The Nation Newspaper

Tag: businesses

  • Helping entrepreneurs to expand their businesses

    Nigeria’s ecosystem offers-plenty of opportunities for young start-ups to flourish. However, many die because they cannot raise funds. To help startups, Rising Tide Africa, an empowerment outfit, organised a deal-making session to guide startups on the right way to attract investors. DANIEL ESSIET reports.

    The Lagos entrepreneurial ecosystem ranks as number one in the country. This is because it has the largest concentration of the richest Venture Capitalists (VCs), angel investors and angel groups. Also, there are many start-up accelerators and incubators in niche markets – FinTech, HealthTech and  AgTech.    Many startups in the state have become successful. The last thing to worry about when starting a tech business is the availability of investment sources.

    Despite this, many start-ups cannot make persuasive pitches to attract investors. This has given business empowerment groups concern.

    One group that has risen to the task of preparing start-ups to pitch  for funds is Rising Tide Africa (RTA). The  group, which largely comprises women business angels, held a deal-making session in Lagos for start-ups seeking funding.  However, only a fraction of companies that applied for the event after screening got selected.

    The event opened with a keynote address by co-founder, Dr Ndidi Nnoli-Edozien, who said RTA believes it will bring about positive change by investing in exciting start-ups. She  added that the group promotes sustainable economic development.

    Co founder Yemi Keri said RTA Nigeria chapter exists in the deal-making landscape for start-ups to connect with the right investors. According to her, the forum is organised with the goal of creating new ways for start-ups, scale-ups and high-growth businesses to access finance.

    RTA Nigeria Secretary-General Ms. Ivana Osagie said the group seeks investment opportunities that have the potential to yield strong financial returns and significant social impact.

    Osagie, who is also Notore Seeds Chief Executive Officer, noted that the group has a number of investors to raise the quality of investor-startup interaction.

    She said six startups and scale-ups were selected to make presentations during the event. They included Fibre.ng, KleosAfrica, WhyBlueSky, DokiLink, Smoodypod Group International Corporation and Beyond Credit.

    The forum offered an excellent opportunity for networking with high net worth individuals, co-investment fund managers, bank executives, stock exchange executives and VCs.

    An ex-Morgan Stanley investment bank analyst and entrepreneur, Obinna Okwodu, launched Fibre.ng.  a real estate booking start-up in Lagos, which gives tenants the option to pay monthly.

    Fibre.ng, opens renting in Lagos up to many, who until now, have not  been able to place 24 months’ rent on the table.

    Speaking about fibre.ng, Fibre Lifestyle Technologies Limited, Chief Executive, said the   real estate booking platform ameliorate the hassle and challenges faced when renting apartments in Lagos.

    However, in exchange for the convenience, tenants have to pay an amount on top of the monthly rent, which pushes their monthly rental expenses slightly over the market-related rental for properties. This convenience fee goes to Fibre.ng for its service.

    He said: “We work with landlords to make it possible for professionals in Lagos to live in the city and pay monthly, as opposed to having to pay two years rent upfront plus service charge, agency fees, legal fees, caution deposit, among others, just to find a place to live.”

    Currently, the platform only covers premium residential areas of Lagos, but Okwodu plans to expand to the rest of the state. He said the homes are sourced according to demand. After users make requests on the website, Fibre goes looking for apartments that best match their given criteria. Tenants then get locked into one-year contract and they have to pay 25per cent  of the annual fee upfront – that’s basically three month’s rent – to get the keys; they then spread what’s left of the rent over the next 11 months.

    KleosAfrica Lead Consultant, Glory Enyinnaya, stated that it is an online platform that connects business owners in need of strategic consulting, financial modeling and managerial accounting expertise with business school students and freelance consultants with cogent consulting experience.

    According to her, KleosAfrica allows MBA students and graduates worldwide to take on side projects that help businesses. While they will be paid for their services, the major value for them is the opportunity to contribute to the development of the African continent.

    Founder WhyBlueSky, Agata Wilam said her organisation built the platform with curiosity-kindling lessons, which boost students’ motivation to learn. Her words: “We help teachers without expert knowledge to deliver lessons on science, health, entrepreneurship or art. Lessons are designed with academics and researchers,  experts and entrepreneurs, using tailor-made experiments, role-playing games and others.”

    According to her, the platform engages more than 7000 teachers and has reached more than 70.000 kids.

    Wilam has worked with children and education her entire life and she is passionate to be part of the future of education.

    Co-founder and CEO, Beyond Credit, Jude Njugo said the social enterprise is a technology driven financial services company that provides insurance backed loans, business support and savings services to low scale businesses.

    He said their approach include supporting entrepreneurs with financial education training, Insurance backed loans, apart from providing a platform for savings and support groups.

    Chief Executive, DokiLink, Niyi Osamiluyi said the online professional network of doctor was created in a bid to reduce medical Tourism by connecting with professional doctors to patients.

    Osamiluyi, a medical doctor, said the electronic platform already has more than 11,000 verified Nigerian doctors, who have been sharing medical cases, getting second opinions from colleagues and accessing medical news and information. This leads to a greater awareness among doctors of the treatment options available locally.

    Chief Executive, Smoodypod Group International Corporation and British-trained architect and industrialist, Prince Tricare, said the organisation needs funding to tackle food waste. He introduced Smoody fruit juice into Nigerian market.

    At his factory tucked in a rather quiet street in Opebi, Ikeja, Lagos, Tricare has since been rolling out premium Smoody drinks made from a blend of mango, banana, orange and ginger, which he initially sold in bottles at equally premium price to high-end hotels and restaurants. He revealed that the product was well received, with the market assured. But his business sense dictated to him that it should be made available for mass consumption to be enjoyed by all.

    He pointed out that another major opportunity exists with local manufacturing. “The cost of fruit is really cheap here, however, we need close to three tons of fruits for a week’s production for now,” he said. The attendees pitched investors in a short fast pitch session in the hope of finding investment capital. The business angels’ offered fresh ideas, real-world strategies, and practical hands on tools for start-ups to launch new ideas and grow existing ventures to the next level.

    Aside presentations by start-ups, the event offered important insights into the start-up ecosystem. The programme was learning space for entrepreneurs to increase their understanding of the investment strategies of angel investors, due-diligence check-lists of investors, and ways to access co-investment funds.

  • How new executive orders will impact businesses

    The two new Executive Orders and five Amendment Bills approved by the federal government to reduce tax burden on Nigerians has elicited mixed reactions from different stakeholders. Expectedly, some have applauded the move while others think the changes are best cosmetic and may not necessarily address the contending issues, reports Ibrahim Apekhade Yusuf

    Despite the different palliative measures put in place by the federal government to ameliorate the recurring challenges of businesses, the latter have remained implacable. However, not to be outdone, the government that is ever forward-looking has not relented thus far.

    A recap of executive orders under Buhari administration

    A major focus of this administration as stated in the Economic Recovery and Growth Plan is to create an enabling environment for businesses in Nigeria, thus, improving the ease of doing businesses in Nigeria. In February, 2017, the Presidential Enabling Business Environment Council (PEBEC) approved a 60-day National Action Plan which was implemented across Entry and Exit of goods; Entry and Exit of people and Government Transparency and Procurement.

    Recently, PEBEC released its results of the implementation of the action plan having achieved 70% of its target – with improved transparency in the public sector being an important achievement.

    In this order, federal agencies and ministries are required to publish a complete list of all requirements or conditions for obtaining products and services within the MDA’s scope of responsibility. These are not limited to fees, timelines and processes.

    Another important aspect of this order is the issuance of default approvals to applications during instances when government officials fail to respond within stipulated dates. Erring government officers will be subjected to appropriate disciplinary proceedings in accordance with the civil service law and regulations

    As part of the order, bottlenecks and delays associated with multiple verifications by different government agencies have been removed as applicants working with the government would be required to provide photocopies of document while the verification of such document would be carried out by the government agencies.

    Enter new executive orders

    In its desire to address the lingering challenges confronting businesses in the area of operating climate, the Federal Executive Council (FEC) had last week approved two Executive Orders and five Amendment Bills to the country’s tax policies aimed at reducing tax burden on Nigerians and boosting ease of doing business.

    Briefing State House correspondents at the end of the Council’s meeting presided over by President Muhammadu Buhari at the presidential villa, Abuja, the Minister of Finance, Mrs Kemi Adeosun said the two approved Executive Orders are: Value Added Tax Act (Modification) Order and Review of Goods Liable to Excise Duties and Applicable Rate Order while the five Amendment Bills include the Companies Income Tax Act (Amendment) Bill and Value Added Tax Act (Amendment) Bill.

    Others are Customs, Excise, Tariff ETC (Consolidation) Act (Amendment) Bill; Personal Income Tax Act (Amendment) Bill and Industrial Development (Income Tax Relief) Act (Amendment) Bill.

    The minister revealed that the approval followed the presentation of a memorandum to seek the consideration and approval of the Council for the report of the National Tax Policy Implementation Committee on Tax Laws Reform.

    It would be recalled that FEC had on Feb. 1, 2017, approved the revised National Tax Policy in order to have a robust tax system that would promote investment and improve revenue for sustainable national development.

    This is just as the then Acting President, Professor Yemi Osinbajo last year signed three Executive Orders to improve the budget process of the country, support the implementation of the Local Content policy in public procurement and promote transparency and efficiency in the business environment.

    Adeosun maintained that the new tax policies would remove obsolete, ambiguous and contradictory provisions in the laws, increase government revenue and simplify the process of paying taxes and doing business.

    “Majority of the provisions approved today are actually removing the tax burden and clarifying obsolete and ambiguous areas of tax. So for example for VAT there is to be exemption for residential property, leases on rental, transport for the general public and life insurance.

    “These are areas that previously were VAT-able and what was approved today was that these areas should be removed, then, they shouldn’t be subject to VAT.

    “In the short term of course that means a revenue lost for government. But we think in the long run that is the right thing to do is improving ease of doing business and reducing the tax burden on our people which is really one of the objectives of this government,’’ she explained.

    She disclosed that the government was proposing an amendment to the Company Income Tax aimed at reducing the Right of Tax on Micro, Small and Medium Enterprises (SME) from 20 per cent to 15 per cent.

    She said the proposal when approved would also promote Micro, Small and Medium Enterprises and protect most vulnerable persons in the society

    Adeosun also revealed that the Council approved N1.6billion for the procurement of 68 anti-smuggling vehicles for the Nigeria Customs Service.

    “The operational vehicles currently available for the NCS are grossly inadequate for effective anti-smuggling activities.

    “The need to effectively patrol the borders of the country, enhance Customs’ bid to suppress smuggling and increase revenue collection gave rise to the request to purchase 68 operational vehicles,’’ the minister added.

    Reaction by OPS

    Expectedly members of the organised private sector have expressed confidence in the Executive Orders.

    The organised private sector believes that the new executive order has the capacity of attracting new manufacturing investments and raise capacity utilisation in the country given that the pillars take patronage of locally made products and efficiency of the business environment seriously.

    Citing the impact of the recently signed an executive order on Ease of Doing Business in the country, the National President of Lagos Chamber of Commerce and Industry (LCCI) Chief Nike Akande, noted that the Nigerian economy had improved tremendously in recent times, attributing it to the series of new policy initiatives of President Buhari.

    She said, “We are delighted to observe that the short to medium term outlook for the Nigerian economy is much better than what it was this time last year. This is the outcome of the series of new policy initiatives, engagements, and consultations with key stakeholders and some positive developments in the external sector.”

    If properly implemented, these measures will bring considerable relief to the business community, she stressed.

    Also speaking on the executive orders, the President of Manufacturers Association of Nigeria, Dr. Frank Jacobs in his assessment of the performance of the administration vis-à-vis impact on the manufacturing sector, he said the current administration above average.

    “My assessment principally focuses on the crafting of robust economic policies, relative stabilisation of foreign exchange rate, massive infrastructure upgrade, efforts aimed at improving the ease of doing business, improved consultation and partnership with the private sector to mention but a few.”

    Understandably, the administration was compelled to take strict measures to stabilize the economy, particularly in 2016 which was the year the economy was thrown off-balance and into recession with  four straight negative quarterly growth rates of -0.36% in Q1; -2.06% in Q2; -2.24% in Q3;  and 1.30% in Q4. In that year, many business activities including manufacturing slowed significantly recording lower capacity, output, revenue and huge profit losses. However, as the economy exited recession and stabilised in 2017, businesses are beginning to gain momentum while manufacturing is gradually rebounding.

    Economic Recovery and Growth Plan (ERGP) which guided the economy out of recession; Adoption of the Nigerian Industrial Revolution Plan (NIRP) and the Inauguration of the Nigerian Industrial Policy and Competitiveness Advisory Council; Establishment of Presidential Enabling Business Environment Council (PEBEC) which improved Nigeria’s ranking in Ease-of-Doing-Business (EODB); The Federal Government Executive Order 003 and 005 which promotes patronage of made in Nigerian goods by Ministries, Departments and Agencies (MDAs).

    The Association, he noted appreciates the government at different fora for the continuous improvement in the Ease of Doing Business in the country.

    He was however quick to add that the various challenges that still interplay in the operating environment.

    He therefore urged the government to sustain the use of moral suasion to banks to give priority FX allocation for raw-materials, spare parts and machinery to the industrial sector so as to improve production.

    Besides, he suggested the implementation of the Steve Oronsanye Report on the reduction and re-alignment of government agencies and parastatals in order to streamline the number of taxes, levies, fees and administrative charges payable to them; Ensure the operability  of Independent Power Producers  (IPP) for On/Off grid power generation and  the Micro Grid Initiative Engage in Public Private Partnership (PPP) programme through the establishment of Concession Agreements under Built-Operate-Transfer (BOT) in road construction and maintenance, rail construction and maintenance with credible organisations.

    He also urged the government to set up a formal structure for the private-public sectors to jointly monitor and evaluate the implementation of Executive Orders 003 and 005 of the federal  government on the patronage of made in Nigerian goods by  Ministries, Department, and Agencies (MDAs) of the government as production without sales would not translate to improved performance.

    In a related development, the Chairman, Toiletries and Cosmetic Manufacturers Group, Manufacturers Association of Nigeria (MAN), Ikeja Branch, Ikpong Umoh, at a lecture organised by Financial Business Team on making the port environment more business friendly criticised the incidence of multiplicity of regulatory agencies, which has continued to escalate the cost of doing business.

    He said until the agencies are fully harmonised into a single platform, it will mar the executive order on the ease of doing business. On the compliance level, Umoh said some government agencies are yet to adhere to basic operational principles, noting that they are still defaulting by providing dysfunctional contact telephone lines, and emails that are not working.

    Prompt and unencumbered communication between agencies of government and the business community, he said, is critical to easing the business environment. Umoh advised service providers to come out clean and rectify the avenues of communication in order to comply with the ease of doing business initiative by reducing human contact in port areas.

    The Founder, National Association of Government Approved Freight Forwarders (NAGAFF), Dr. Boniface Aniebonam, expressed concern that the agencies of government are not working in sync with each other, adding that collapse of the ports system is imminent based on the present state of the port system.

    A divergent view

    In the view of Omooba Olumuyiwa Shosanya, founding president, Association of National Accounts of Nigeria (ANAN) although the federal government has taken some measures, there certain areas that need improvements.

    According to him, “What the government must face squarely is to boost its revenue generation capacity. One can say oil has been our fortune as well as our misfortune because we relied solely on oil and neglected the non oil revenue sectors like agriculture and taxation. In most of the developed and emerging economies of the world, taxation has been their main revenue generation stream. But in Nigeria, taxation revenue generation is poor. We still don’t generate up to 10%. Now they have done, especially the Ministry of Finance, is what I would call fire brigade approach to revenue generation.”

    The Voluntary Asset and Income Declaration Scheme (VAIDS), he recalled, “Is a temporary measure to aid revenue generation. You’re targeting the rich people who have been evading tax.  In taxation what you’re doing is back duty. The money they would have paid in the past, you’re trying to realise it. But that would stop because you’re only targeting the wealthy people, who are just about half a million out of the 180million population. What happened to the about 179 plus?” he queried.

    Way forward

    “There is a veritable tax system which all the developed countries are using to raise money- it’s the value added tax. But unfortunately, the VAT in Nigeria is not realising up to 5% of its capacity. The burden of administering the VAT is on the Federal Inland Revenue Service (FIRS), which unfortunately doesn’t have the capability to manage it. So we suggested through policy briefs on revenue generation with emphasis on the VAT but it hasn’t seen the light of day. Taxation through VAT is the most simple revenue generation stream. What you need to have is information about the chargeable person which are the businesses, you’ve to get them registered. They should decentralise collection of the VAT. Let each of the states administer the VAT. That way, you’ll get more chargeable persons, more companies, more traders into the tax net.  At the end of the day whatever is realised on monthly basis goes into a central account. From our working documents VAT would be generating over N900billion every month.  As of now, what is being generated by the FIRS is less than N80billion, which is less than 10% of what should be generated if the administration of VAT is decentralised. Besides, we can go ahead again to establish Ministry of Taxation and Revenue with a cabinet minister at the helms of affairs while the states can have Commissioners for Taxation and Revenue as the case may be. It has happened in this country before during Shehu Sagari’s regime, we had Ministry of Taxation. We have a veritable revenue generation mechanism that has been abandoned. As far as l’m concerned, the VAIDS initiative is a one-off thing but if the VAT is well administered and decentralised, it will ensure a steady stream of income into government coffers. Based on our projection we can generate at least N9trillion from VAT administration alone. That way we don’t need to execute our budget; it’s possible.”

     

  • ‘Businesses have moved out of Rivers’

    EX-President, Movement for Survival of the Ogoni People (MOSOP) Ledum Mitee, and former  INEC Resident Electoral Commissioner (REC) Bariton Lenu Kpagi yesterday said businesses have pulled out of Rivers State.

    They spoke at the maiden stakeholders forum of the Initiative for Credible and Non-violent Elections (ICE), in Port Harcourt,  the capital

    Kpagi said: “In the last two years,  over 300 businesses have left Rivers State and relocated to other states.

    ‘’I know of a state with a dry seaport, which has attracted over 200 companies between November and date, one of the companies which relocated to the state employed over 400 persons which would have reduced the unemployment rate in the state.

    “While businesses are fast dying in the state, politicians are busy dividing the state along political party line. Youths are the tools and target of electoral violence,  youths should reject the offers and antics of politicians and create the right environment for credible elections,  the state is losing, businesses are dying, while unemployment is rising.”

    Mitee explained the concern of the initiators, saying:  “The meeting, which was attended by youth groups,  and organisations,  including tertiary institutions and music artists, was meant to sensitive youths on the need for credible and peaceful elections for development and good governance in the state.

    “The idea of this initiative came from what was an informal discussion among friends trying to X-ray developmental in the state.

    ‘’We reviewed ghetto enormous resources and advantages available to the state. We noted that we do have three seaports and an international airport, irrespective of its present state.

    “We are unarguably the oil capital of Nigeria, home to a petrochemical plant and two refineries, an oil and gas free zone and have abundant natural resources in vast lands and waters,  among others.

    “No doubt, the state has enormous advantages that should make it the preferred prime investment destination but for some years now,  the reality tells a different story. Several businesses have moved out of the state, with no discernible new ones moving in.

    “Even private citizens are relocating with their families to other states that cannot boast of any natural advantages, yet the latest statistics by the National Bureau of Statistics shows that the state does not fall within the first three states with the highest reported crime rates in the country.

    “We have examined the reasons why we have found ourselves in the ironical situation that in the midst of such endowment and natural advantages, we continue to be the butt of jokes and ridicule and have found that our situation is not unconnected with the perception of the state as a theatre of violence. This association of our state with violence, in turn,  stems from the type of elections we continue to witness in the state.

    “Elections which represent the modern and universally accepted process through which individuals are chosen by the people to represent them in government, have, in the recent past in the state, characterised by fraud associated with political tensions, crisis and frightening levels of violence. The outcome of elections in the state have more or less been the subversion of the democratic process rather than its consolidation.”

  • Robots’ use brings businesses, new loss, others

    The rise of robots usage has brought about a mixed-grill of fortune to businesses. While it has acrued huge benefits to businesses, it has also created new losses, risks and liabilities’ scenarios, a report by Allianz Global Corporate & Specialty (AGCS), has shown.

    The report showed that Chatbots, autonomous vehicles, and connected machines in digital factories foreshadowed what the future will look like.

    According to the report, the widespread implementation of Artificial Intelligence (AI) applications has brought many advantages for businesses such as increased efficiencies, fewer repetitive tasks and better customer experiences.

    However, in the wrong hands, the potential threats could easily counterbalance the huge benefits. Vulnerability to malicious cyber-attacks or technical failure will increase, as will the potential for larger-scale disruptions and extraordinary financial losses as societies and economies become increasingly interconnected. Companies will also face new liability scenarios as responsibility for decision-making shifts from human to machine and manufacturer.

    In the new report: “The Rise of Artificial Intelligence: Future Outlook and Emerging Risks”,  insurer, AGCS identified both the benefits and emerging risk concerns around the growing implementation of AI in society and industry, including the insurance sector. AI, also referred to as machine learning, is essentially software that is able to think and learn like a human.

    It read: “AI comes with potential benefits and risks in many areas: economic, political, mobility, healthcare, defense and the environment. Active risk management strategies will be needed to maximise the net benefits of a full introduction of advanced AI applications into society,” said Michael Bruch, Head of Emerging Trends at AGCS.

    “Today, weak or basic forms of AI are able to perform specific tasks, but future generations of so-called strong AI applications will be capable of solving difficult problems and execute complex transactions. AI is beginning to find users in almost every industry, from chatbots which offer financial advice to helping doctors to diagnose cancer. The technology is used to power driverless cars better predict the weather, process financial transfers or to monitor and operate industrial machines. According to Accenture, AI could double the annual economic growth rate in 12 developed economies by 2035..

    “But with these potential benefits come risks. Cyber risks, which are one of the biggest risks for businesses according to the Allianz Risk Barometer 2018, illustrate the two different faces of new technologies such as AI: AI-powered software could help to reduce cyber risk for companies by better detecting attacks, but could also increase it if malicious hackers are able to take control of systems, machines or vehicles. AI could enable more serious and more targeted cyber incidents to occur by lowering the cost of devising attacks. The same hacker attack – or programming error – could be replicated on numerous machines. It is already estimated that a major global cyber-attack has the potential to trigger losses in excess of $50 billion] but even a half-day outage at a cloud service provider has the potential to generate losses around $850 million.

     

  • ‘We’re committed to instilling succession plan in businesses’

    The Nigerian-German Business Association (NGBA) is committed to ensuring a sustainable and healthy business relationship between German investors and their Nigerian counterparts.

    Its Director-General, Mr. Gbenga Adebija, said the body was committed to ensuring that Nigerian businesses have good succession plans.

    Adebija said most thriving businesses in Germany started as family entities and grew to be conglomerates. He lamented that most Nigerian family businesses die with their owners, attributing the trend to lack of a long-term planning and sound business management principles.

    He said this was part of the training offered by the group to help in the sustainability of businesses.

    Adebija said part of NGBA’s agenda was to foster a better bilateral business relationship between Nigerian and German companies, especially in the non oil sector.

    He said the group would not only promote Foreign Direct Investment (FDI), but also encourage the export of Nigerian products and commodities to Germany.

    Other functions of the group, he stated, are to connect Nigerian businessmen to potential markets in addition to sourcing  finance for investments.

    “We have significantly collaborated with the two countries in the areas of sourcing financial and investment opportunities in Nigeria and Germany. Our aim is to facilitate the ease of doing business between the two countries,” he said.

    On the draw backs of trade facilitation between the two countries, Adebija said it was mostly that of perception. According to him, Nigeria is perceived as a corrupt nation, making it difficult for German businesses to be comfortable here.

    Adebija listed multiple taxation as another major factor that discourages investors. He added that corruption and multiple taxation were hindering FDIs from Germany, as German businessmen believe in zero tolerance for corruption. He said any level of corruption in Germany attracted a jail term.

    He said Germany, built by small businesses based on sustainable practices, was working to see Nigerian businesses get to that level.

    The group said it was speaking with some German investors and business organisations on marketing investment opportunities in Nigeria.

    Adebija said: “We have concluded arrangements with over 150 potential investors, who will explore the Nigerian market before the end of 2018 and we are keenly committed to that.”

    He added that NGBA had been  mediating between Nigerian and German businessmen. It has also been training young Nigerian entrepreneurs to imbibe the right value in doing business, which is a departure from the old order.

    He said having realised that some German investors were not comfortable with the way and manner of doing business in Nigeria, the NGBA charted a new course by trying to inculcate the right values in doing business – transparency.

  • Why banks avoid funding start-up businesses

    Why banks avoid funding start-up businesses

    Commercial banks are avoiding funding start-up businesses given the high risk associated with such transactions, Head Trade Finance and Enterprise Banking at Stanbic IBTC Bank, Babatunde Akindele, has said.

    Speaking during Stanbic IBTC Bank SME Capacity Building Series held in Lagos, he explained that private or angel investors should fund such enterprises and grow them to full capacity instead of relying on commercial banks.

    He said: “The Angel Investors are designed to fund start-ups. Banks were not designed to fund start-ups. The best we can do is impart business skills on them to enable them grow and add value to the economy. Stanbic IBTC wants to create employment, stimulate the economy and increase the impact of SMEs on the economy,” he said.

    Akindele said the essence of the capacity building is to impact skills on SMEs and enhance  their capabilities. “SMEs remain the lifeblood of any economy. The better our SMEs, the more growth we will see. The idea is to impart skills on owners of SMEs businesses. We are training SMEs operators that are both new, or have been in the business for long,” he said.

    On why it is still difficult for many SMEs to access credit, he said the operators must comply with set lending criteria.

    “All lending come with criteria. We are here to let them understand the principles of business and letting them to meet those principles. We are happy that Nigeria’s Ease of Doing Business Report released by the World Bank showed an improvement. That alone will help boost foreign direct investment to the economy, which the SMEs will benefit from,” he said.

    “SMEs are the livewire of any economy. So the idea is that the better our SMEs become, the better their impact on the economy and the more growth we will experience.

    “It is a priority and that is why we are training people who are new in the business and those who have been in the business for a while. We have different roles in the economy but impacting business skills on small and medium businesses is something we can do and it’s something we are doing right here today,” he said.

    Akindele added that the Central Bank of Nigeria (CBN) recognises that there was the need to find ways to work on interest rates for SMEs, which have given rise to a number of intervention funds like the SMEs Fund.

  • Report: militancy, political uncertainty pose risks for businesses in 2018

    Investor sentiment across West Africa may experience uplift in the new year, following Nigeria’s exit from recession this year.

    Still, political uncertainty ahead of Nigeria’s 2019 presidential elections and on-going security concerns are among the key risks for businesses  in the region, Control Risks, a specialist global risk consultancy, has said in its yearly political and security risk forecast titled: ‘RiskMap.’

    According to Control Risks’ Senior Partner for West Africa,  Tom Griffin, this year has been tough  for businesses. He however, said that with Nigeria exiting recession, and foreign exchange shortages easing, “We see a strong improvement in investor sentiment emerging.”

    Griffin said another major engine of growth will be Cote d’Ivoire, where economic expansion is projected at around seven per cent next year.

    He said there would be only a handful of elections in the region next year, meaning continuity would largely prevail with policy decisions having the biggest impact on the business environment.

    In Nigeria however, though presidential elections are next slated for 2019, campaigning has already started.The uncertainty that generates, as well as the need for cash that an election brings, mean that political instability and regulators whose actions will be difficult to predict remain among our top risks for businesses in the year ahead,” Griffin said.

    Control Risks in the forecast accessed by The Nation identified terrorism and militancy, irregular regulators and political instability, among others, as key risks facing businesses in West Africa next year. Specifically, it said business assets and personnel in West Africa will remain vulnerable to attacks by transnational or domestic militant groups.

    The report said al-Qaeda and its affiliates would continue to threaten operators in the Sahel, while the oil and gas industry in Nigeria’s Niger Delta would remain exposed to attacks by domestic militant groups. “Failure to resolve the underlying political and socio-economic grievances at the root of these movements will see the threat persist in 2018,” it warned.

    Control Risks added that as countries in the region, notably commodity-dependent economies, face growing fiscal pressures, operators are likely to see regulatory bodies increasingly act as revenue-generating bodies, strengthening local content provisions, introducing stricter fiscal terms, reviewing contracts or erratically imposing fines in companies in the hope of boosting state finances.

    Noting that this would give rise to commercial disputes, legal challenges, and the need for businesses to engage with government stakeholders, the report added that protracted political and socio-economic grievances will continue to fuel popular discontent and a desire for regime change in parts of the region.

    It pointed out, for instance, that Cameroonian President Paul Biya’s re-election bid amid a continued crisis in the Anglophone regions would exacerbate tensions, while Togolese would continue to protest   the end of the 50-year-old Gnassingbé dynasty.

    “Protests will pose security threats to businesses, while regime changes would prompt major institutional changes and complicate engagements for operators,” it warned.

    Continuing, Control Risks said new sectors would throw up new risks in the coming year. It said from Senegal’s offshore potential to the country’s embryonic mining sector, some countries would be foraying into previously-undeveloped sectors in 2018. It, however, advised that prospective investors need to monitor closely how the government’s ability to oversee these sectors evolves and what the associated risks around these projects become.

    On operational risks, the report said many of the major risks  businesses face in West Africa were  impediments to operations. It listed some of them to include shortages of or difficulties in sourcing fuel, foreign currency, equipment and skilled labour.

    The report further noted that infrastructure deficits that persist in the majority of the region, such as in electricity and transport, would continue to mean higher costs, higher demands on management resources and a tougher capital-raising environment, as well as greater uncertainty for businesses than in other regions.

    According to Control Risks, many countries in Africa, Nigeria and Cameroon among them, face the prospect of what could become a sovereign debt crisis, a decade after they followed Ghana’s lead in entering the international bond market. “The problem is driven by high levels of external debt, persistent uncertainty over the recovery of commodity prices to fund repayments, and borrowing to fund recurrent expenditure,” it said.

    While pointing out that countries dependent on oil revenues are particularly vulnerable to ballooning debt in 2018, the report said in Nigeria and Ghana, plans to borrow to finance long-term infrastructure will not generate sufficient revenues in the coming year to finance debt repayments.

    “Amid rising inflation and muted oil prices, Nigeria’s debt servicing payments – which in 2016 doubled to 66 per cent of total revenues – are likely to rise further, placing extreme strain on an already stretched budget.

    “With the government of President Muhammadu Buhari well over halfway through its term, yet to fulfil many of the promises that brought it to power and already entering campaign mode, businesses in Nigeria will remain acutely sensitive to political and operational instability in 2018,” the report added.

  • ‘Recession harrowing but good for businesses’

    ‘Recession harrowing but good for businesses’

    Mr. Peter Ndegwa, Managing Director/Chief Executive Officer, Guinness Nigeria Plc, in this interview with Bukola Aroloye takes stock of the company’s performances vis-à-vis especially its strategic approach to remain competitive and profitable, including its impressive dividend payout which has been the toast of many shareholders. Excerpts:

    What is your assessment of the business climate in the last few months with particular reference to your operations?

    One of the critical things we need to consider as far as the operating environment is concerned is the Gross Domestic Product (GDP), which has started to grow in the last quarter. This is good news as there are signs that the economy is coming out of recession. But we need more quarters to start seeing whether this has not started reflecting in their pockets and costs of buying commodities are still going up as we can see consumers holding back on spending, reducing frequency of purchases, or spending less anytime they purchase, or going for lower-priced brands. If you look at the other key performance indicators (KPIs), one of which is inflation, it is in double digits- food inflation is about 20 percent. So consumers are not in great shape yet. From the manufacturing perspective, foreign currency still remains an issue as the Nigerian economy has big import content. Although we are sourcing 75 percent of our raw materials locally, there is still 25 percent which is a lot of money for our business. When you are importing and accessing foreign currency, the foreign exchange market is very important. The past 20 months when liquidity was a problem, it was a big issue for us, even though we were able to get $95m support from Diageo. The intervention of CBN is quite laudable as it improved liquidity. This is one of the biggest positives that we have seen in the GDP. This has brought stability in terms of the company’s ability to access liquidity. Our concern is how sustainable is this credit. Secondly, the shocks in the economy, oil price, security, and policies are factors that need to be considered. The CBN has had different policies at different times but we hope that this one will continue to be stable because it provides the cover for companies to plan, and predict their expenses to suppliers.

    Talking about sustainability, last year, Guinness declared an impressive dividend to its shareholders. Do you think Guinness can sustain this dividend policy?

    If you look at the time we were paying dividends, it has always been around 50 percent. The distribution of dividends this year is not unusual. We distributed 50 percent of our after tax profit. What I think shareholders will be worried about is: will Guinness continue to make profit? Is paying dividends the right thing at this stage? Of course I cannot say at this moment whether we are able to make profits or not, but what I can say though is that we are very confident that we have undertaken the right strategy, and we have gone through our rights issue, which will help us take out a lot of debts that we have had on our balance sheet. This has been a drag on our results. Last year, our interest cost was quite significant, about N7billion.  If you are able to significantly reduce that interest cost, then it means the profile of your profit will be more stable. Secondly, because we have reduced the debts, including the foreign exchange debt, now that liquidity is more available, then you expect less volatility on the foreign exchange which had previously impacted negatively on our profitability. So, we are growing better in starting to have more predictable growth. We are more confident in managing costs and interest on costs that we have been carrying and also the FX volatility. That is the reason why the board recommended that dividend level to the shareholders, who generally tend to approve what the board has recommended. The pay-out ratio was not different from what Guinness had done in the past.

    The 30 percent increase in profit in your revenue this year is impressive. What would you say is responsible for this?

    We recently released our result to the general public and we are very pleased about the positive excitement this has generated, especially among our key stakeholders. As we all know, Nigeria has gone through some tough times, so also has Guinness Nigeria Plc. However, we have continued to focus on our strategies especially in the area of portfolio expansion. A few years back, the focus was primarily on Guinness Foreign Extra Stout and Malta Guinness. In view of the current economic scenario, the market has been down-traded into segments. So, as the economy has become more challenged, we are returning to price policies that are lower while offering value. For the beer side, the lower value segment of the market became the predominant segment and we were late in going into that segment.  Thus, we started losing our shares and that’s why our results were affected in the past. But in the last three years, we have refocused our business and we are expanding, thereby participating in price policy we were previously not involved.

    Again, our brand, Satzenbrau, has done very well and we are starting to see the trend that was started in the beer market in the malt category. We have also expanded in category as we have gone into spirits. About two years ago, we got distribution rights for international premium spirits from Diageo, our parent company, to distribute brands such as Johnnie Walker, Baileys, Smirnoff, among others. We have expanded our product range for our consumers. Last year, we launched our local mainstream spirits, locally produced into international brands in our plants here in Nigeria. We are proud that we have been able to launch five additional brands such as Smirnoff S1, Vodka Chocolate, and Gordon Moringer, while we have also started producing brands like McDowells, which we got distribution rights from United Spirit, owned by Diageo. Basically, we have expanded the range and we are going into segments that are growing which we were previously not. Essentially, when you are in recession, you cut the cost. This we did significantly to reduce waste, drive simplification, to improve our business. I think the recession is some learning for the country. On where the country or where the business stands, a primary way of protecting yourself is to reduce costs. On an individual level, most people try to prioritise their investment which is same for businesses which try to cut back on spends that are really not relevant, and start challenging where you are investing. As a result, we have improved the top-line, middle and also not limited by the challenges of foreign exchange issue that the country was confronted with. The credit facilities from Diageo also helped us in excess liquidity which was not available in the market. Many businesses would have complained about challenges, such as lack of access to foreign currency and consumers not buying their brands, among others, but we focused on portfolio expansion, and we were able to take costs out. Ultimately, it was not difficult for us to turn a loss-making position last year into profits at a time when the economy was challenged.

    You just listed some of your strategies and how you came out from the recession to profitability and revenue growth. So what were the things that were lacking at time when you had issues? Did you feel there were things you didn’t do well?

    Not really. Organisations anywhere in the country will always look at the market. We also did, and we discovered that we were primarily participating in the premium brands – Guinness Extra Stout and Malta Guinness. At a time, this market was buoyant five years ago, until the value segment, which is also known as the affordable segment, suddenly became predominant. It was only ten percent of the total beer category, but today it is close to 70 percent. So you have seen the consumers down trading, not just because the economy was in trouble, but because there was much choice available in the market. And you could argue, should we potentially have moved faster? Yes, we should have moved faster. There is always a choice you have to make, and we have made the choice to be in that category. We are offering more choices for our consumers. And I think our strategy is very simple and clear- adapt price policy that consumers can afford and offer brands of high quality. So we still retain the quality offering that Guinness Nigeria is known for while also accessing more consumers that we were not engaging before. In achieving this, we drove out cost so that we are able to price our brands right and then get a route to consumers. We have expanded the number of our distribution points and the route to consumers is a third leg of our strategy. This is actually not rocket science but we think the complication was that the economy was troubled. So we had the choice which is to continue to be in our small premium segment or expand at a time when cost was going up. And that is why we decided to go after cost. Again, I want to reiterate that productivity is not just about reducing costs but about going after efficiency. For example, in logistics, we have been able to reduce our cost problem with about $10million in just one year. And this had nothing to do with price, but about making it more efficient to transport our goods from our breweries to their various destinations.  So clearly there was a lot of improvement in efficiency. Again, if you look at Nigeria, when oil was selling at $110, I am sure there was more waste than we have today. Even companies go through this cycle. In my opinion, I think the recession is actually a good thing for businesses. This is because, during this time, you go back to the basics so that you can price right and get the portfolio that consumers can buy.

    For your firm, are these strategies short, middle or long-term?

    All our strategies are simple and can be easily implemented. In fact, it can be implemented forever. This is because Guinness is known as the house of quality. So when we offer spirits that are locally produced, we are saying you are getting world standard brands produced by a reputed house of quality, at affordable prices. Consumers can then make informed choices knowing that they are getting quality in an environment where counterfeiting and adulteration are big issues. In this case, you can’t trust the brand, especially at a time consumers are under pressure, and we are investing. If we are not thinking long-term, we won’t be putting more capacity and surprisingly we are growing, with our top-line growth standing at 23 percent. We have also expanded export not because of profitability, but because we need the currency, dollars. We exported some of our products to countries such as Cameroun, Ghana, among others. As a result, we were able to use the currency we earned to fund the purchase of the import. We were also able to reduce costs, in the last two years, through sourcing of raw materials locally. However, this is not always about lowering cost, especially during economic recession, though it is more sustainable long-term. We outsourced cassava, sorghum, etc. and have significantly moved our local sourcing from 40 to 75 percent in the last three years. Although there have been challenges but we still believe this is sustainable. We have also started to work with Edo state and some other Northern states in developing the value chain of the agriculture sector. For quality, we have effective processes in place, and we can get better pricing and guarantee farmers on specific prices of their outputs.

  • CPC urges businesses on consumer protection

    The Director-General, Consumer Protection Council (CPC), Mr. Babatunde Irukera, has urged businesses to prioritise consumer protection as the pre-eminent factor in protecting brands and businesses.

    He also said prioritising consumer protection will help manage crisis, build confidence and corporate growth. He emphasised that customer satisfaction is the most vital pillar for loyalty and corporate trust.

    Irukera spoke at a meeting with Chief Executive Officers (CEOs) of food and beverage companies who are members of the Association of Food, Beverage and Tobacco Employers (AFTBE), during the week in Lagos.

    He noted that customer service cannot be ancillary to business, especially in the food and beverage industry; rather it must be the core of business and operations.

    He admitted that CEOs are vital to customer satisfaction and economic growth.

  • Funding Nigerian, German businesses with $2b trade lines

    Funding Nigerian, German businesses with $2b trade lines

    Access Bank Plc is ready to boost trade relations between Nigeria and Germany. To achieve this, the Tier-1 lender is collaborating with DEG – Deutsche Investitions – und Entwicklungsgesellschaft and the Delegation of German Industry and Commerce in Nigeria (AHK Nigeria) to make over $2 billion trade lines available to small enterprises that will drive trade volumes between both countries. The German Business Desk Nigeria –Financial Support and Solutions, opened in Lagos in October which will operate in partnership with Access Bank will at the centre of the ongoing business integration and partnership. COLLINS NWEZE who covered the event, reports.

    journey by air from Nigeria to Germany will last for over seven hours non-stop. The two countries are determined to bridge this long-distance by building formidable trade relations to stimulate both economies and create wealth for their people.

    At the centre of this partnership is Access Bank Plc, which has collaborated with DEG – Deutsche Investitions – und Entwicklungsgesellschaft and the Delegation of German Industry and Commerce in Nigeria (AHK Nigeria) to deepen trade relations between Nigeria and Germany.

    The initiative is borne out of the partnership between Access Bank and DEG to support German business and Small and Medium Enterprises (SMEs) in Nigeria. It is supported by Executive Management in DEG and Access Bank Plc.

    The German Business Desk Nigeria –Financial Support and Solutions was opened last month in Lagos to drive the new trade relations. The desk was created to facilitate financial advisory and support services make $2 billion correspondent trade line support available to German and Nigerian SMEs.

    Speaking at the event, Access Bank Group Managing Director/CEO, Herbert Wigwe, said that Nigeria remains a big market with enterprising people. He said the bank is at peace with credible partnership and determined to alter the narrative about German-Nigeria trade.

    He said that Access Bank will be providing tailor-made financial solutions for German exporters and Nigerian importers. The lender is expected to translate and balance commercial and financial supply and demand. It will also provide specialised financial packages to facilitate trade.

    Wigwe said that trade financing is just one part of the project, adding that the bank will in partnership with the stakeholders support Nigerian businesses. “The relationship between countries starts with relationship between individuals. It will translate to greater relationship between Nigeria and Germany. Nigeria will benefit especially since we are just coming out of recession. Growth and economic opportunities do not happen by chance, but by strategic partnership,” he said. He said the partnership will help support German firms that want to do business in Nigeria.

    Wigwe said: “At Access Bank, we are constantly searching for innovative ways to provide solutions to meet our customers’ needs. This collaboration with a first rate partner like DEG – Deutsche Investitions – und Entwicklungsgesellschaft leveraging on their global investment footprint and our local industry expertise in setting up a German Desk is the first of such initiatives in the country.

    “This desk which will be bi-lingual will provide customised long term and cost effective financial solutions to our clients available to conduct business with German corporates.”

    Also speaking, the bank’s Group Deputy Managing Director, Roosevelt Ogbonna, said Access Bank Plc, with N480 billion shareholders’ fund is the third largest bank in Nigeria. He said the bank currently has eight million customers and 385 branches, which has remained a critical milestone in getting the lender great rating by Fitch Ratings, Moody’s Investors, S&P and Agusto & Co. He said Access Bank of Nigeria is determined to be number one bank in Nigeria in the next five years.

    Ogbonna disclosed that out of more than $10 billion in German investments on the African continent each year, 90 per cent is with just three countries – South Africa, Nigeria and Algeria.

    “Nigeria is Germany’s second most important trading partner in sub-Saharan Africa (after South Africa). The volume of bilateral trade between Germany was about 5.4 billion Euros in 2014 and 2.9 billion Euros in 2015. This has provided increased benefits to the Nigerian economy in terms of job creation, revenue generation, growth in Gross Domestic Product, technical and management capacity development and cutting-edge technology,” he said.

    He noted the “German Desk – Financial Support and Solutions” will benefit from the support of the German Consulate in Lagos.

    Ogbonna said that the partnership will also help to boost Nigeria’s perception by German companies. “We want to improve image and fast tract trade relations between Nigeria and Germany. There will be market entry-support for German companies,” he stated.

     

    The German Business Desk Nigeria

    Senior Banking Advisor, German Desk, Daniela Grunert said the German Desk will provide financial services, such as setting up accounts, providing short to medium-term credit lines, services for financing trade and transaction banking.

    This also includes financing solutions for local companies wishing to acquire German equipment or services, because German companies often start establishing business ties with local companies via their export business before they invest in emerging markets such as Nigeria. To do so, they need to obtain suitable financing solutions for their local clients.

    Grunert is not only fluent in German and English but is experienced in working with banks and German companies. She is a networker: contact to Nigerian and German business community and fully knows both cultures.

    She said the desk will help facilitate engagement with Nigerian businesses, German owned enterprises on trade opportunities and also create customised solution unique to each business needs.

    “Jointly with our customer Access Bank DEG wishes to support German companies and their trading partners. Within the scope of the “German Desk – Financial Support and Solutions” we offer innovative financing solutions tailored to the needs of German companies and their local partners. They can get information about financial services from a single source and make direct use of the partners’ network on location,” said Bruno Wenn, chairman of DEG’s Management Board.

    According to the representative of AHK Nigeria, Marc Lucassen, the German Desk would help to fill the gap that has been in existence in the Nigerian-German business relations.

    “We are very much in favour of this landmark partnership which provides the required solutions to recent demand for additional financial support mechanism for the Nigerian-German business relations. Our role is to connect the Nigerian-German business partners to the German desk in Access Bank in terms of financial solutions.”

    The German “AHK” and delegation network is the international backbone of Germany‘s economy. DEG has close partnerships with more than 200 financial institutions worldwide: are specialists in their local markets with a strong focus on the SME sector. Access Bank has a close relationship with  local businesses and can provide customised financial solutions.

    Key Focus will be expanding the opportunity for Trade Volume growth and collaboration between German and Nigerian SMEs. German Desk shall facilitate financing of German Companies via long-term cost effective finance for German affiliated business. German Desk shall provide an agency relationship between DEG and German clients.

    The firm offers financial solutions such as structured trade; project and structured finance among others. Global Footprint and extensive presence across all trade centres in Nigeria Sub-Saharan Africa, China, India, UAE and United Kingdom that enable us provide solutions to our clients.

    In-depth Experience, robust balance sheet and full spectrum of financial products in consummating deals promptly. We are the industry’s leading Treasury house, trading the largest volumes across all Treasury product offerings.

    Director German Corporates, The German Desk Initiative, Klaus Helsper, said customers are offered appropriate long-term financing. “We provide individual advice in order to shape investments and businesses more professionally, efficiently and sustainably. With our promotional programmes we co-finance feasibility studies, pilot projects and various Business Support Services,” he said.

    He said the team will develop financing solutions for infrastructure projects that are viable for the long term and can be flexibly structured. “We arrange large volumes and involve additional investors. Project developers benefit from in-depth advisory services based on our extensive sector and industry know-how.  We have an extensive network in emerging and developing countries,” he said.

    Continuing, he said that as an anchor investor, DEG is there right from the start, to strengthen the capital base and mobilise further investors. “We are an experienced and well networked partner. We provide advice based on our funds and structuring expertise and our comprehensive country and regional know-how. We provide long-term support even during challenging phases. Banks receive financing as needed. We have in-depth knowledge on the financial sector. Banks benefit from our advisory programme on sustainable ways of expanding their SME business. By means of our Business Support Services, we provide assistance with risk or liquidity management, or with implementation of environmental and social management systems,” he said.

    He disclosed that for 55 years, DEG has been providing German corporates with reliable support, advice and financing for the entire duration of their involvement abroad. ‘’We offer country and industry know-how, along with market experience and essential contacts on the ground. Our customers benefit from promotional programmes designed for feasibility studies or pilot projects. With our “German Desks” in selected countries, we offer German companies and their trading partners a one-stop service at local banks.

    “Successful private enterprises are key drivers of economic development. Markets, enterprises and the local population benefit from DEG’s work. Many of the co-financed enterprises take on social responsibility by, for instance, paying above-average wages, offering pensions or health insurance and operating health centres, nurseries and schools,” he stated.

     

    Nigeria/German trade relations deepened

    Nigeria is a hub for West Africa and the economic powerhouse in the region. Bilateral Nigerian-German trade volumes exceed $2.9 billion (2015). Main exports from Germany to Nigeria include high quality machinery and automotive parts. Intelligent trade finance solution could strongly foster the bilateral trade.

    The German Desk can rely on three strategic partners with a strong footprint in Nigeria: Access Bank offering a wide range of financial products and services, AHK being the first point of contact for German companies entering the market & DEG in the region since 2008.

    As part of the cooperation, DEG puts its network at the disposal of the respective local partner bank and, where necessary, provides it with additional long-term capital, allowing them to offer financing for local customers of German companies. Neighbouring markets are also to be covered with the partner banks’ networks.

    The desk will help in building up a strong portfolio and provide quality customer service. It will also be spreading the word in Germany with local business associations, political representatives and potential customers.