The Nation Newspaper

Category: Issues

  • Imo agric firm gets loan

    Skye Bank Plc has provided funds for Imo Hill Farm as part of efforts to support agriculture in the country

    A statement from the lender said the initiative would help drive top-line performance and profitability, while at the same time minimising costs through low-cost deposits for the farmers

    The Imo Hill Farm, an integrated farm project in the Southwest, which covers poultry, piggery, feed mill and meat processing. It engages MP Farms, a German agric firm known as one of leading names in Europe, as its technical partners.

    MP Farms would help to oversee the management of the whole farm, with experienced managers in poultry and piggery management already hired to manage each division. The processing unit is to be run by top class professionals from Germany with over 20 years experience in meat processing and food technology.

    The bank cited the Imo Hill Farm as a case study of what it has been doing in recent times to ease access to finance to farmers and support them all through to meet the peculiarities of their operations.

    Executive Director, Corporate and Investment Banking, Skye Bank Plc Mr Timothy Oguntayo said the bank would focus on growing businesses that would develop into stable long-term banking relationships.

    He said the Agriculture Support Desk of the bank reinforces Skye Bank’s long-standing role as a key player in agricultural project financing with its portfolio in the agricultural sector covering the nooks and crannies of Nigeria.

    Oguntayo said the Imo Hill Farm would be a case study in agricultural innovation and livestock development in sub- Saharan Africa.

     

  • CBN warns mobile money operators against ‘suspicious’ transactions

    The Central Bank of Nigeria (CBN) has listed transactions that will be categorised as suspicious in the mobile money business.

    In a paper entitled: Regulatory framework for mobile payment services in Nigeria, CBN said a mobile payment firm would be involved in suspicious transactions when it allows a single mobile account (individual) to receive a total volume of payments of more than 100 in a day.

    Also, any mobile payment (individual) that receives a total volume of payments of more than N1,000 in a day; and when any mobile payment (merchant) account that receives a total value of payments of N10 million and above in a day will be involved in ‘suspicious’ deals.

    It said any company involved in suspicious transactions, has violated anti-money laundering regulations.

    CBN said it would be in the interest of a mobile payment company to disclose such transactions to avoid problems.

    “The mobile payments scheme operator shall notify the Nigerian Intelligence Financial Unit (NFIU) of suspicious transactions as part of anti-money laundering regulations provided by CBN,”the report added.

    It said the regulatory authorities have the right to change the criteria for suspicious transactions reporting on mobile payments as it deemed fit, adding that such amendments shall be communicated by appropriate channels to the mobile payment operators among other stakeholders.

    It said: “CBN would ensure that appropriate processes and procedures are established for the purpose of monitoring compliance to the regulatory framework. Non-compliance with the provisions of the regulatory framework shall attract appropriate sanctions as may be determined by the Central Bank of Nigeria.”

    It said CBN will establish the Office of Ombudsman, noting that the Office would consist of the representative of the Nigerian Communications Commission; Consumer Protection Council; Scheme Operators; Financial Institutions; and a member of National Payments System Committee to foster the growth of electronic payment system in Nigeria.

    In a related development, a Deputy Director, CBN, Mr Emmanuel Obaigbona, said there is the need to do more enlightenment in view of the high rate of electronic payment fraud in the country.

    He said there is a need for customers to guide their identities to reduce fraud.

    Obaigbona, also the Chairman of Nigerian Electronic Fraud Forum (NeFF), said the forum is looking at the Payment System Management Bill put together by the legal working group of the Financial Sector Surveillance (FSS 20: 2020), before submission to the National Assembly.

    He said besides the awareness creation, the forum has produced a card arbitration framework for review and possible adoption by the industry stakeholders.

    He said the forum is committed to training, arguing that this is the only way to upscale knowledge among practitioners and further ensure that e-payment fraudsters do not rubbish the work done on the cash-less policy initiative.

     

  • CIBN seeks offshore practice

    The Chartered Institute of Bankers of Nigeria (CIBN) has reiterated the need for certified bankers in the country to work in other African countries.

    In a statement, the institute said a communique issued at the end of its Annual General Meeting (AGM) called for an inter-country recognition and acceptance of qualifications and certificates of member countries. This, it said, would encourage and promote mobility of labour as well as skills among banks in the continent.

    It stressed the need for the Alliance of African Institute of Bankers (AAIOB) member institutions to participate in the establishment, programmes and activities of the Global Banking Education Standards Board (GBESB), expected to be launched at the World Conference of Banking Institutes (WCBI) scheduled for Nairobi, Kenya in June, this year.

    It stated that the alliance would periodically conduct professional examination moderation exercises to strengthen examination policies, regulations, curricula and practices with a view to ensuring that quality standards and improvement in candidates’ performance are maintained and adhered to, at all times.

    According to the alliance, “a smooth implementation of the Staff Exchange Programme (SEP), which is aimed at, among other things, to enhance cross fertilisation of skills, bonding, mentoring among member Institutes’ personnel would be vigorously pursued”.

     

  • Exchange rate stable in 2012

    The exchange rate was relatively stable last year, with the naira maintaining moderate appreciation and depreciation at intervals.

    The naira-dollar rates stability was because of increased supply of foreign exchange through autonomous sources to the interbank segment.

    Also, the Central Bank of Nigeria (CBN) intervened in the market to reduce demand pressure and raise the net open position of commercial banks in part to curtail speculative foreign exchange demand.

    It adjusted the mid-point exchange rate band from N150 plus or minus three per cent to N155 plus or minus three per cent within the year.

    Managing Director, Blue Wall Bureau De Change (BDC) Lucky Aiyedatiwa said despite occasional upsurges in foreign exchange demand due to interventions by the CBN and the increased supplies from autonomous sources, the exchange rate never exceeded a two per cent appreciation or depreciation margin.

    He said 2012 had seen some of the CBN policies on forex reflect on the dollar-naira parity at both the local and international market.

    Analysts at the FBN Capital predict that the exchange rate for the naira will be strengthened by the approved oil benchmark. The investment and research firm explained in a report that if the oil price remains stable, which is expected, a lower budget threshold would strengthen the defences and underpin the naira exchange rate. The naira has gained 3.1 per cent this year, the second best performance of African currencies tracked by Bloomberg News.

    On the budget, President Goodluck Jonathan had sent a N4.92 trillion Appropriation Bill to the lawmakers. “The House of Representatives had previously argued for $80 per barrel and the Senate for $78 per barrel. The FGN had assumed a threshold of $75 per barrel in its proposals for 2013. This was an increase from the level of $72 per barrel in the 2012 budget, an unusual step by the executive, which we attributed at the time to its determination to secure a relatively swift passage into law of the finance bill,” FBN Capital said.

    Fixed Income & Currency Analyst, Ecobank Nigeria,Ezun Olukunle, said the inter-bank rate fell 20 basis points to 10.5 per cent on December 19, despite provisions made for Central Bank of Nigeria (CBN) Wholesale Dutch Auction System (WDAS), treasury bills and the monthly government bonds auction.

    According to him, recent rise in interbank rate was to due ongoing CBN’s liquidity management adding that Open Market Operations (OMO) bills of N273.1 billion were sold between December 10 and 13.

    Data from the CBN showed that the average spot rate of Wholesale Dutch Auction System, Bureau De Change (BDC) and inter-bank were N157.65, N164 and N162.85 to a dollar, especially in the first half of the year.

    Besides, forex inflows into the economy increased substantially, reflecting rise in crude oil receipts and autonomous inflows. However, foreign exchange outflow dropped relative to the level in the corresponding period of 2011.

    In the second quarter alone, there was a net inflow of $35.44 billion into the economy, compared with $28.85 billion last year.

     

  • Banks may review Ghana, Zambia operations

    banks operating in Ghana and Zambia are contemplating closing down these subsidiaries as the deadline for their recapitalisation ended on Monday.

    Findings showed that the banks have not complied with the recapitalisation order by local banks.

    Ghana and Zambia central banks had raised banks’minimum capital requirement, on the ground that the measure would help mobilise additional resources for their economies.

    The Bank of Ghana raised banks capital from $5.28 million to GH¢60 million ($31.7 million). It set the end of last year as deadline.

    Zambian hiked its minimum capital requirements for foreign banks to K520 billion ($98.52 million), from $2.27 million; that of local commercial banks was raised to $19.69 million.

    Central Bank of Nigeria (CBN) Director, Banking Supervisions, Mrs. Agnes Martins, said the increases reflect efforts to strengthen the banking sectors in those countries, adding that global banks have also been seeking ways to boost capital adequacy ratios in their home countries to meet increased capital requirements under Basel III, and one option they have explored has been the disposal of international subsidiaries.

    He said these capital demands are not in tandem with the level of growth in business activities in these lenders.

    She added that it would not allow banks to continue funding their subsidiaries from parent companies but would encourage them to consider mergers and acquisitions with other local or foreign banks in host country.

    “The CBN shall not permit any further capital outlay from parent banks to augment the capital needs of foreign subsidiaries but would rather encourage banks to consider mergers and acquisition arrangements with other local and or foreign banks in the host country. Under no circumstances are parent banks allowed to guarantee the deposit of their foreign subsidiaries,” Martins said in a statement.

    Head, Market Risk, Greenwich Trust Limited, Babatunde Obaniyi, said the CBN is being proactive to ensure that the funds that would have been used to develop Nigeria’s economy are not channelled to other economies.

    He said for a bank to operate offshore, it has to raise its capital base to the required N100 billion ($635.72 million) in the country. This means that a bank such as United Bank for Africa (UBA), which has 18 offshore branches may see its funds depleted trying to recapitalise its branches abroad, where such cases arise.

    He explained that although there are some African countries, especially The Gambia where investors cannot bring in hot money to fund banks, polices in many African countries point to the fact that more countries want foreign banks to recapitalise their subsidiaries with funds from home countries.

    Besides, he said some of the banks have learnt to share risks with local banks to reduce the economic burden that come with foray into new markets.

    “The level of aggression most Nigerian banks exhibit in venturing into new markets, if not checked, will raise their operational risk level. Besides, I do not see the restriction of these banks into foreign countries as having the capacity to deplete their group performance because some of these markets are smaller than Nigeria’s,” he said.

    He said most of these banks are expected to develop their own products and services to meet the needs of the people.

    Speaking on the development, Deputy Governor, Operations, CBN, Tunde Lemo, explained that there is no justification for the level of capital requirement imposed by the central banks of those countries hence banks will decide on their own if they can continue with those subsidiaries.

    The policy became exigent after report showed that Nigerian banks have recently witnessed reduced credit lines from their international partners because of the growing need for liquidity of major European banks following mounting sovereign default risks.

    However, Lemo said these developments would not have a debilitating impact of the health of the sector. But he did not rule out the impact on the liquidity of finance from lenders.

    Martins explained that the policy is expected to affect UBA and Access Bank because they have the highest number of offshore operations in the sector.

    Others are Guaranty Trust Bank Plc, has five subsidiaries; Skye Bank Plc – four; Keystone Bank Limited- four ; Diamond Bank Plc, and Zenith Bank Plc – three each.

    Managing Director, UBA, Phillips Oduoza, said he expects the subsidiaries to contribute 25 per cent of its profit this year to the bank.

    He said his bank operating in Zambia would seek a local banking license, which requires a lower capital base of $20 million, to meet the requirements.

    He said the rule may instead make local lenders acquisition targets as the companies have to keep cash in Nigeria.

    Access Bank Plc will cut to 49 per cent its stake in its Zambian unit after the southern African country raised capital requirements, Chief Executive Officer Aigboje Aig- Imoukhuede said.

    He admitted that the requirement to increase funding for foreign units has exerted pressure on the capital base of most parent banks.

     

  • IFRS: Promoting accounting integrity

    International Finance Reporting Standard (IFRS) comes with laudable objectives. It is a concept meant to sanitise accounting practice in order to achieve corporate goals. To ensure that companies comply with IFRS, which has already been embraced abroad, the Financial Reporting Council of Nigeria says auditors must play a major role, writes AKINOLA AJIBADE

    Across the world, countries are stepping up efforts in adopting and implementing the International Financial Reporting Standards (IFRS).

    The concept is all about full disclosure of information in companies checking fraudulent practices; correcting means by which firms formulate and present their financial statements to shareholders and the regulatory authorities.

    IFRS also assists in checking the excesses of the Board of Directors to ensure financial probityand good corporate governance.

    It is a catalyst for economic growth as companies that have embraced it get good ratings, compete favourably at the international level and attract investment.

    Little wonder that countries and corporate bodies are increasingly signing on to IFRS by enacting laws for implementation. The United States (US), United Kingdom (UK), Germany and Canada are among developed countries that have keyed into the concept.

    Abroad, those that infringed on IFRS provisions have been sanctioned and fined, in addition to losing their licences.

    Those that compiled with the requirements are reaping the benefits of balance sheets.

    To achieve similar goals, the Financial Reporting Council of Nigeria (FRCN), formerly known as the National Accounting Standard Board (NASB), said it would leave no stone unturned in it efforts at sanitising accounting practice in Nigeria. The body said the development became necessary to enable companies to improve on their accounting process and further implement IFRS programmes.

    Being the only body, vested with the powers to issues accounting, actuarial, valuation and auditing standards that would be used in preparing financial statements of companies, the IFRC said it has power to enforce compliance of IFRS’s provisions. It said it does not expect anything short of full compliance from firms, adding that everybody would be accountable for his misdeeds.

    According to the body, every entity that is involved in issues relating to accounting or taxation will be expected to engage in full disclosure of information. It said failure to do so would attract penalty as part of efforts to improve accounting practice and further make them operative in line with global standards.

     

    Sanctions for auditors

     

    The Chief Executive Officer, Financial Reporting Council, Jim Obazee, said Sections 61 and 62 of the Constitution confers powers on the body to review the activities of external auditors and see whether there are grey areas in them. He said such auditors would be sanctioned depending on the gravity of the offence.

    Speaking at a seminar in Ijebu Ode, Ogun State, Obazee said there is no hiding place for auditors (internal and external) with questionable conducts.

    He explained that under the IFRS rules, auditors are required to affix their names against any accounts they oversee, saying any violator of the rules would be sanctioned.

    The implementation, he said, is that such persons would cease to be practitioners, or members of their professional bodies.

    He said the IFRC is only a secondary regulator and is not taking over the responsibility of primary regulators. It has the right to reassess the performance of auditors in companies after they have been certified okayed by other regulatory agencies, adding that the aim is to ensure that the rules of IFRS are adhered to.

    Said he: “The Central Bank of Nigeria (CBN), for instance, is the primary regulator of banks. IFRC has the power to re-regulate the accounting processes of banks. By this, IFRC will re-appraise the works of the external auditors, after they have been certified okay by certain relevant agencies. Whenever errors are discovered in the reports of auditors, such auditors will be invited for investigation. He or she would be sanctioned, based on the outcome of the investigations.”

    On corporate bodies, Obazee said there is going to be financial probity in corporate bodies as part of efforts to sanitise the accounting practice in Nigeria.

     

    ANAN position on IFRS

     

    The Association of National Accountants of Nigeria (ANAN) has advised the Federal Government to set up machinery that would guarantee the IFRC’s independence.

    ANAN said the development is in accordance with the Council’s Act, adding that it would help the council’s resolve to improve accounting practices and the auditors in particular.

    It said the constitution of the council is vital to the realisation of the IFRS objectives.

    The former President, ANAN, Dr Samuel Nzekwe, said the adoption of IFRS is a good omen for the country because it would help in sanitising the accounting practices, and further prevent people that are not competent to engage in auditing. Nzekwe said the issue of sanitising the accounting practice is germane to the growth of the economy, adding that the financial reporting council has started in the right direction. He urged companies that have not fully implemented IFRS to do, arguing that such companies stand the risk of losing credibility in the country.

     

    Capital market perceptives

     

    According to capital market operators, IFRS has become a catalyst for growth across the world. They said this is the era of globalisation, arguing that Nigeria cannot be isolated from the wind of changes that is sweeping the world. They said the international financial reporting standards have brought some changes in the way financial statements are being processed.

    The Vice-Chairman, Anchoria Investment and Securities Limited, Chief Olusola Dada, advised quoted firms to see IFRS only from the point of bringing fundamental changes to their operations.

    Olusola said institutions abroad have implementedIFRS because they are going to derive some objectives from it. He said this is the period companies want to compete globally, arguing that those that cannot put in place good corporate governance would find it difficult to attract foreign investments.

    “For Nigeria to improve its level of Direct Foreign Investment (DFI) and Portfolio Investment, the listed and non-listed firms must have a sound corporate governance programme in place. They can only win the confidence of foreign investors and further get good rating from recognised agencies, when their financial statements are prepared in the line with the provisions of IFRS.

    A capital market analyst, Mr Tayo Bello, said the implementation of IFRS is serious, urging the Financial Reporting Council to attach more seriousness to it.

    He said there are irregularities in the ways companies prepare their financial statements, arguing that auditors are guilty of this offence. He said when sanctions are imposed by institutions like the FRC, the level of infractions was bound to reduce in Nigeria.

    He said when an auditor loses his membership for committing an offence,others would be careful. He said experience has shown that the best way to clean a system is to use some people as scapegoats.

    “I think the only way to minimise accounting errors is to bring some people to book. The use of International financial Reporting Standards need not be handled with kid gloves, if meaningful achievement is going to be recorded in this area. In any profession, there are codes of ethical standards that must be followed to achieve success. In some professions, rules are relaxed for one reason or the other. But in accounting, the rules must be abide with to forestall financial management. When the auditors are made to comply with rules guiding their jobs, the better for the accounting profession.”

    In a related development, Nzekwe said the collapse of the capital market was due to actions of the bank executives to divert money and buy shares in the same bank to finance their subsidiaries. He said many of bank managers borrowed money from the banks and used them to buy stocks of their subsidiaries and converted them to personal use.

    He said many banks failed to become mega banks because of the lack of capacity to give long term loans to customers and failure to finance their foreign subsidiaries effectively. He said some bankers have shown that they are not ready to follow due process, arguing that the development causes a lot of problems to firms auditing their accounts.

    The former ANAN chief said it’s not only auditors that should be blamed for accounting errors, adding that everybody involved in the cost management in an organisation must be held accountable for the errors. He said once this happens, getting the right manpower to implement the international financial reporting standards would not be a problem.

     

    Arguments against

    adoption of IFRS

     

    Opponents of IFRS have argued that the idea is complex and unattainable for developing countries that have a lot of infrastructural problems. They said the conversion to IFRS is highly technical, time consuming and uneconomical. This, they said, is evident by the different regulatory frameworks that the government must provide before the standards work.

    Instead, they advocated what they described as Nigerian GAPP (the Generally Acceptable Accounting Principles). This a common set of accounting principles, standards and procedures that companies use to compile their financial statements. It is a combination of authoritative standards (set by policy boards) and simply the commonly acceptable ways of recording and reporting accounting information.

    According to them, IFRS is a global GAPP that countries are trying to implement for growth.

    “There is nothing wrong in having a Nigerian version of GAPP, which means that various aspects of GAPP must be domesticated to suit the purpose of local companies and further stimulate their growth. Inability to do so means that the country will be grappling with implementing IFRS,” they said.

  • Is the airspace safe?

    Is the airspace safe?

    The crash of an Agusta Helicopter, belonging to the Nigerian Navy in Bayelsa State, has again raised concerns  about the state of air safety in Nigeria. The recurrence of air disasters has provoked many questions but provided little answers in the aviation sector. Amid anxiety by the public, experts and stakeholders in the sector are divided on whether efforts by the government are enough to improve the nation’s bad safety record in global aviation, reports KELVIN OSA-OKUNBOR

     

    These are not the best of times for players in the aviation sector. This is because of the recent crash of an Agusta helicopter belonging to the Nigerian Navy in Bayelsa State, where the Governor of Kaduna State, Sir Patrick Yakowa, former National Security Adviser, General Andrew Owoeye Azazi, and four others died.

    The crash brings to three the number of ghastly helicopter crashes in Nigeria in recent times. These the ones involving a Nigeria Police helicopter carrying Mr John Haruna, a Deputy Inspector-General of Police (DIG), Operations, which crashed near Jos, the Plateau State capital; and another flying the Chief Executive Officer of a shipping firm.

    These and the DanaAir disaster on June 3, 2012 in Iju-Ishaga, a suburb of Lagos with all 153 passengers on board, brings to the fore, again, the question of air safety in Nigeria.

    The recurrence of air crashes in Nigeria has brought to the front burner efforts by the government to close gaps in air safety, which experts have over the years, attributed to obsolete infrastructure.

    Since the Naval helicopter’s crash, which many have said is one too many, experts in the sector have argued that there is need to harmonise civil and military aviation to promote air safety.

    But the former spokesman Nigeria Airways Mr Chris Aligbe has cautioned Nigerians on speculations making the rounds that the nation’s air space is not safe.

    Aligbe explained that because military aviation is self-regulatory, it is outside the purview of the the Nigerian Civil Aviation Authority (NCAA) to determine the nature of military aircraft operations.

    He said some people suggested that the helicopter crash may have cast doubt on the integrity of air safety in the country.

    He explained that military aircraft do not fall within the purview of the NCAA even the Accident Investigation Bureau (AIB) is not empowered to investigate military air accidents.

    He said: “There is institutional difference in oversight of military and civil aviation operations. All the aviation agencies have no responsibility over military operations. Even the AIB cannot investigate military air accidents. They do not come under the inventory of the NCAA. The military is self-regulating. They train their staff to the highest level. The military has full complements over the regulation of their aircraft.”

    He urged the military to build internal capacity for their aircraft, adding that the culture of self-regulation by the military requires tremendous institutional will- power.

    On the call that military aircraft should be brought under the supervision of the Aviation Ministry, Aligbe said such proposal would not work, because NCAA has no competence to oversee military transport aircraft and other fighter jets in their fleet.

    “It is unfortunate that the crash occurred and some illustrious Nigerians died. Sadly, some people now want to frighten the public because of the questions over air safety in Nigeria, as they affect the quality of civil aviation regulation.

    “There is difference between military and civil aviation. Any professional who talks about it is not worth his salt. We all have to wait for the report of the investigation because it would amount to being presumptive to hold such position. To say the least, it is against global standards,” he added.

    He explained that since 2005, when the aviation industry was bedevilled by series of air crashes, the government has risen to the situation by facilitating infrastructure upgrade and other amenities needed to improve air safety.

    Aligbe noted that though the International Federation of Airline Pilots raised some issues a few years ago over poor communication in the airspace, the government has invested enough overtime to improve the system.

    He said the government’s intervention in the industry is working in the area of air navigation facilities and airport infrastructure.He canvassed the implementation of communication navigation satellite surveillance and air traffic management, which he said is key to air safety.

    Aligbe, however, urged the relevant government agencies to do more in providing the needed air navigation facilities, affirming that for a sustained infrastructure upgrade, the government should allocate more funds for critical safety projects.

    He said: “A maintenance facility in Nigeria is long overdue. The government should facilitate the establishment of such a project, and ensure that the airlines have enough aircraft to ensure it is profitable.

    “If there are not enough aircraft to sustain the maintenance, repair and overhaul facilities, it could be a failure. Above all, there must be competence in fleet and aircraft type to make it work.

    “One sure way of achieving this is the entrenchment of standardisation of fleet and line management to boost the competence of such a facility.”

    He further said without standardisation of aircraft type, the industry could have problems with growth and development, as major aircraft repairs’facilities are driven by the development of competence in aircraft types.

    “Most of the airlines in Nigeria do not have commonality of aircraft type to drive maintenance and repair overhaul facilities,” Aligbe added.

    A non-governmental coalition that focuses on aviation safety last week called on the Federal Government and the National Assembly to introduce a legal framework, which would compel aircraft and helicopters to come under the supervisory of the Ministry of Aviation. The aircraft and helicopter type, the group said, should include those in the fleet of the military.

    The group explained that the implementation of this proposal would facilitate a national aviation safety standards in compliance with best practices, adding it could save Nigeria from incessant plane crashes.

    Senior members of the group Emmanuel Onwubuiko and Maimuna Al-Hassan exonerated the Ministry of Aviation of any blame in the Bayelsa crash, reiterating that since military planes and helicopters do not fall under the schedules of officials of the civil aviation ministry, it would improper to blame them.

    Chief Executive of Mish Aviation, Captain Ibrahim Mshelia, explained that the crash might not have any effect on civil aviation because military and civil aviation are different.

    He said civil and military aviation differ in terms of structure as military aviation is not subject to civil registration and, therefore, not under any civil oversight from NCAA.

    Mshelia said the Minister of Aviation should not be blamed for the tragedy, saying she is only in charge of civil aircraft.

    “The Minister should not be blamed at all. She supervises the civil aviation operations involving civil registered aircraft only, even if the aircraft is operating under Military Aviation. But in this case, the aircraft was reported to be a Naval helicopter, which is under military aviation.

    “Since it doesn’t bear civil registration, the Minister has no jurisdiction of safety oversight prior to the accident on that aircraft, nor has any right of inquiry into that unfortunate accident,” he said.

    Also, the General Secretary, Aviation Round Table, Mr Sam Akerele, dismissed insinuations that the spate of air crashes could affect the nation’s rating in global aviation.

    He said: “I don’t think this crash will affect Nigeria’s aviation rating in the international community. It is, however, a signal that Nigeria should not relent in its efforts to sanitise the sector. We sympathise with the country.”

    Another industry expert, who pleaded anonymity, said since it was a military helicopter that was involved in the crash, it would not affect the country’s rating.

    According to him, the Nigerian Civil Aviation Authority does not have safety oversight over military planes.

    Industry analyst and Head, Research and Statistics, Mr Olumide Ohunayo, also said this might not affect the country’s rating in any way.

    Nigeria is among the five African countries (from the 64 African countries) that have passed United States of America’s Category One Certification. The other African countries are Cape Verde, Egypt, Ethiopia and South Africa.

    From 1967 to 2012, Nigeria recorded 131 accidents. The crashes, which involved both fixed wing and helicopters, led to the death of 1,166 people.

    Meanwhile, an aviation expert, Group Captain John Obakpolor, a retired Air Force officer, has called for collaboration between military and civil aviation on ways to improve air safety in Nigeria.

    He said there was the need to set up a military aviation department, like it exists in civil aviation to raise the bar in air safety.

    President, National Association of Aircraft Pilots and Engineers (NAAPE), Isaac Balami, said pilots have continued to adhere to regulations to boost air safety.

    His position was predicated on insinuations in some quarters that some pilots some times bend the rules to keep their jobs.

    Balami, however, said no pilots would do this, saying it would amount to suicide for any pilot to fly an aircraft he knows is not airworthy.

    Only last month, experts in the industry tasked airline operators on the need to upgrade their avionics in compliance with Performance Based Navigation (PBN) to Global Navigation Satellite Systems, the latest technology in airspace management.

    AON Chairman, Dr. Steve Mahonwu; Secretary-General, Mohammed Joji; its Assistant Secretary General, Mohammed Tukur and the Managing Director of Afrijet, Mr Vitalis Ibe, said the problem with the navigational communications was not beyond redemption, noting that the Federal Government should assist the Nigerian Airspace Management Agency (NAMA) to secure the airspace.

    Mahonwu said given the commitment of NAMA, he noted, was poised to remedy the situation.

    Experts, including pilots and air traffic controllers, said the situation “is so bad that often times airplanes enter the Nigerian airspace without the knowledge of air traffic controllers. At other times, they only get to know of such flights through telephone calls from their counterparts in Nigeria’s friendly nations.”

    In the past one year, the Federal Government has embarked on airport infrastructure, including those of remodelling and air navigation, aimed at improving air safety on the ground and in sky.

    As a follow up to the remodelling, NAMA has completed the first phase of the installation of N280 million solar powered facilities at six major airports to check power failures on its navigational aids (NAVAIDS).

    The solar power is for navigation/landing aids in Lagos, Abuja, Port Harcourt, Kano, Bida and Enugu airports where the agency has the problem of power failure.

    Chairman, Stormberg Power Limited, Tunde Morakinyo, the contractor of the solar power project, described the hybrid power system in the country as first of its kind in sub-Saharan Africa. He promised that the second phase of the project would start early in the new year.

    NAMA spokesman, Supo Atobatele, said each of the sites has 24 solar panels with a 15 KVA hybrid inverter. The system has 18 batteries for the NAVAIDS except the very high frequency omni-directional radio range (VOR), adding that this could last for 12 hours. For the VOR, the back up batteries are 36 and it has capacity to run the system for between 15 and 18 hours.

    Managing Director, NAMA, Mr Nnamdi Udoh, described this as ” another milestone in saving money and diversifying our power source to solar.

    “It is a project that has been on-going and is fully completed and we are now using it. It is saving us the huge amount we used to spend on diesel to power generators and the down-time we used to experience due to power failure.

    “So, it is a thing of joy. We will continue to explore how we are going to deploy it in other areas apart from its current usage for navigational aids, which is the pilot scheme in six airports/locations”.

    Udoh said the nation’s airspace records over 500 flights daily, and that this is an evidence of improved air safety.

    He said the figure does not include overflying flights, which do not land at the airports.

    According to him, air traffic has increased astronomically in recent years, adding that the situation has forced the agency to embark on critical projects to boost the capacity of its navigational facilities.

    He said the development informed the agency’s decison to decongest the Lagos Area Control Centre of the airspace.

    He said: “With growing traffic, especially at peak period, the main Lagos Aerial Control Centre frequency, 127.3MHz, had become congested with attendant challenges posed to pilots. The agency in her typical manner commenced the process of categorising the Lagos ACC. And based on the project timeline of December 17, 2012, the Lagos ACC would have been categorising.”

    He added: “I want to use this opportunity to reassure Nigerians that our airspace is safe. To address some of the challenges we had in the past, embarked on many critical projects to reposition and strengthen the navigational facilities in the airspace.”

    Udoh explained that a team of air traffic controllers and engineers was working on the technical and operational implementation of the categorisation.

    In addition, NAMA’s Director of Operations, Mr Mukaila Solola, said the agency has taken some major steps to address radio communication challenges in the airspace, adding that at the moment, only Nigeria could boast of having the Performance Based Navigation (PBN) system in Africa.

    PBN is a shift from ground based-navigation to satellite-based.

    NAMA reassured the public of the safety of the airspace, noting however, that there were still challenges in radio communication in the airspace.

    Udoh added that the agency was working towards solving the problems, adding that there was a medium-term plan for the implementation of the Controller Pilot Data Link Communication (CPDLC) that would further boost the safety of the airspace.

    He, however, said it was wrong to allege that pilots were flying blindly in the airspace. He stressed that no pilot could ever take-off from the ground without receiving instructions from the air traffic controllers.

    “To address some of the challenges we have had in the past, the agency embarked on several safety critical projects, one of which includes the Total VHF Radio Coverage of the airspace. Experts say the project has been completed and the project provides VHF radio services for Lagos and Kano.

    “Currently, a team of air traffic controllers and engineers are working on the technical and operational implementation of the sectorisation which includes but not limited to drawing of procedures, gap analysis and safety audits of the process,” Udoh said.

    NAMA completed the World Geodetic Survey (WGS-84) of Bebi airstrip, which joins other major airports prepared for satellite-based navigation system.

    NAMA said it developed this capacity through competence transfer achieved by the WGS-84/Performance-Based Navigation (PBN) project of 24 airports.

    “With this development, NAMA prides itself as having in-house experts in WGS-84 Survey, PBN Procedure Design and Cartography. NAMA has also acquired through same project, state-of-art digital survey equipment and GIS LAB.

    “The agency is ready to collaborate with any organisation that requires this service within and outside Nigeria, with assurance of delivery in accordance with international standards to ensure Safety of Air Navigation”, Udoh, said.

    Meanwhile, plans have reached an advanced an stage to upgrade the airports facilities in the 22 locations.

    According to the Federal Airports Authority of Nigeria (FAAN), the remodelling of the airports is expected to be completed in two years.

    At the end, the 22 airports would have been renovated to meet international standards.

    Speaking on the development, FAAN General Manager, Corporate Communications, Yakubu Dati, said the authorities have been working hard to ensure that after the remodelling, meets international standard.

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

  • Cement: Importation puts backward integration at bay

    Cement: Importation puts backward integration at bay

    Although the dust raised by the Dangote Group on the threat to local production of cement by importers remains unsettled, the government has seen the need to revisit the issue as the firm’s closure of its Gboko plant takes its toll on the workers and the host community, SIMEON EBULU, Deputy Business Editor, reports.

    For years, Nigeria has yearned to diversify its economy and be self-sufficient in certain sectors of the economy. The government, and many Nigerians, have always flayed the nation’s almost total dependence on oil ( to the tune of over 85 per cent), as unhealthy and dangerous, given the fact that oil is a wasting asset, and also that its control, in terms of production and sale, is not entirely within Nigeria’s control. Besides, the price is subject to all kinds of regional and geo-political influences and configurations to which the nation has little, if any, control.

    In no area has the need to be self-reliant been more pressing than in rice and cement production. Rice, because it is the nation’s staple food, and cement because of government’s desire to deliver affordable housing to the generality of the people.

    The lack of local capacity to churn out cement, the major component required in building and construction, has led governments over the years, to issue import licences for importation of the product, not only to bridge the supply gap, but also to moderate its price.

    This delicate balancing act, has more often than not, played out in favour of importers, who require next to nothing to bring-in the product, against producers, who in most cases have to exhaust the whole gamut of the production process, including aggregating all the financial, cum-human resource input to ensure they meet local demand.

    It was not until the present democratic dispensation that a conscious effort was made to address the challenge of making Nigeria becoming self-sufficient in cement production. The bait to accomplish this feat was thrown to many industrialists, but few took on the challenge. Among them are Lafarge, Dangote Cement Plc, BUA, Ibeto Nigeria Limited, Flour Mills Plc, Northern Nigeria Cement Company and NIGERCEM.

    Since the goal is to make Nigeria self-reliant in cement production and a net exporter (not an importer) of the product, some of the firms and their promoters ( a handful of them), who originally were key importers, took on the gauntlet and reverted wholly to becoming manufacturers. In this regard, the Dangote Group and a few others invested massively in plant and machinery for cement production.

    The interplay of local production, with its attendant infrastructural deficit and the unbridled influx of imports, have resulted in what one of the leading manufacturers, Dangote Cement Plc, described as a glut, or over supply in a segment of the market. And to minimise its loss, the management of the conglomerate has taken a pre-emptive step to temporarily shut down its plant in, Gboko, Benue State.

    The closure of the Gboko cement plant has raised many issues. They are both micro and macro. Firstly, it puts a whole line of huge financial outlay at risk, thereby jeopardising the chance, or early realisation of government’s backward integration programme. In addition, the lifeline of about 5,000 workers (direct and indirect) is on hold with an uncertain future hovering over their heads. The impact of the multi-plier effects of the development on the economic activities of the host community cannot be overlooked.

    Although the management has assured that the closure is temporary, the workers and the community have started counting their losses.

    A visit to Gboko by The Nation revealed that economic activities in the hitherto boisterous enclave have been grounded. “The place is now a shadow of its former self. As you can see, the place is deserted except for the security men and some company guards at the factory entrance,” remarked one of the staff members who requested that his identity be veiled.

    A filling station attendant, Paul Akosu, said since the factory was closed, they have run out of business. He said before now. petroleum business was very lucrative as both Dangote’s trucks and other vehicles patronise the fuel station non-stop.

    For a food vendor. Mrs Dooshima Iorfza, the closure of the company has sent her out of business at a very critical period.

    She said, “Christmas is when sales peak. I had hope to make enough sale and buy my three children clothes for the Yuletide, but the hope has been dashed,” she lamented.

    Officials at the Dangote Group, in Lagos, said although the action may appear harsh and painful, it had to be taken as a rescue measure. The official, who asked not to be identified, explained that the challenges in Gboko were not replicated in the other cement plants owned by the Group. He said the factory which was opened to meet the needs of consumers in the South-south and Middle Belt, is being threatened by a horde of imported cement, mostly from the Asian countries.

    He said what is brewing now is akin to the development in the textile industries, warning that if no steps are taken to arrest the situation, it could lead to the collapse of cement factories in the country. The official explained that cement is the only sector that is close to being self-sufficient, and, therefore, should be assisted to succeed and make government’s backward integration plan a reality.

    The official, who faulted critics’ claims that Dangote was crying wolf where there is none, said no one can do the import business better than Alhaji Dangote, adding that he has settled for local production,” because of his patriotism.

    He said if the government is unwilling to impose a ban on cement importers, it can increase tariff, or raise duties on imported cement. He also suggested that if the Export Processing Zone (EPZ) in Calabar is operational, it could assist the company in evacuating some of the products to the international market, especially in the West African Sub-region. “Dumping will not be so adverse if we have the leverage to export,” the official stated.

    He said for anybody, who is patriotic, this is a national disaster, stressing that cement is the only good thing coming from Nigeria. Beside cement, in which other product are we self-sufficient? he asked.

    The official came hard on critics who have rationalised that the concern expressed by the firm and the subsequent closure of; its plant are ploys to arm-twist the authority, saying, “if Dangote was not patriotic, he would have been the number one importer, and would’ve been making more money.”

    He argued: “Large scale importation will not even crash prices, but will impact negatively on the government’s backward integration policy, hack jobs and businesses, and ultimately result in capital flight.”

    He urged government agencies and the Standards Organisation of Nigeria (SON) to rise to the occasion by frustrating importation of sub-standard products, so that the nation does not end up as a net importer of all its consumer products, as is the case with rice and sugar. “A stitch in time saves nine,” he warned.

    The Nation has learnt that the government has risen to the occasion. It has set up a fact- finding mission to ascertain the true position and proffer a solution. An official of the Ministry of Trade and Investment, who asked not to be identified, said the government is addressing the matter.

     

  • Much ado about a terminal

    Much ado about a terminal

    What does the concession agreement between the Federal Airport Authority of Nigeria (FAAN) and Bi-Courtney Aviation Services Limited say about the General Aviation Terminal (GAT)? Does it cede control of the terminal to Bi-Courtney? Bi-Courtney says it does, but FAAN disagrees.Who is telling the truth? KELVIN OSA OKUBOR asks.

    It used to be a random facility. But now the General Aviation Terminal (GAT) at the domestic wing of the Murtala Muhammed Airport, Ikeja, Lagos, can compare with any of its kind in the world.

    When it was being remodelled, airlines moved to the other terminal commonly referred to as mmII. now, they are planning to return to the refurbished GAT over which the Federal Airport Authority of Nigeria (FAAN) and Bi-Courtney Aviation Services Limited are squabbling.

    Their quarrel borders on control of GAT.Bi-Courtney is claiming that the ownership of the terminal is covered in the concession agreement it signed with the government some years ago.

    FAAN disagrees, saying Bi-Courtney’s position, is at variance with the terms of the concession agreement.

    On their part, airline operators, workers and passengers, who are fascinated by government’s efforts within a few months to deliver such a world-class remodelled terminal, have expressed concern over what becomes of the facility because of their rift.

    Speaking through its General Manager, Corporate Services, Yakubu Dati, FAAN insists that the agreement the authority signed with Bi –Courtney only covers a 12-year tenure. The arrangement, he said, did not confer the ownership of the GAT on Bi-Courtney.

    Dati  said it became imperative to clear the air over the issues because of the misinformation being fed to the public. The agreement conceived under the (Build, Operate and Transfer BOT) model, may be jeopardised because of the rift, he added.

    He said: “We are constrained to restate that the General Aviation Terminal of the Murtala Muhammed Airport, Ikeja, Lagos, is not included in the Build, Operate and Transfer concession agreement between the company and the Federal Government. The authority is constrained to ask to members of the public, especially aviation stakeholders, to discountenance that often-bandied claim because it is false, misleading and mischievous, to say the least.

    “We observed, with interest, quotations from questionable documents or portions of documents that suits their assertion about the duration of the BOT concession and government’s directive for the so called take-over of the General Aviation Terminal. We consider this unfortunate because Bi-Courtney knows that the only authentic documents on the agreement, limits the duration of the concession to 12 years and that the area of land occupied by the General Aviation Terminal is clearly outside the area of land granted Bi-Courtney for the concession. These facts have been stated for the umpteenth time.”

    Dati said Bi-Courtney was only crying foul because the Federal Government has decided that there should be transparency and fairness in a concession agreements with government agencies. He added that it is convenient for Bi– Courtney to deceive unwary Nigerians into thinking that the Murtala Muhammed Airport, Terminal One (which is named MMA 2, by Bi- Courtney) controversy will discourage private investors in the industry. Ill-motivated, manipulated and unbelievable concession agreements skewed against the interest of the Nigerians cannot stand the test of time, Dati said.

    “No amount of playing to the gallery, twisting the law and facts, or appeal to undue sentiments can change this,” he said.

    He noted that the transformation agenda of the government in the aviation industry, among other things, is geared towards eliminating selfish business models that create personal business empires, and not a level playing field for stakeholders capable of contributing meaningfully to genuine growth of the sector.

    As the feud over the ownership of the GAT heightens, skeletal services have started at the terminal, even as the installations of operational facilities are on-going.

    But, Bi-Courtney,  speaking through its Public Relations Manager, Mr Steve Ajulo Omolale, said FAAN should keep to the terms of the agreement it signed with the firm, insisting that the terms of the agreement gave it control of the GAT.

    He said it was a show of lawlessness, the insistence by FAAN that the tenure of its concession agreement remains 12, and not 36 years, describing the action by FAAN as a disdain to the judiciary.

    Omolale said: “By insisting that the General Aviation Terminal is not Bi-Courtney’s and that our concession tenure of 36 years is now 12 years, despite the court order to that effect, they have further shown how lawless they are, as well as their disdain for the judiciary. They should allow the Supreme Court to hear their appeal over the concession agreement they signed with us instead of putting forward shallow and irrational argument.

    “We are aware of their grand conspiracy to render MMA 2 useless, send over 2,000 Nigerians into the job market, and also render our billions of naira investment in MMA 2 useless, with the building of the General Aviation Terminal. If they so much love Nigerians, they should go and answer the several summons of Nigerians’representatives in the National Assembly to x-ray their Ministry’s activities.

    “For now, the General Aviation Terminal belongs to Bi-Courtney Aviation Services Limited and will continue to be until they are able to overturn the appellate court’s judgment.”

    The Minister of Aviation, Princess Stella Oduah, said the government would not allow the interest of businessmen or investors to dwarf the overriding national interest.

    “The GAT belongs to the Federal Republic of Nigeria. This terminal does not belong to him; this General Aviation Terminal belongs to FAAN. Nobody, I mean nobody, can hold the entire nation to ransom. We must protect what belongs to all of us. Nobody will usurp what belongs to the people of Nigeria; we will not allow it and we must protect the interest of the nation,” she stressed.

    Also speaking, the Managing Director of FAAN, Mr George Uriesi, explained that in general, the principle that concerns the concession with Bi-Courtney, it has a limitation on the specific plot of land upon which to build a terminal and to operate and transfer it after 12 years.

    He said: “But, in general principle,the concession to Bi- Courtney is a very specific plot of land upon which they have a concession to build a terminal and to operate and transfer it after 12 years. That is what they have, within that concession. It does not prevent us from operating the General Aviation Terminal. The government, absolutely, is not contravening any aspect of the concession agreement.”

    The former Secretary-General of African Airlines Association (AFRAA), Mr Nick Fadugba, cautioned on how concession agreements are delivered in Nigeria, saying that they are not well-packaged to attract investors.

    He said: “Before we sign deals, whether they are concession agreements on airport terminals, including the General Aiation Terminal, we should ensure that they are favour of  Nigeria.  Many deals have been signed that were not properly done including the agreement involving Bi- Courtney.

    “Before we put pen to paper, we must have a solid deal that would be all-beneficiary and all- encompassing. This presents a problem; so I believe the government has to bring the private sector but ensure they make the transactions thoroughly planned or agreed; so it is a win win situation for the government, the country and the private sector.”

    The Head of Research and Strategy, Zenith Travels, Mr Olumide Ohunayo, said until issues on public-private partnership are sorted out as they affects concession agreements, contention over the GAT would continue to pose a distraction to investors.

    Speaking through her Media Assistant, Mr Joe Obi, Oduah said: “Information at our disposal indicates that Bi-Courtney Aviation Services Ltd, the Concessionaire to MM2,  is apparently threatened by the imminent opening of the newly reconstructed and remodelled GAT, Lagos.

    To be sure, the area where GAT is located has never been part of the area concessioned to Bi-Courtney Ltd. The agreement with Bi-courtney has a Survey Plan clearly marked in Square metres and the area of the GAT was never contemplated to be part of the area leased to Bi-Courtney.

    “Nigerians can vividly recall the dilapidated and decrepit state of the nation’s airports,  including GAT prior to the assumption of office of the Minister. Today, 11 airports, including the GAT are an elegant testimony of the desire and determination of the Minister to give Nigerians what they truly deserve-airports of their dreams that compare to any such facility anywhere around the world.

    “It is inconceivable that anyone would not only contemplate, but also  hold fast to the jaundiced belief that a nation as big and great as Nigeria ought not to progress beyond having a terminal like MM2. “

    Mrs Oduah further said: “Regarding allegations that there are subsisting court orders restraining anybody, including FAAN, which is the landlord of Federal airports in Nigeria from further development of the GAT, we need to stress that the cases are still on-going. In fact, our case is before the Supreme Court, challenging the orders being referred   to mainly, but not limited to the fact that in several of these cases, FAAN, as a principal interested party, was never fully represented.

    “Most of the cases and attempts at arbitration were conducted without the full incorporation and participation of FAAN. Those behind Bi-Courtney, relying on their privileged positions and closeness to the corridors of power at the time conspired to leave out FAAN in most of the adjudication and arbitration processes.

    “Perhaps it is pertinent to emphasise that most of the concession and lease agreements in the aviation sector prior to the coming on board of the minister were heavily skewed against national and public interest. The review and cancellations of some of these agreement are, therefore, done in the overriding public and national interest. The interest of an individual investor or corporate entity cannot be allowed to override the public.”

    As FAAN and Bi-Courtney sort out the ownership status of the General Aviation Terminal, airlines, including IRS Airlines, Overland Airways, Medview Airlines and Arik Air, have taken space at the terminal to boost their flight operations.

    Scores of passengers continue to salute the courage of the government in delivering a terminal that could only be compared with what is obtainable in most developed countries.

     

     

  • Telcos bogged down by multiple taxes

    Telcos bogged down by multiple taxes

    For telecoms firms and other stakeholders in the Information Technology (IT) sector, multiple taxation and regulation is a real threat. The problem, they say, is affecting business and may force some to relocate to more conducive environment.
    LUCAS AJANAKU
    examines the issue, urging operators and authorities to close ranks for subscribers’ benefit.

     

    When Osondu Nwokoro, Regulatory Affairs Director, Airtel Nigeria, took the floor to address the gathering at the 2012 edition of the West African Information and Communications Congress (WAFICT), everyone listened to him.

    Nwokoro, who represented his boss, Rajan Swaroop, spoke on the twin-evil of multiple taxation and regulation, lamenting that operators were groaning under the yoke of heavy financial demands by ministries, departments and agencies (MDAs).

    According to him, independent tax consultants, working for the federal and some local and state governments, have been making life unbearable for telecoms firms through outrageous levies and taxes.

    “It is important that we understand that multiple taxation and regulation are two different issues. For instance, if a particular operator has a base station in a particular community, he is faced with the challenge of paying all manner of levies and taxes to different governmental agencies for just that base station. Also, he is faced with the challenge of multiple regulations from different government agencies.

    “At the end of the day, the customer is made to suffer for this as some of these agencies usually shut down base stations, thereby preventing engineers from performing routine maintenance work. Just imagine an operator with more than 2,000 base stations. Indeed, the impact is huge and customers are made to suffer unjustly,” he said.

    Osondu, like his colleague in MTN, Mrs Oyeronke Oyetunde, general manager, Regulatory Affairs, is also worried by this development. She identified multiple taxation and regulation as the twin-factor that impeded telecoms growth in the past.

    According to her, a situation where a local government area requires telecoms firms to pay about N10 million for the erection of base transmission station (BTS) besides other levies is not healthy for the industry.

    Mrs Oyetunde, who is also the vice chairman, Industry Working Group (IWG) on multiple taxation and regulation, a body comprising representatives of operators, regulators and subscribers, noted that because of delays in BTS roll-out, operators have been able to deploy only 20,000 BTS across the country. She argued that over 70,000 BTS would be required to provide acceptable levels of services.

    “If you have a local government demanding N10 million from an operator and you now multiply that by the number of local government areas we have in the country, you will see that this is unsustainable in the long run for operators.

    “It is either you kick them out of business or the operators are forced to pass the cost accrued to them through such illegal taxations to their customers in form of high tariff,” she said.

    For Mr Okey Itanyi, Executive Commissioner, Nigerian Communications Commission (NCC) and chairman, IWG, the matter is threatening to operators and foreign direct investment (FDI). Investors may also be compelled to seek a more conducive environment elsewhere.

    “The country may lose the gains and confidence achieved so far in the last couple of years. The industry still requires investment in network infrastructure to ensure full access across the country, and to guarantee good and acceptable quality of service, which has become a major challenge,” he warned.

    The IWG is working towards stopping the imposition of illegal taxes and levies on telecoms operators because of their perceived grave socio-economic implications. The group comprises the regulation agencies, operators and subscribers.

    Analysts argue that direct and indirect taxes are veritable sources of revenue to governments all over the world. They believe that there is nothing abnormal in the imposition of taxes on businesses to generate revenue. To them, tax imposition is a standard practice but a situation where there is a litany of indiscriminate charges from different quarters, both legal and illegal, is deplorable and constitutes a disincentive to business growth and expansion.

    No fewer than 12 states and the Federal Capital Territory (FCT), Abuja, impose multiple taxations on telecoms operators running into billions of naira.

     

    Outrageous taxes

    According to reports, the Abia State Infrastructural Development Fund Board is demanding N19 million from Airtel as infrastructure development levy. The Abia State Environmental Protection Agency/Yagazie Nigeria Limited is demanding from each mobile operator N300, 000 per new site as environmental support fee and Environmental Impact Assessment (EIA), registration the State Town Planning Authority is demanding N650, 000 per site as permit/processing fees.

    There is a new dimension to the problem in Imo State, where the Environmental Transformation Commission (Entraco) and the Town Planning Authority are demanding N262.4 million, pest/vector control fees and fumigation charges for 2008-2011 and N720,000 per site as permit fees.

    In Anambra, the Ministry of Environment and the state’s signage and Adverting Agency are demanding N500, 000 per site as EIA fees and N4.5million as outdoor advertising for BTS.

    In Edo State, Egor and Oredo local government areas see telecom operators as goldmine. They are demanding the payment of N24.75 million as tenement rate for 11 BTS, N16.25 million as operational/inspection fee for five BTS, while the Edo State Town Planning and Ministry of Commerce want the payment of N750, 000 and N650, 000 as site permit and business premise fees respectively.

    In the FCT, the Abuja Municipal Management Council has given a notice to MTN for the payment of over N257million as annual charge for BTS, the Bauchi State Signage and Advertising Management Agency has asked Airtel to pay N755 million as signage, branding and advert levy.

    In Cross River State, the Internal Revenue Service (IRS) and Town Planning Authority are demanding the payment of N510 million purportedly for BTS revenue from 2005-2010, N1.2 million as site permit per operator. The Katsina State Urban Development Authority is asking for N755, 000 as building permit and EIA fee.

    If the operators bow to the threats and pressures of the MDAs, they will be contending with multiple charges. They pay Annual Operating Levy (AOL) of certain percentage of earnings to the NCC and are required in addition to pay various rates and charges to Federal Government agencies, such as the Consumer Protection Council (CPC), Nigeria Lottery Commission (NLC), federal and state ministries of environment including authorities in every state and local government in which they operate.

     

    Stakeholders’ grouse

     

    Akinwale Goodluck, Corporate Services Executive, MTN, said in 2010 MTN has paid N43 billion as income tax to the government, contributed N15 billion to the NCC and paid N6 billion as education tax. It also contributed another N2 billion to National Information Technology Development Agency (NITDA) in spite of the existence of those spurious taxes and levies.

    Udemba Hyacinth, chief executive officer, Prostar Global Energy, said the burden of spurious taxes, levies and charges on goods and services are, ultimately, passed onto the final consumers and in this case, the subscribers who have to pay through the nose for low quality services. “The effects of multiple taxation and regulation on telecom industry appear to have overwhelming influence on every facet of our lives and transactions. The first is on the delivery of telecommunications services. The second is that it will discourage investors from investing in the industry,” Udemba told The Nation.

    Dr Sheidu Olanrewaju, lectruer, Economics Department, University of Lagos, agrees no less with Udemba. According to him, multiple taxation will discourage investment and make call tariff go up. “This will affect the entire business including the profit margin. Gross domestic product (GDP) will inevitably go down because instead of promoting business, it will discourage it.

    He said the Federal Government should regularise taxes while the National Assembly should promulgate laws that will harmonise and spell out the taxes that should be paid by telecom operators. “Taxes should be fair, just and ensure equity and should not discourage investment. It should not affect production and inevitably lead to unemployment,” he said.

    Omobola Johnson, Minister of Communications Technology, also acknowledges the crippling effects of the development. “The Ministry has put in motion collaboration with the Ministry of Environment and all indications are that we can, within a fairly short time, reduce the time it takes to obtain approval to erect a base station. There is an industry working committee on illegal taxes and levies that is putting together appropriate recommendations to curb illegal, punitive and unfair taxes on telecoms companies,” she said.

    According to IWG Position Paper on Hazards and Further Implications of Multiple Taxation and Regulation of the Communications Industry in Nigeria, in a brief provided by the sub-Committee on Legal and Judicial Reviews of the IWG on Multiple Taxation and Regulation, the challenges of multiple regulation and taxation faced by the communications industry has existed and been ventilated several times over the years. It added that the phenomenon inhibits the ability of telecommunications as an economic enabler and social overhead capital to impact positively on the attainment of the country’s developmental goals.

    According to the IWG, the successes recorded in the telecommunications industry in the last 10 years have reinforced the internationally acknowledged perception that communication is a powerful, progressive tool of socio-economic development with continued boost to socio-economic development in job creation, security and social cohesion while the impact upon culture and quality of life and the contribution to GDP are gains, which have been recorded by the industry as a direct result of the advent of mobile telephony in Nigeria.

    IWG regrets that while the sector has been a major catalyst for socio-economic development, it has become apparent that majority of the national stakeholders have failed to recognise the pivotal role played by mobile communications to the long-term socio-economic development of the nation by continuing to perceive the successes of the industry as opportunity to generate short-term and other immediate pecuniary benefits, a skewed perception that results in undue interference in the operations of communications networks by various strata of society, and particularly agencies of government.

    “These continued intervention in telecoms operations by MDAs results in disruption of services, degradation of service quality, major increase in operating expenses and the general cost of carrying on communications business in Nigeria. While we note that the untoward consequences of multiple and illegitimate levies/taxes is not born solely by the telecommunications industry, it is our cogent believe that the critical nature or services provided by the telecommunications sector requires urgent action to address these challenges before a total collapse of the telecommunications sectors is witnessed,” IWG noted.

    The situation is even so ridiculous as it is now common to have a telecommunications operator receive a ‘stop work order’ from a state or local MDA over a right of way (RoW) approval granted by a State or Federal MDA and to have state and local environmental MDAs reject an EIA certificate issued by the Federal Ministry Environment (FME) to insist instead on the telecommunication operator processing same with them. This occurrence is similar to the demands in Kaduna State by the Kaduna State Urban and Property Development Authority (KASUPDA) which insisted on conducting its own EIA.

    It noted that the associated setbacks and bureaucratic bottlenecks usually lead to project implementation delays that unduly increase the project cost, while occasioning network downtimes and quality of service issues among others. Besides multiple-taxation, which ultimately results, the situation presents significant regulatory discord that can ground telecommunications operations for months in severe cases with unsavoury implications for the national socio-economy.

    Udemba argues that the regime of taxes and levies ought to be ascertainable in order to assist planning and forecasting for business endeavours. “Taxes and levies form a veritable source of revenue for government, it is imperative that citizens should be able to determine or know in advance what taxes they are statutorily liable to pay. The computation of taxes and levies should therefore be based on clearly defined criteria, the absence of which negates regulatory propriety and certainty which negatively impact investors’ confidence and their subsequent investment decisions,” he argued. Udemba added that the phenomenon affects the perception of Nigeria as a preferred investment destination, with unfavourable consequences for the national economy.

    The IWG said that taxes and fees ought to be predicated on clearly defined criteria, stressing that where their collection presupposes that government is providing a public (regulatory or administrative) service, it is imperative that relevant MDAs provide that service. “Because the objective is typically to enhance internally generated revenues, the provision of the underlying regulatory or administrative service is usually relegated. For instance, state and local environmental authorities are quick to impose and collect fees for effluent discharge, fumigation, pest control and other environmental related services, without ever providing such services or only partially doing so,” IWG lamented.

    According to a GSMA Tax Study on sub-Saharan Africa, 2007, there is a negative correlation between tax and mobile penetration and as such, countries such as South Africa with low tax burden per connection (17.5 per cen) enjoy high penetration (97 per cent). The reverse is the case as countries such as Madagascar with high tax burden (23.5 per cent) have low penetration (9 per cent). From the report, it is clear that by removing mobile-specific taxes, mobile ownership and use will rise, stimulating wider economic growth; while the total tax receipt from the industry and indeed the wider economy will increase.

    The report revealed that tax receipts would increase by $930 million, rising from $28.9 billion to $29.9 billion, if the governments of some African countries including Nigeria, Kenya, Tanzania, Cameroon, Ghana, and Malawi removed all non-value added tax (VAT) mobile ownership taxes in 2007. It added that by 2012, Chad’s tax receipts would be approximately 30 per cent higher, Ghana’s 20 per cent and Nigeria’s 15 per cent higher. In the light of this, it is evident that multiple taxation of telecoms sector inhibits growth and penetration; stifles economic growth and constrains the creation of a value chain that is beneficial to socio-economic development.

    These, analysts say, invariably combine to limit tax revenues to government from direct and indirect value-addition as well as the wider economic impact of the sector on the economy.