their industrial sectors have been taken over.

    So, even when we try to invest in other countries, we see a lot of push back, most of it is generated by these competitors who are not essentially indigenous investors. We are not worried about the competition. What we are concerned about is when certain incentives are allowed through this businesses or when hurdles are placed in our way to exploiting those opportunities.

    This is why we keep saying that if African free trade agreements work, the first focus of our government must be to ensure we have a regulatory environment that is fair and equitable. We have a regulated environment that works based on agreed rules of the game not based on some unacceptable  practices.

    Now there are others, like infrastructure. Where you lack good transport infrastructure, trade suffers because the cost of your product is simply raised significantly high and this is common across the region. Transport infrastructure in the whole of Africa is extremely important and it aids a huge cost to products delivered. There are people who think up to about 35 percent addition of cost is settled by African businessmen within their organisation as regards transportation.

    Does your organisation have or feel any responsibility to help other businesses become like it? Do you have any plans on mentoring?

    Nobody goes out to grow their competitor; that is certain. But we are happy to create opportunities for up and coming small businesses and that is why we are very supportive of the small and medium scale enterprises so that they can also grow because if they grow then we make our own business easier because then we can now focus and not have to do a lot of the small things that others can do.

    Yes, we are very committed to working with the small and medium industry sector to provide strong linkages between the small medium industry sector and the large industry sector and this is something that also the government ought to do more seriously.

    A lot of people complain that a lot of the intra-Africa trade is informal. This is certainly true in the West Africa zone, but I feel that people who trade informally do so because the constraint of formal trade is beyond them, so they will not be able to break through all the barriers.

    Thank God the government has set up a committee, the Presidential Enabling Business Environment Council (PEBEC) and it is trying off course in the economy and again our problem has always been sustainability; you’ll start something and then there’s a change of government and leadership.

    What is the experience of Dangote Group in the free movement of goods and persons within the continent?

    Our President, Aliko Dangote, in particular, has been probably the loudest opponent of this arrangement whereby African countries can’t seem to allow ease of movement even at levels that it is obvious will be of advantage to both countries. I think it is obvious he has made a lot of progress because even this visa on arrival used to be non-existent, if you want to go to Kenya or Zimbabwe, you will spend three weeks waiting for visa, but today at least thank God it’s getting better.

    If we are going to really integrate our economies, we have to allow movement of talents across the border easily, particularly if you are investing newly in a country outside your own, you would want the opportunity, at least at some level to make some of your own people to go there so that you can transfer whatever experiences and knowledge that you need.

    It’s even worse with regards to goods because even if you take West Africa for example, which has the ECOWAS liberalisation trade scheme, allowing for the movement of goods without much hustle, what we know is that today, if we are moving goods across our countries from Nigeria to Benin Republic, to Togo, to Ghana, the headache is enormous and most of this headache is not because the rules of the game are set to create a headache, but because the people who execute those rules, unfortunately, see themselves in a total different light.

    The regulators are men of our country that see themselves more as gatekeepers rather than as enablers and facilitators. But, particularly for trade and investment, the role of the government is to nurture, facilitate, encourage. It is saddening that when you go to apply for that visa or that permit to establish your business you’ll find out the regulators tend to see themselves as gatekeepers.

    So, that’s the kind of attitudinal change that has to happen if trade and investment is to flow across Africa. If you travel around Europe, you can pass six borders without knowing that you’ve passed any border, all you need is your ID card or your small chip, you’ll just put it against the little window and you pass.

    The 2019 budget has been presented to the National Assembly? How well has the manufacturing sector benefited from government policy this year and what is your advice on moving forward?

    The manufacturing sector, in particular, derives the greatest benefit from three perspectives. First from continuing investment on the infrastructure: road, rail, telecoms.

    These are all vital to efficient manufacturing, particularly efficient business in manufacturing. Infrastructural services are so vital to successful investment and so we look at the budget and see how much will be going into infrastructure and then we can say we are moving in the right direction.

    The second perspective is the other end of our business. We produce to sell, so we want to see actions being taken by the government which puts more money in the hands of the individual because if you increase the buying power, then off course our market will grow.

    The third element is to look at the monetary and the physical policies and see how to these adapt or aid our business.

    Take monetary policy for instance, stability in exchange rate is very bad. For many reasons, our manufacturing sector is heavily dependent on imported input, raw materials, component, spare parts, machinery, everything. A huge dependency on importation and, therefore, we want to make sure that the foreign exchange is stable. So, every time the dollar go up, it means our import cost increases and we may not have the capacity to increase our prices; so profitability diminishes.

    Any budget that introduces new structures on foreign exchange will be negative but any budget that puts more money in the hands on the population will be positive. So, that’s the sort of thing we are looking at in any budget, of course we are not just looking at the cost, but we are also looking at the specifics because some of those constraints are more argent than others.

    For instance, if you look at the total expenditure on infrastructure we want to see significant progress on the rail and the road distribution on the reports because those are the things that create the biggest impediment to the success of the operations.

    We are engaging the government; we are engaging the National Assembly. The last budget to be concluded has made tremendous progress in terms of increase investment in the infrastructure side and we hope that this budget will sustain that of the investment side.

  • ‘New guidelines will eliminate electrical accidents’

    The distribution sub-sector of the electricity market has been operating without a standard construction guideline. In this interview with John Ofikhenua, the Managing Director, Nigerian Electricity Management Service Agency (NEMSA), Peter Ewesor, says the guidelines, when unveiled, will eliminate all risks associated with electrical construction.

    What will the operation of the electricity industry be when the new order comes on stream?

    The outlook, or what to expect  when the new construction guideline comes out is that, one, there is going to be  uniformity of installation nationwide. We are going to see poles that are properly aligned. We are going to see the elimination of bad networks. Not as we see it now, when you planted a pole just yesterday and by today it is already bending from the position because people are not constructing their substations in line with the extant rules and regulations. The electrical installation and construction guideline manual, is actually meant  to show the nitty-gritty, step-by-step approach to carry out electrical installation along the distribution sub-sector of the power value chain.

    If you notice today, when people are given a village to electrify, the man will not follow any kind of approach. He just goes there and plants poles the way he likes and how he feels it should be planted, not following a specific pattern. But the guideline is actually referring to the rules and regulations and the extant rules, giving you a step-by-step approach of how to do it. For example, when you are providing light in a community, there is what we call survey. You are going to do the survey so that there will be proper pole alignment. Proper pole alignment will enable this network to be firm, stable and solid. But if there is no proper alignment and you have poles planted zig-zag, what now happens is that there will be forces of imbalance that will actually be pulling the network in different directions and that will make the network to collapse and it will make the network not to provide its services.

    So mainly, this construction guideline manual, is going to ensure standardisation, it is going to guarantee safety, it is going to guarantee reliability, to ensure that the network you build will not fall into a state of disrepair as it is now.

    At the same time, it is going to ensure smooth and reliable flow of power to houses. In short, it is going to address a whole lot of things. For example, when you finish your installation, when NEMSA is coming to inspect, test and certify, it is going to look at the guideline. Have you carried out the installation in line with what the regulation says, directed, and as pictorially shown and approved in the guideline? This is because all this works together to ensure that at the end of the day you get a fine and reliable product of the network that is delivered. That is why we want to ensure that the project has been properly planned, designed and executed, and to ensure that the network will actually provide those services in the very long run, not the one that works and after a period of time, it collapses. This is because the construction guideline would have given them what to do in each of the different sections of the installations, starting from the overhead line where you are going to connect to the grid and where you are going to connect to the transformer.

    But today under the guideline, there is provision that we call bi-metallic lighter which allows you to join too metals together without any problem. The earthling system and everything will be okay. This is because the guideline will give you the layout station, layout of switch yard and layout of control room.

    In many of the control rooms today, you cannot access their backyards and it makes maintenance difficult. And there is not enough maintenance spaces between the panel and the wall. All this will be done. Like in a control room, all the relevant devices will be there, like installation rubber bind, fire extinguishers, danger sign, everything will be there. In the construction guideline  that is used in a network, every device that should be there, will be there, including how you treat an angle. And then all the devices, like anti-climate devices, danger place, all those ones will be provided. Actually, the guideline is a holistic document that will give you a standard procedure for carrying out electrical installation in the distribution sub-sector.

    How far has NEMSA gone with the preparation of the guideline?

    Currently, we are at the final stage and that is one of the things we said we are going to do from the second stakeholders forum. The step is for us to ensure that this one is concluded and be ready for presentation and launching, and will be delivered for the distribution sub-sector’s use because from there on, no distribution company will be able to feign ignorance, or say that they don’t know. Today, you see different types of constructions. Actually we have done stakeholders, internal stakeholders and external stakeholders on the guideline and during our second stakeholders’ forum, it was presented again.  So, we are at the final stage of just checking to see what and what are not there and what we need to actually tie, and what we need to lose. And that is the final stage.

    When will the guideline take effect ?

    We are looking at preferably the end of January. In short, in the third week of January, we should be able to make the presentation.

    How far has the agency gone with the clearing of structures under high tension lines?

    Right of way is not just NEMSA’s work, but we are the ones enforcing some technical standards. So, in line with government policy we have already issued directive to the distribution companies, as a first step, to secure the lives of those living under the lines. DisCos should disconnect any structure, any facility, or any building that is within the right-of-way from the public supply, and that we are already doing. And they are already complying with that, they are already sending us the compliance level. And we are compiling them. As of today they have disconnected well over 750 houses, structures from supply within the right-of-way nationwide.

    Some of the residents are saying they are not quitting the right of way until they are resettled, while others are saying that they were not adequately compensated, therefore, they will not quit. What is your position?

    The true situation is this. I will just give you the scenario. Anybody that is saying that he has not been compensated is definitely not telling the truth. But that is not to say that there cannot be one or two nationwide, for one reason or the other. The true position is that when government is going to build a 130KV line and a 330KV line, they will do a survey, they will do enumeration for the right of way they are acquiring, and those enumerations are properly documented. Under the then TCN, under the PHCN, NEPA that time, there was what we called a Way Leave Department that assessed all the buildings, structures within the right of way. Not even just structures, even those who have crops under the right of way were enumerated. And they would pay them and make them to sign for what they were paid. But some of them said what they paid them was not enough to build a house. That too, cannot be true.

    If you listened to my Radio Programme, one of the chiefs in Abuja ( I think it is  around Kubwa area),  stated that there was somebody with a two bedroom that was  paid higher than somebody that had a  four bedroom. Yes, it is possible because they evaluate the structure and look at the kind of structure you have built. If you built a four bedroom which is zinc, ramshackle, you cannot be compensated like somebody who has built a standard two bedroom with blocks, with all the required apparatus in the house. So, many of them too, when they get this money, only God knows what happens because government used qualified valuers to value most of these properties within the right of way. They don’t just go and start guessing.

    They are valuers who would value the properties and give you the right valuation and the right amount to be paid. Even the one in Lagos that was complaining that they didn’t pay them, one of them came to say they were paid, but they were shortchanged. But I can’t know that. You can’t know that. The people that can actually know are the people who pay them and the person who is paid. If they are short-changing you at that point, you should complain. So these are the issues that I see, but to say you were not paid, I think it is not correct because there are standard procedures for doing it.

    Is it true that government has no evidence of payment?

    I have told you that when they do compilation, they do survey. In that survey, they will show all that are inside the right of way. Thereafter they will go and have meetings with the people. They don’t just say there are 10 houses. After they have enumerated, they count all the houses. They normally have what is called, stakeholders meeting with the communities, Chiefs and all the people that are involved. At that stakeholders forum they will check the details of every building, owner and premises owners. And the person will agree that this is my name and show evidence that he owns the property. I can’t see how somebody will say that government doesn’t have an evidence. We started in 2014 and 2015 with our Act. TCN, which is the custodian of the right of way, that has the Way Leave Department, definitely has all the documents. And unfortunately some of them would be thinking when they were paid, there was no evidence. That is why they are saying so, but in their hearts they know that they have been properly compensated. If they say it was inadequate it depends on the measure with which the person is saying, it is inadequate.

    Industry players are saying that all manner of meters will flood electricity market upon the implementation of the Meter Asset Provider (MAP). Although the MAP regulation is yet to take effect, what check do you have to ensure standardisation?

    That is  the reason why NEMSA National Meter Test Stations were established because when you say all manner of meters, it is not all manner. When you say all manner, that is any type of meter. There are brands of meters, there are specifications. Specifications have been properly aligned and defined in the Nigerian metering code version. Any meter that does not meet those specifications and requirements, NEMSA will not test it. In short, we are already having challenges with some people now. They brought meters into this country and our Meter Test Station engineers assessed the meters and said this meter is not in compliance with this specification, as a result, we will not test those meters. And some of them have even gone as far as writing petitions everywhere and saying the meters meet international standards. I said yes; your meter, whatever standard we are looking at, must first and foremost comply with the national local standard in Nigeria.

    That is the first  place we start from. But if it does not meet it, we will not test and such meter will not be allowed to be used in Nigeria. NEMSA cannot be forced because we are the sole authority in ensuring that meters are properly tested, meters are checked out to ensure the accuracies are correct, to ensure the types are right, and to ensure that the quality, too, are the right quality and to ensure that when the meters are being used the people will not be shortchanged. Every meter that is tested in NEMSA and the one that has been certified, there is a seal on it. That seal shows that this meter has been tested and certified. You know this one now, the MAP is going to explode the deployment of meters, we are equally now going into fine tuning how people can verify whether the meter in their premises is genuine meter tested by NEMSA or not. That one too we are working on it seriously to ensure that just as if you buy your drugs now you can dial one number it will tell you this drug us fake, this drug us pis genuine. We are going to do that. Because you talked of all manner, you check against all manner, we are definitely going to step up our game of ensuring the security of the meters we have tested is to  consumers and to the suppliers benefits because that when you talk about meter you always think about the consumer and customers alone. No, it is for both. The supplier too can lose revenue if the meters are under dispensing, if the meters are dispensing power and the amount they are dispensing is not paid, the DisCo will lose money. At the same time it is that if the meter is over dispensing and the person is not paying for that amount of money because there is no proper accuracy balance, there is no accountability, the supplier will lose money. On the other way the consumer will lose money. So, our job is to make sure we are referees to make sure that both suppliers and the consumers actually have satisfaction from the business. I am paying for what I am consuming and I am paid for what I am supplying. There are the issues that we are going to look at.

    How many types of meters have you tested since the sector started talking about MAP?

    I can say that precisely it is one brand now, it has just come. And that particular brand is a brand that is coming new which we are type-testing. Type-testing, we want to check whether it meets our requirements in the industry. But we have done what is called due diligence check; physical checks and technical checks to see whether it meets those requirements like what we say were the radar is must not be opaque. It must be transparent. That is the terminal cover of the meter. But this one we are talking now is opaque, we cannot see the terminal. So, even if there are going to be safety challenges there, there is smoke, something is going one, it will not work. The voltage rate which they quoted was not correct. There is a token with which we verify that meter because every meter has a cycle it will go: one kilowatt/hour unit us actually fulfilled. If it is a mechanical it is like a disk. It is when it finishes the 360 degree that you have consumed one kilowatt hour. So this one I am telling you has been going on for about nine months now because they have been going everywhere and we have told them that as NEMSA our job is to check that no substandard meter should come into the industry.

    How many types of meters have you tested so far?

    If you say how many they are so many. We have type- test certificates we are giving now, they are close to about 450. And if you say type, it means if A is producing meter, and B is producing meter, it may be you are using the same specification but you may just change one angle there to make it look  different. So if you see them it is only through pictures you will see some little differences. You might not even see some differences. But we have type-tested over 450 since the inception of NEMSA.

    How has the establishment of NEMSA affected safety in the electricity industry ?

    If you watched me very well you would see at my Power Summit presentation from 2015,  2016, 2017, 2018 till now, there is a marginal decline in electrical accident and electrocution, which shows there is improvement. But beyond this, the DisCos still need to do more because the target is that we are going to zero tolerance for electrical accidents and electrocution. But it is better than the past, and if NEMSA has not probably been there  and if NEMSA is not doing its job through inspection, may be by now, it would have been something else. When we say marginal decline in electrical accidents, you can just know that it is not just a small thing . But the loss of one soul alone is big, but when you now say multiple of them, then it is bigger. What we are now saying is that there is a decrease in the number of electrical accidents. But definitely for safety in the industry, we need to do more, the DisCos need to do more and unfortunately, the networks are aging . You know that with age the equipment are no longer as strong and no longer as reliable.

    The DisCos are being told everyday in writing, counseling to make sure that they start revamping and changing most materials and equipment that are already old that can fail suddenly on their own. We are following it up with sanctions. As I am here, we have gone to do some network monitoring which I am writing to them when they are not properly done even though  it is a rehabilitation. When you bind a conductor to the neck of the insulator, it is a very risky situation because it will slip and it will fall off . Definitely there is improvement in terms of safety in the  industry. Subsequently, we are going to have more improvement because the DisCos  know now that they have to ensure compliance.

    There was a time you talked tough about the types of poles that should be used in the electricity industry . Is there any compliance with the type you said they should use?

    There are, and it may interest you to know that some people, some pole manufacturers, who could not meet up on their own fell by the wayside. They packed up because if you want to do the manufacturing of electric poles you must be a serious businessman. You must have the resources, you must have the technical know-how. But before we came on board somebody will just go and buy a mould, then himself and his child or his wife or just one or two persons will be mounding. But now it is mandatory. There are mandatory requirements. You must have a civil and structural engineer, who must be part of the business. Because the person must design the structure of that pole.  We are carrying out test on those poles.  There is what we call disruptive test. In that test we will try to destroy the pole, we will first of all drag it, we leave it back and it goes back to its original position. We must see that it has that ability to move and go back to its original position. And it must be strong and firm. And there is a factor of safety which we must check out. So, many of them are complying and now NEMSA is on the field. We check them regularly and we at the headquarter too, check our men who check on them regularly to make sure there is compliance because the electric concrete pole is actually the strongest part of the network. It is the one carrying every other thing. Then if it is substandard, the whole network will be substandard. But we still tell people any person who sees any person manufacturing pole, just like we say you should equally ask them where is your certificate? Any contractor or individual who wants to buy electric concrete pole, even if it is steel pole, you should ask where is NEMSA certificate to show that what we are using is correct. If you buy pole from accredited NEMSA pole manufacturer, if the pole has defect, you are sure of that pole being replaced to you and being replaced at no cost. If you buy 20 poles and 20 poles get broken, the poles must be replaced once we find out it is a defect.

    There was a time you started your meter test stations upgrade, how far have you gone with the upgrade?

    The upgrade, we finished Lagos in 2015. Kaduna is done now. We are just waiting to do finishing touches so that we can commission. We just hope we will be able to commission this same period. We have commissioned new equipment too for Kafuna. In fact, Port Harcourt upgrade and remodeling that one is commencing as soon as the resources come down those ones will start. We are building new one in Enugu and we hope to equally start the one in Kano soon.

    What else would you like to clear with  the public ?

    The only thing I have to say is that people in the media should actually help us to always to regularly do campaign of how people should observe safety requirements in their houses, in their offices. Like for example, now somebody will use extension cable, you plug over 10 to 15amps inside that extension, it is not good. Many people build their houses they don’t earth them and sometime you see your cooker, your fridges they will be shocking but if it is properly earthed it won’t be shocking and if there is any electrical accident anywhere, people should be able to reach us and let us know.

  • ‘African-focused capital should target infrastructure’

    Infrastructure deficit is a major challenge in Africa. In this interview with COLLINS NWEZE, Chief Executive Officer (CEO) New African Capital Partners (NACP) Charles Kie says the company will help to bridge the infrastructure gap on the continent. Kie, the immediate past Managing Director/CEO Ecobank Nigeria, says his company will invest in the development of a pan-African financial services platform which will provide customers with trade finance products and solutions.

    What is your view on equity investments, trade and corporate finance in Africa?

    I believe there are still a lot of industries which can be seen as being strategic to the development of the continent which either are completely out of our control or have not received the needed amount of investments. The same goes for trade and particularly for the Asia-Africa corridor where much more can be done.

    There is, therefore, a lot of room for African-focused capital to be deployed for good investments in agriculture and eco-systems, in technology, in infrastructure, financial services, among others.

    Tell us about the New African Capital Partners and what led you to establish it?

    New African Capital Partners (NACP) is an investment platform created mainly to support the agenda of creation of African Champions in industries that support the economic growth of African countries.

    Its main objective is to identify Small and Medium Size enterprises with high growth potential and pan-African reach and provide them with the financial, organisational and governance handholding they need to scale up over time. We, the founders of NACP, felt the time had come for African investment platforms to come in action to develop the African SMEs that aspire to become well-run multinationals.

    The NACP is a Pan-African investment platform focused on equity investments, trade finance and corporate finance in Africa, as well as the provision of financial advisory services. NACP is a distinctively Pan-African entity, offering investors the combined benefits of the co-founders’ decades of experience, in-depth knowledge of African business, sectors and economies, as well as their independent thinking and networks in Africa and Asia.

    The NACP’s founders share a common dream of a prosperous Africa, built with African human resources and African expertise. We have realised that there have been many years of discussions about how to drive the growth of African businesses, economies and trade, but that in reality very little has been done to execute some of the ideas and proposals generated to transform Africa into its rightful role as a global powerhouse.

    At NACP, we will be focusing our investments on industries that can build sustainable economic growth pan-Africa, and particularly those that foster regional integration. Our ethos is to drive the value creation in our investments by leading their long-term transformation, and we will be co-investing in them alongside African-focused institutions.

    The Co-Founder at NACP, Paulo Gomes, also believes that as Africans who know Africa intimately, we have launched NACP with the firm intent of becoming the premier platform providing investment opportunities in companies that trade intra-Africa and between Africa and Asia. We are mapping and analysing specific industries, ecosystems and the companies to pinpoint those that have the growth potential to become the African Champions of tomorrow.

    For example, we intend to support the emergence of a multinational pan-African financial services platform built around the highest standards of the industry. Institutional investors can benefit from our unrivaled entrepreneurial acumen, hands-on business experience, turnaround expertise, on-the-ground know-how and high-level contacts which will be channelled into securing transformative investment opportunities, offering superior returns whilst making a real impact on African trade and development.

    Honed by years of assessing and guiding commercial organisations in multiple sectors across the African continent, as well as understanding the need for responsible investment, the founders are identifying the growth prospects of tomorrow. Their philosophy includes rigorous screening for commercial viability, a hands-on management approach with investees and the independent thinking to leverage positive impact from investments.

    What will be the initial focus of the company?

    The initial focus is on investing in small and medium-sized as well as large, existing brands in the financial services sector – including in digital transformation – in Africa. They will also be introducing compelling investment opportunities bringing together key investors for a series of high-ticket transactions. As turnaround experts they will uncover undervalued companies that can be transformed into greater profitability and impact.

    The team takes great care and places emphasis in selecting the right people to lead turnaround opportunities and all investments will be closely monitored by NACP’s leadership team. NACP looks set to be the team to follow for locating high growth investment opportunities in the Africa.

    NACP will also offer financial advisory services including trade finance, fund raising, business organisation / reorganisation and investment advice. It will also be assisting governments to implement innovative schemes to raise funds, and spearheading market-led funding schemes for infrastructure projects in Africa, including Green Bonds.

    What impact will your experiences as immediate past Managing Director/CEO Ecobank Nigeria have on the new company?

    Having been in the banking industry for more than 20 years, in various parts of the African continent and having run some of the most difficult operations in crisis situations have provided me with the breath of experience that can now allow me create value sustainably in businesses NACP will be involved in. The last three years in Nigeria have definitely contributed in reinforcing my view that regional integration in Africa is paramount to the continent’s growth prospects.

    What other experiences are you bringing in to impact on the success of the company?

    Beyond the above, we’re leveraging the depth of the network of relationships we’ve built over the years, our intimate knowledge of business environments of various regions of the continent we’ve worked in, our hands-on management style as a means to drive and deliver the value creation potential we identify as well as our entrepreneurial mindset.

    What impact is the company going to make in helping African businesses raise new capital and grow their reach?

    Most Small and Medium Enterprises (SMEs) have consistently complained about the lack of capital to expand and reach their full potential.  We want to be able to demonstrate that ambitious SMEs which have a good growth potential and can expand internationally will have access not only to financing but also to good organisational structure and best governance practices through us.

    We intend to focus in particular on women-run or led business as a means to really making an impact on Africa’s development.

    What is your view on intra-African trade and how will the new company help to promote it, especially by providing the needed financing backbone for better trade and partnerships?

    One of our key investment criteria is for companies to have operations in more than one country, with a potential of having a truly pan-African  profitable presence. One of the ways we intend to support intra-African trade is ensure that such companies have all it takes to remain competitive at the scale of the continent as we’ll support in having access to the financing they need to grow their trade volumes.

    We also intend to invest in the development of a pan-African financial services platform which will provide our customers with Trade Finance products and solutions.

    What are the investment opportunities you see in Africa and where are the funds likely to come from?

    There is still a lot that can be done in giving access to financial services to unbanked populations at the lowest price point possible. That’s why financial services will remain a focus industry in our investment strategy. In fostering intra-African trade, it’s extremely important to ensure that the logistics industry is properly funded to facilitate the movement of goods between African countries. We see a lot of investment opportunities in this space as well.

    Beyond the classic industries like Agriculture and FMCG where the demand is still quite high, we’re mindful that Africa has a huge opportunity to take advantage of this fourth Industrial Revolution and leapfrog on new technologies to speed up its development.  That’s why we’ll all closely look at potential investment in Fintech companies that bring productive innovations to Africa

    What is your view on the various challenges that confront African businesses, especially infrastructure deficit and poor access to finance and how they could be tackled?

    As Africans, we can continue meeting in endless forums across the continent and writing about our challenges but until we start investing, creating companies and jobs and supporting each other with new ideas, nothing will change. There’s nothing wrong with making mistakes and experiencing failures but execution time has come and it should be there to stay.

    Where do you expect New African Capital Partners to be in the next five years?

    The NACP intends to be the go-to platform when it comes to investments in pan-African ventures, and one of the largest independent Trade Finance entities in Africa

    How would you access the Nigerian and African banking sectors, especially the rising cases of failures seen in the industry?

    It’s really unfortunate that ten years after the world economic crisis, some of the basic lessons have still not been learnt. Banks need a high level of capital, liquidity and profitability, a low level of non performing assets and high ethical values. When these basic principles are applied banks don’t fail.

  • Bambooksunveils largest digital library

    A start-up company, Bambooks, has unveiled mobile application which it said is the country’s largest digital library.

    According to the firm, Bambooks offers users access to thousands of eBooks, magazines and comics from any internet connected device including mobile phones, tablets and computers.  It also offers an affordable membership plan that gives users unlimited access to the library; with a N500/per month and an annual plan of N5,000/yearly, users can subscribe using their debit cards or bank accounts.

    It said the country has the largest mobile market in Africa with over 160 million connected lines and 100 million mobile internet users. With plans to expand across Africa, Bambooks is eyeing the 450 million subscriber base which is expected to grow at five per cent CAGR over the next few years. The penetration rate is forecast to reach 50 per cent by the end of 2023 and 52 per cent by 2025. According to its Head of Content Acquisition, Seun Ashaka, said: “Information is available to anyone that has access to the internet and mobile phones have become so smart you can do almost anything with them. We estimate the publishing industry across sub Saharan Africa to exceed a billion dollars in annual revenues by the end of 2018 and expect authors on our platform to earn a significant share of the market.”

    It is a well-known fact that distribution of physical books is a major challenge in the country with little or no bookstores and libraries across major cities in the country. These infrastructure problems lead to low literacy levels and poor reading habits as many Nigerians don’t have the resources to travel long distances or buy physical books at prices way above their purchasing power. Scarcity of books also fuels the increasing trends of piracy with annual revenue losses to legitimate content owners running to the hundreds of millions of naira. Bambooks solves all these problems through their digital publishing platform and hopes to inspire a new generation of writers and content creators.

    Founder & CEO of Bambooks, Ugo Okoye, said:  “Bambooks will not only entertain and educate people but also improve literacy levels, break the cycle of poverty and create a better future for Nigerians”.

  • The final donation

    When I first read the story that James Harrison, an Australian citizen nicknamed “the man with the golden arm,” has made a final blood plasma donation that up until then had saved over 2.4 million babies according to the Australian Red Cross Blood Service, all I could whisper to myself was: what a great man and what an inspiration!

    A little background will suffice here; James Harrison, has a rare antibody in his blood that is used to make a lifesaving medication called anti-D, given to mothers whose blood is at risk of developing rhesus D hemolytic disease (HDN), or antibodies that attack their unborn babies. “It’s a sad day for me. The end of a long run, I’d keep on going if they’d let me,” Harrison was quoted as saying. But unfortunately, he has surpassed the donour age limit. At 81, doctors’ advised that he has done his very best for mankind by donating his blood consistently for 51 years and needed to rest and enjoy the rest of his life.

    There’s something about giving that defines our humanity and Harrison embodied that having donated blood plasma over 1,100 times through the Australian Red Cross which said more than 3 million doses of Anti-D containing James’ blood have been issued to Australian mothers with a negative blood type. Harrison was the first donour in a national Anti-D program that started in 1967. Prior to the creation of the program, HDN killed thousands of babies every year. He made the decision to donate after he underwent major chest surgery and depended on blood donations to save his life.

    According to the Red Cross, all of Australia’s anti-D plasma comes from a small pool of 200 donours, but 17 percent of Australian women who become pregnant need the injections to keep their babies healthy.

    As I reflect on the story – which I do often – I always come out with the conclusion that acts of kindness defines our humanity if only we can tap into the resources planted in our hearts by God. I recall the story of the late Joseph Blankson, the man who saved 13 people from drowning in Rivers State but eventually lost his life during the 14th attempt! It took a major outpouring of emotions and commendation on social media before the state government stepped in to offer his wife an automatic employment and his children scholarships.

    In our highly materialistic society, it often appears that our capability to receive in whatever form or manner is measured by our capability to give based on our resources. If we don’t have anything to give, we have nothing to receive, plain and simple. We live, generally, in a “give and take” society, so when we stop giving we may also stop receiving. Our social lives, consciously or unconsciously, revolve around this principle: the less we have the less we receive; the fewer our resources the fewer our friends are.

    This, to me, is the most common misconception of giving: a preconceived notion that it should be reciprocated in return. There is always that implicit condition that if an individual gives to someone, the latter is bound to return the same favour or kindness in any form or manner.   Consequently, giving becomes a meaningless act because of such distorted belief of paying back the supposedly generous deed by the giver. The receiver becomes, in turn, the giver to the selfish motive of the primary efficient cause of giving.

    Individuals like Harrison and the late Blankson – I strongly believe – do not have such mindset. Harrison did not think twice when he was told his blood has the “magic” that can save unborn babies; he continued donating his blood regularly for 51 years until he was advised to stop for medical reasons. Blankson, on the other hand, saved a record 13 people before he eventually lost his life trying to save more. It is unfortunate that we in Nigeria search for “heroes” in the wrong places while some of our most heroic feats often go unnoticed.

    In our day-to-day existence, we normally receive from our loved ones and friends that we trust and love, from a stranger that we don’t know, or from the people that we neither care nor love.  We may also receive from others as a reciprocal token of our benevolent act. And the cycle goes on.

    Sometimes, we give because we are compelled to do so. We accept because we want to play by the rules even if we don’t appreciate the gesture or the act of kindness being bestowed upon us. At times, we sacrifice our own principle just to appease the majority. But what is the “majority” if every individual act according to what is morally acceptable in relation to the common good of the society.

    I sometimes wonder: is it a privilege to give or to receive, or is it a duty of every individual to give or benefit from the act of benevolence?  For instance, when people choose or elect a political leader in organized societies, the latter is privileged to receive such honour with duty and responsibility to serve the same people rather than his or her personal gains or interests.  Political leaders owe no allegiance to anyone but to the people who put their dream, hope and trust on them to oversee and manage the equal distribution of national wealth and the general well-being of the society.

    A business or corporate entity gives something to the society not because it is philanthropic, but it is bound by duty to return the “surplus” of its profits for socio-economic development on the same society where it establishes business with. A government, on the other hand, is expected to give to the society; not because it has a “surplus”, but it is bound by the very nature of its entity to govern, manage and distribute what is due to its constituents.

    In this regard, there are two kinds of giving: conditional and unconditional. In “conditional giving,” the giver sets a condition for the recipient in order to continue giving; otherwise, if the condition is breached or violated the giver will stop giving. Here, the act of giving is provisional, a “give and take” agreement, which demands the active participation of both the giver and the recipient. Violation of such agreement will result to the cessation of the act of benevolence. It is tantamount to say: ‘I’ll give you something, but you have to give me also something in return so that I can continue giving.’

    In “unconditional giving,” on the other hand, the munificent gesture is purely an act of freedom and charity by which the recipient is not required to return the favour (material or non-material). In other words, there is no moral and material obligation for the recipient to reciprocate what has been given because the act and the object of giving are bestowed with no given set of conditions whatsoever.

    The recipient has a freedom to do what has been bestowed because it is the desire of the giver to seek what is good for the receiver in the context of freedom and charity. The recipient may or may not appreciate or reciprocate the object that is being bestowed, yet it is the munificent act in unconditional giving that is consequential rather than the object itself.

    In essence, there is something in the act of benevolence which is more sublime than the material aspect of giving or receiving. In the case of Harrison, some Australian mothers may not have even heard of him, yet component of his blood saved their babies.

    I have come to the conclusion that to lose something, which is part of the person, by giving is to find new meaning in another person who now possesses the object of the benevolent act. The giver may “lose” the presence of such valued possession but soon, he or she may find the relevance of the object in another person who needs it more than the giver does.

    We should keep this in mind: everyone, rich or poor, can be a receiver or a giver of the act of munificence, but in every act there is always an equal responsibility for both the giver and the receiver to use such benevolence for the highest good of others and the society.