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Tag: doldrums

  • LCCI: Nigeria’s economy still in doldrums

    THE Lagos Chamber of Commerce and Industry (LCCI)  has said the economy is still in the doldrums.

    It said the latest report of the National Bureau of Statistics (NBS) showing decline in the performance of the economy in the second quarter (Q2) of this year was a confirmation of the true state of the economy.

    LCCI Director-General Muda Yusuf, said with a population growth of three per cent and gross domestic product (GDP) growth of 1.5 per cent, there is a reason to worry about the wider implications of the  increasing level of poverty across the country.

    He said the positive performance of the service sector underscored its critical importance and prospects to the economy, stating that it contributed 54.64 per cent of GDP and 44.67per cent of total employment, besides being largely driven by indigenous players.

    He however lamented the poor performance of the manufacturing and agric sectors, despite the attention given to the agric sector by both the monetary and fiscal authorities. Yusuf said the decline in performance of the agricultural sector from three per cent in Q1 2018 to 1.19 per cent in Q2 could be attributed to recent security challenges, which affected many farming communities across the country.

    He said access to credit in the sector  is low due largely to the nature of risk inherent in the sector.

    With regards to manufacturing, Yusuf said: “The real sector is still grappling with serious productivity challenges arising from the constraint of infrastructure, particularly power and logistics. It is imperative, therefore, that there should be greater investment and policy focus on improving logistics and enhancing the power sector.”

    He said the manufacturing sector also slowed from 3.39 per cent in Q1  to 0.68 per cent in Q2 because of infrastructure deficit, logistic challenges, including the Apapa gridlock, access and cost of credit, weak purchasing power and multiple taxation.

    Recognising the huge contribution of the oil sector that accounts for over 87.91 per cent of foreign exchange (forex) earnings,  he said the dip was as a result of production related issues.

    The LCCI chief said to reverse the declining trend in the GDP, there is need to sustain the momentum in the implementation of the ease of doing business of the government,  saying that this would help to bring down the operational cost of investors. He called on the government at all levels to double their efforts to improve the state of infrastructure.

    He said the state of infrastructure has continued to take a toll on investment across all sectors, pointing out that the impact was more pronounced on manufacturing and the agric sector.

    Also, the Chairman, Policy Committee and former Chairman of Electrical Group of Manufacturers Association of Nigeria (MAN), Reginald Odiah, faulted the report which suggested that the country has exited recession. He said the economy is not completely out of recession, arguing that the saving grace is that more money is coming in from the oil sector.

    He said: “If you look closely at it most businesses have closed down, saying: “I am not seeing clear policy direction and political will to bring the country completely out of recession.’’

    The government is simply focusing attention on the 2019 general election. The truth is at the slightest mistake, the country would plunge back into deep recession.”

    Also, the former Director-General, Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA) and United Nations Industrial Development Organisation (UNIDO) consultant, Dr. John Isemede, wondered how NBS can suggest that Nigeria is out of recession with the first quarter growth as 1.95 per cent while the second quarter recorded 1.5 per cent.

    He said: “The Chamber noted that the trade sectors are still in negative territory even though there was a slight improvement as there was reduced contraction. This is indicative that the consumers are still under pressure due to weak purchasing power, which has been compounded by inflation, high cost of goods and services, low disposable income, delays in payment of salaries in the public sector, the continued naira exchange rate effect and high import duties on many consumer items”.

    He argued that the NBS figures clearly showed that the country is not out of recession and may likely go back into recession if the right recovery policies are not only put in place but also properly managed.

  • ‘Without diversification, Nigeria ‘ll remain in the doldrums’

    ‘Without diversification, Nigeria ‘ll remain in the doldrums’

    The General Secretary, National Union of Textile Garment Workers of Nigeria (NUTGWN), Comrade Issa Aremu, says the dwindling oil price has put Nigeria in its worst moment ever. He says the issue has made it difficult for both the Federal and state governments to provide critical infrastructure, pay salaries, among meeting other obligations. In this interview with AKINOLA AJIBADE, the NUTGWN scribe speaks on issues, such as corruption, and efforts made by Labour to facilitate the implementation of minimum wage. 

    How far has the Nigerian Labour Congress (NLC) gone in its campaign on the implementation of minimum wage for workers?

    Getting an act passed is one thing, its implementation is another. I have said it on several occasions that the Federal Government is keeping faith with the issue of implementation of the Act, specifying the minimum wage to civil servants, ditto the state governments.

    Also, many private-sector employers have also been compelled, by trade unions and other pressure groups to implement and pay their workers minimum wage. But there are few anti-minimum-wage governors. Happily, the workers and unions are engaging governments that disregard the rule of law with respect to the Minimum Wage Act.

    The point cannot be overemphasised; good governments must motivate the labour force for better productivity. We must ensure workers are paid well and on time. It should be noted that delay of salary for whatever reasons, including delayed payment of minimum wage, is the same as wage theft. The recalcitrant governors must know that the sub­sisting national minimum wage is due for review next year. The 2010 National Tripartite Committee on National Minimum Wage, headed by Justice S.M.A. Belgore (GCON), recommended that to avoid an ad hoc approach, the minimum wage is supposed to be reviewed every five years against the backdrop of increasing costs of living and deepening poverty of working people. The review is due this year. In some countries, minimum wages are adjusted almost every year to reflect the cost of living. Some countries have wage indexation according to which minimum wages are adjusted automatically to the rate of inflation.

    Many of the governors have said they can’t pay the minimum wage. Do you think there is sincerity in that admission?

    I think we have long crossed that bridge. Governors must respect the laws of the Federation. The National Minimum Wage Act of 2010 is an act by the National Assembly. Second, the negotiation lasted one year. The state governments were also part of the negotiation. You also remember that the labour demand was N50,000. It was a compromise to agree to N18,000. No employer, including the state governments, has any excuse to flout it. Some of these governors should get their priorities right; they should stop wasting or spending on executive indulgences such as private jets. They must also fulfill their obligations to their workers.

    One of the ways to judge the performance of the sitting President and all the state governors is their ability to resuscitate the collapsed industries in the country. Any state government that cannot pay salary has no reason to be in business of governance, and therefore, any governor that cannot pay the salary should resign.

    Nigeria is playing with fire because 24 per cent of its population is officially unemployed, and 50 percent unofficially unemployed. Some countries have a total of only 12 per cent unemployment crisis, the people will be on rampage. Nigeria must begin to prevent this by reopening all closed factories to engage the teeming unemployed youths.

    Labour strongly supports the urgent need to rebuild Nigeria through targeted efficient massive productive spending. President Buhari must be weary of the emergency advisers who claim falsely that government has no business in business. “Government not only has business in business, the art of governance itself is a business that must be done.

    There is no doubt that the economy is going downward at the moment. What is the way out?

    I think it’s time for all of us to think outside the box of oil and gas. This is now the time to walk our talk. It is the time to diversify our economy. With the collapse of the price of crude oil, with the fiscal crisis now facing all tiers of government such that even the Federal Government is also struggling to pay salary. I think we don’t need any counselor to tell us that this economy is no more sustainable on the back of revenue from oil and gas, with the unstable nature of that sector. Even with the best prices for crude oil, oil and gas are exhaustible, that will always finish. But what will not finish is our capacity to turn abundant raw materials that we have in this country to goods both for domestic consumption and for export. That means the future of Nigeria lies in manufacturing. We need to reinvent industry in this country. There is need for the revival of all the moribund factories, thereby returning the nation to the 70s and 80s when Nigeria earned huge resources from manufacturing.

    How much do you think the ongoing insurgency in the Northeast has affected economic activities in that region?

    You cannot talk about economic activities when there are no human activities. We must urgently put an end to this insurgency. You also cannot industrialise in an atmosphere of violence and war. I commend the security forces on the fight against insurgency. However, security goes beyond this.

    What are the implications of high rate of unemployment to labour and the economy of Nigeria?

    There are a lot of implications. Unemployment reduces national productivity. If more people are employed or gainfully engaged, there will be an increase in national productivity. We must not also forget the adage: ‘an idle mind is the devil’s workshop.’ When more youths are engaged, there would be less insecurity, hooliganism, thuggery, kidnapping and other violent crimes. The engaged people will concentrate more on their jobs and how to improve their productivity and welfare than being lured into becoming agents of societal and self-destruction.

    We must understand too that all factors of production are critical to development. In particular, technology can provide more efficient production methods like machines and computers. Capital and finance are also significant for states that are being run on debts and bonds. But, it is the human resources and skilled labour in particular, which are most critical to manage these other resources to improve the quantity and quality of production and quality of life.

    Indeed, it can be argued that where critical human resources are lacking in quality, other factors of production can hardly add value to development. States can borrow billions of naira, as most states do, but the human managers might divert the funds for the indulgence of the leaders, such as buying private jets, rather than improving the basics like potable water and good roads.

    What happens to Nigeria’s 170 million human resources is as important as what happens to 2.5 million barrels per day. It is certainly a scandal that we are losing as many as 900,000 barrels of crude oil to theft. This is unacceptable for a nation with almost 200,000 military personnel and an Army that is ranked as the fourth in Africa and 34th in the world.

    Nigeria recently joined the world to mark the industrialisation day. What can we do to revive our moribund industrial estate?

    Yes, we celebrated the African Industrialisation Day recently. This year we used that event to raise the awareness level on the need for Nigeria to try to produce what it consumes and it must consume what it produces. However yearly, we should use the day to see how we can increase manufacturing value added to this country. In the 1970s and 1980s, manufacturing sector was contributing close to 25 per cent of our GDP. The country was active in all sectors, Nigeria was getting active in automobile, we used to have Peugeot, Steyr, even producing trucks in Kano, we used to have Volkswagen, the Toyota brand was about to come in that time. In the 1980s, we were the third largest producer of textile, Nigeria had shares in Dunlop, Michelin, they were all here before, we must bring them back, that is the future.

    We should always use the Industrialisation Day to reflect, that day, from the President, his deputy, governors, should set aside at least one hour, to visit the old industrial estates, which the founding fathers of this country put in place. They should go to such places as Ilupeju, Ikeja in Lagos State, and take inventory how many factories are left, how many are under lock and key. In Kano, we have Sharaddar and Bompai, in Kaduna, we have Nassarawa, Kakuri among others.

    In Port Harcourt, there is Trans-Amadi, it’s a huge industrial estate. That was the design, to be purely for production. All our elected leaders should go there, they would be shocked, how many factories are working, and how many factories are under lock and key. We talk so much about the collapsed textile industry, because it’s labour intensive, virtually all industries have collapsed in this country, we must revive them. So for me, the advice to the president, and all our elected leaders is not for them to be agonising about the collapse of the price of crude oil, my advice for them is to organise their policy thinking process, to move from oil and gas to non oil sector, which should be driven by the manufacturing. Even, we can also make the oil and gas to be value adding, why exporting crude oil and importing petroleum products, when we can refine them.

    Refinery itself is value adding for petro chemicals. Those are the area we can create jobs, decent work, not just any kind of work. The kind of jobs we have now in the oil and gas is far from being decent. We can have more sustainable jobs if the refineries are working. I strongly believe that the future lies in growing the real sector of the economy. How can we drive that, there cannot be industrialisation without electrification. So, we must hit the ground running to make sure that these distribution companies, generating companies, deliver electricity to the industries at affordable price. You cannot run this economy or grow in all sectors with generators, so something must be done.

    As organised labour, we marked that day, with lecture and rally, geared towards revival of the industry. We made case against struggling and called for patronage of made in Nigeria goods, as well as the electrification of the country. I am optimistic, because Nigeria was once an industrialised country, and before it returns, it must prepare for real industrialisation.

    The issue of smuggling has been a major challenge. What is your take on this?

    We must fight smuggling because the truth of the matter is that Nigeria has become a dumping ground for most of imported goods, that’s bad enough. But it’s even worse that most of these imported goods do not pass through the Customs, they don’t pay revenue, they don’t pay duties to the Customs, which means government loses revenue. But above all, they undermine domestic goods, with cheaper goods. Because without duties, by the time they get here they become more cheaper than our own. And for poor economy, it means purchasing power is low. Consumers just want to buy any goods, irrespective of quality. In the process, they kill our industry, they also kill our jobs. What I am saying is that we have to revert to a situation in which domestic market, will dominate almost 90, if not 100 percent now dominated by imported dumped smuggled goods. Nigeria is endowed with huge market, 178 million people, that is the largest market in Africa, but which goods are we buying? Are we buying made in Nigeria? Because every time you buy imported smuggled goods, we are creating jobs overseas, one is also making their industry to prosper. So something must be done, and the first challenge is to tackle smuggling.

    On this I want to commend, the new Comptroller-General of Customs, Colonel Ahmed Alli, who has taken over now with the task of reforming and restructuring the Customs. I can see that the impact is already being felt. First, we have to re-orientate the Custom men that anytime they look the other way round, when goods are being smuggled into the country, they are undermining their own work, they are also undermining their own economy and undermining the country.

  • Audu: APC ’ll pull Kogi out of doldrums

    Audu: APC ’ll pull Kogi out of doldrums

    The All Progressives Congress (APC) standard bearer for the November 21 governorship election in Kogi State, Prince Abubakar Audu, spoke to reporters in Lokoja, the state capital, on the choice of his running mate, his plans for the state and his achievements as a former governor of the North Central state. JAMES AZANIA reports.

    What informed the choice of Hon. James Abiodun Faleke as your running mate?

    There are two factors. One, I have tried home-based people as my running mates in the past and they all brought disappointment to our team, so I felt I should look out for someone with a wider horizon and one who understands the concept of development and has bundles of experience in same. I got Faleke after a thorough search.

    Like my own background, I was never a politician and was never resident in Kogi State. I worked round Nigeria, Britain and the United States of America, pursuing my banking career. Sometimes ago, I was the highest paid black man in Britain and America, having occupied the seat of Assistant General Manager (AGM) in Standard Chartered Bank. I started my banking career with British Bank of West Africa to Standard Bank of West Africa to First Bank of Nigeria. Then, First Bank had an affiliation with Standard Chartered Bank. So, by extension when I was working with First Bank I was also working with an affiliate bank abroad —  Standard Chartered Bank. This is why my approach was different and in view of this, my people insisted that I must be governor. So, when I eventually became the first-elected governor of Kogi State in 1992, which was abruptly truncated as a result of military incursion I went back to the bank to resume my normal career as a banker.

    Again in 1999, I contested as a result of severe pressure and won as governor of Kogi State again. The most dramatic thing about the victory achieved in 1999 was that I had a tragic auto crash about three months to the election while coming home and was hospitalised in a London hospital for three months. I was discharged from the hospital two weeks to the election and through the special grace of God I still won the election. I remain eternally grateful to God almighty and the good people of Kogi State for the confidence they had in me. I see most of our politicians that are home-based as being myopic, based on my past experience. This is the more reason why I had to shop outside and fortunately I found Faleke. He is a rare breed with similar background with me.

    Faleke is not home-based and as such have no political enemy down home. Such was my own case then when I came into politics, there were seven aspirants before my entry. But immediately I showed interest the seven withdrew.

    Secondly Faleke is applauded in Lagos, so I am of the view that if he has done so well in Lagos as a two-term chairman of a local government and at a stretch a member of the Federal House of Representatives, representing the good people of Ikeja Federal Constituency in the National Assembly, as our son in Kogi State I am of the believe that his leadership qualities will be highly needed to move Kogi forward because our dear state is in shambles. By the special grace of God, our team will scale through.

    What is your take on the recent recruitment into the civil service by Kogi State Government?

    I believe they are fooling the people. They want to use it for election purposes. If those that are on their staff establishment at the moment cannot be paid and some receive stipends what is the essence of recruiting new ones? They want to make the employment a political issue to improve their battered image because civil servants have not been happy with the government. These include their non-promotion for upward of 12 years now; those promoted on paper have no financial benefits attached and therefore the promotion has no meaning. Again, salaries are not paid as at when due.

    When eventually they were paid, it was done on percentage basis. So, if they like, let them recruit every adult in Kogi State into the state civil service, it will not help them in the forthcoming election. I am not insinuating or exaggerating, neither am I trying to score a cheap political point. This is what is on ground in Kogi State and the position we find ourselves in right now. It is a battered situation that needs urgent rescue and the APC is at work to pull our dear state out of the doldrums.

    What will be the focus of your administration if elected?

    I strongly believe in first things first. By the special grace of God when Kogites elect us into office on November 21, 2015, all the sectors crying for attention, like human capital development, structural development, environmental sanitation, as well as physical development will be rejuvenated. Without mincing words, let me say emphatically and categorically that the most backward state in Nigeria today is Kogi and this has become a major source of concern to all of us. In the process of building our capacity to the status it assumed when we were in office between 1999 and 2003, when Kogi was described as the fastest developing state in Nigeria; I was crowned as the best performing governor. But now the story has changed. The rot is so much that our state needs an urgent rescue attention because the terrain has been so devastated.

    Therefore, the onus lies squarely on us to do everything humanly possible to bring our dear state out of the woods.

    On this note, I have renewed my friendship with the international community and immediately after our primaries, I travelled abroad to strategise with our friends on how to move our dear state forward. Thank God they are willing to come and assist us like they did on the issue of the state university when I established it morally and financially. Then, they sent in a white American deputy vice chancellor to assist us kick-start, aside giving us a donation of $7.5 million, they also provided instructional materials, books and journals.

    In addition, we had nine visiting professors and an allegiance programme put in place so that all final year students will go to America to broaden their horizons and widen their scope of knowledge as well as acquire new outlook.  They did it in the past and they are willing to come and do it again.

    While you were in office between 1999 and 2003 you might have stepped on one or two toes. What steps have you taken in making amends?

    Not one or two toes. I stepped on very powerful toes because of my belief of the concept of development and an egalitarian society. Kogi State has suffered a lot. The components that made up state today was formally under one umbrella called Kabba Province and has been together for an upward of 73 years as one indivisible body. We were the brain-box, the intellectual capacity of the then Northern Nigeria.

    However, we got nothing from this; our people were used as disposal materials. We were only needed to add up the number and we were after usage laid off again. This is a very pathetic situation and this gives me a lot of concern.

    This was what spurred me up into masses’ development but it met brick wall as some powerful individuals insisted I must not have my way and instead I should, ‘share the money.’ I refused, hence the battle that I just have to leave at all cost. I was called so many names; some said I was arrogant and that they will show me who they are… they showed me because I went through hell. I went through one of the worst travails in the political history of this country. From ICPC where I was cleared at first, I was taken to EFCC, where I was arraigned before four different courts, but they could not nail me.

    In Kogi State to be more emphatic, I was first handcuffed before Justice Medupin. On the faithful day I was brought to court, the students of Crowther Memorial College came out to the street to protest. They rained stones on the security operatives and it was a big battle between the students and the police. After the trial commenced and they knew they were not making a headway under the learned legal luminary, they now moved the case to another court under Justice Otu who wanted to say I had no case to answer. So, when they sensed that, they wrote some things and took to Justice Olusiyi who also viewed it in the perspective of his other colleagues and wanted to leave me. When they sensed this again, they moved the case before Justice Hussein and he too wanted to leave me. At this stage they forwarded the case to Abuja. The day I was arrested, it was on the highway and I was in the entourage of the sitting President Mohammadu Buhari to a zonal rally in Jos. They blocked my vehicle on the highway and dragged me out, tour my dress, slapped me and gave me serious torture in the process of which I had a blood-shot eye. They handcuffed me and took me to Abuja to face 80 count-charges. They said I stole a car, my wife stole a car, the deputy governor’s wife stole a car – all one-count charge, and all the people they said stole the cars, eight-count charges. But, the EFCC was acting on the instruction of the then Attorney-General of the Federation. There and then again as they discovered they could not make a headway, they went to the Code of Conduct Bureau and I was arrested by the bureau and taken to the tribunal… it is too long a story.

    Besides, these there were three attempts on my life but for God who gave life preserved my life. It is however noteworthy to state here that the last attempt on my life was at the Kogi State University Anyigba, in broad day light when I was officially invited to attend an occasion. From there they set-up a panel headed by a professor. It was a very long story at the end of which a White Paper was issued banning me from politics for 10 years and my assets were seized. So, I went through hell. It was a political vendetta and persecution but I thank God that I am alive today, hale and hearty and by the special grace of God, the APC will win the election.

    It is being rumoured that you are seeking to come back as governor to take vengeance. What is your response to this?

    I can assure you that I will never take vengeance. So, anybody insinuating such means such person or persons has really offended the other to whom they have such insinuation. As for me, I hold no grudge against nobody and am not offended by anyone, instead I offended everybody and hereby apologise and beg for forgiveness because to err is human and to forgive is divine.

    I also want to make it clear to the civil servants that they will not be held responsible for all that happened in 2003. Everybody in Kogi State knew that the electorate voted for me and I would have won that election but there was intervention from the very top; they used their federal might, bringing in aircraft from the Air Force Base in Makurdi and the military from their base in Lokoja, who tortured, maimed and killed over 22 people. For the first time, I saw soldiers stuffing and snatching and carrying ballot boxes. So it baffles me if they now say I am annoyed with civil servants who in the actual sense were not responsible in any way for the manipulations that took place. I am a friend of the civil servants and we had good rapport during our sojourn in office between 1999 and 2003 and this relationship shall be built upon in the next administration.

    What about the alleged master/servant status quo you are being accused of, particularly while you were governor?

    Many things has been said to ridicule my person to score cheap political popularity. One of these is that, ‘if you want to see Audu, you have to crawl 15 kilometres on your knees to where he sits and if Audu is sitting on the chair everybody will sit on the floor’. It is very very sad because a lot of people allow negativity to control their sight. This is ridiculous and very much unlike me. I pray God forgive my detractors.

    On the issue of the non-payment of workers’ salary, how do you intend to tackle this if elected?

    I did pay arrears of workers’ salaries for seven months in 1999. These were backlog from the military government. The APC is an organised political party that will do everything humanly possible to bring smile to the face of the led and on our own we shall run a people-oriented government that will bring smile on the faces of civil servants.

    Our government will be 100 per cent salary payment and not 20 per cent as obtainable now. More so, we promise to pay the backlog of salaries owed civil servants. I have done it and will do it again.

  • IBB: Buhari ’ll get Nigeria out of economic doldrums

    IBB: Buhari ’ll get Nigeria out of economic doldrums

    Former military President Gen. Ibrahim Badamasi Babangida (rtd) has expressed confidence in the ability of President Muhammadu Buhari to get Nigeria back on a sound economic and social footing.

    He described the Buhari administration as focused, having identified the problems plaguing the country and strategising on how best to proffer enduring solutions to them.

    The former military leader gave the assessment yesterday at a news conference to mark the anniversary of his 74th year birthday.

    Gen. Babangida, who turns 74 today, spoke at his Hilltop residence in Minna, Niger State.

    He said: “I am confident that they (the government) are doing well. They have identified the problems and they look resolute in confronting these problems head-on and there are a lot of people in the society who are offering a lot of sound advice on how to move the country forward and are not relenting.

    “I must commend the present leadership for identifying even before and after the election some of the problems facing this country. We should support the President towards achieving these objectives of ensuring security, wiping out corruption and economic development.”

    The former leader lauded President Buhari’s efforts at recovering the nation’s stolen funds by some top shots in the immediate past administration and urged the government to pursue the policy resolutely to achieve the desired result.

    He recalled that similar effort during the tenure of President Olusegun Obasanjo yielded positive results as the country made a lot of recoveries then.

    On the war against terror, the former military leader said that the Federal Government must fight Boko Haram and tackle other militant groups head-on and stamp terrorism, even as he cautioned against negotiating with wrong leaders of the outlawed group.

    Gen. Babangida called for public understanding of government policies and programmes at a time he described as a ‘trying period for the nation.’

    “The people and the government must come together. People should support the government and government too should come up with solutions to ameliorate the problem that every government faces,” he advised.

    Recounting how he survived the botched military coup staged by Gideon Okar against his administration, Gen Babangida said: “I can remember fairly well; I had some loyal officers who are supposed to be my protectors and my body guards. Initially they told me to leave but I told them no, I am not leaving for anywhere but they remained stubborn and later I took my family outside Dodan barracks and joined my guards.

    “So, we went out of Dodan barracks and we went to a safe house where we got in contact with loyal troops. May God bless Sani Abacha (late Head of State).  The late Gen Sani Abacha was the Chief of Army Staff, he got in touch with me. I got in touch with him and we sat down and talk on what we were going to do.

    “Abacha and I rallied round the loyal troops and then I left my State House and joined Abacha in his house. That is what happened.”

    He also commented on other national issues.

    The anniversary of Gen Babangida’s birthday will be marked today with a special prayer session billed to be attended by his immediate family members and few of his associates.

  • One year after: Dangote leads market from doldrums to vitality

    •••Market soars by 76 percent 

    Investors and other stakeholders could not have had a better yield than they are presently enjoying in the market, following the return to the full grip of the bulls on the market from the bearish era after a long spell of lull.

    Many investors lost hope following the global financial meltdown which ravaged economies in 2008, Nigeria not immuned, as the down turn wiped off almost 70 per cent of the value of the market. Since then, the market has been struggling to recover.

    However, investors began to have part of their hopes rekindled when the market began to bounce back. In the second half of 2012, the market recorded a record growth of 34.5 per cent. The market began the upward swing precisely after the President of the Nigerian Stock Exchange (NSE), Aliko Dangote resumed office on June 19, 2012 after an interregnum.

    It would be recalled that Dangote, s former Vice President of the Exchange was elected the President. He had barely assumed office when his election became a subject of judicial dispute. He was however returned to the office after 22 months following the ruling of the court of appeal. His resumption, stakeholders claimed, opened a new vista in the life of the market which hitherto had been comatose.

    Prior to his assumption of duties, the implementation of Nigerian government policy on fuel subsidy in January of 2012 had stalled economic activities at the beginning of the first quarter, the result of which was felt in the capital market through the first half of 2012.

    However, there was more excitement in the second half of the year with steady growth across most sectors, and the inclusion of selected Nigerian government bonds in the JP Morgan Government Bond Index-Emerging Markets (GBI-EM). Consequently, international institutional investors flocked to the Nigerian bond market, while local institutional investors appetite for equities was reawakened.

    After a superlative growth of 74.7 per cent in 2007, the market dipped by 45.7 per cent in 2008, 33.7 per cent in 2009. It recovered by 18.9 per cent 2010 before falling again by 16.3 per cent in 2011. Towards the end of 2012, the market growth, measured by the Nigerian Stock Exchange (NSE) All-Share Index (ASI) was already over 33 per cent. The President of the Chartered Institute of Stockbrokers (CIS), Mr. Ariyo Olushekun, had assured that there was no likelihood of any major negative development in the market that could reverse this performance and make the market to close negatively in the year.

    Given the efforts of regulators aimed at repositioning the entire financial system and the capital market in particular, market analysts were optimistic that a positive growth would be recorded this year, however, they never expected the magnitude of growth that was about to manifest. In the beginning of 2012, analysts from three leading investment banking firms, FSDH Securities Limited, Meristem Securities Limited (MSL) and FBN Capital Limited projected a growth of below 15 per cent for the year.

    For instance, analysts at FSDH Securities Limited, projected that the market would close at 13.3 per cent. Those at MSL envisaged 13.5 per cent while FBN Capital Limited projected a growth of 14 per cent. In projecting the robust outlook for 2012, analyst at MSL said their bullish sentiments were driven by expected performance of the financial service (majorly banks) sector of the market among others. Meanwhile as at last week the quantum leap in the performance of the market was beyond their expectation.

    Most investors and other stakeholders are of the view that the business acumen, good leadership qualities and international contacts of the Exchange President combined have impacted positively on the Nigerian stock market which grew by 77 per cent in capitalization within one year of his return to NSE.

    In the last one year, capitalization of the NSE has soared by N5.202 trillion, while the NSE All-Share Index rose by 76 per cent. Specifically, the market capitalization rose from N6.712 trillion to N11.914 trillion by the close of trading last Monday. In the same vein, the ASI grew from 21,028.39 to close at 37,085.11

    Market analysts and operators said the leadership of Dangote has created harmony in the Council and good atmosphere for the management of the exchange to implement strategies which have taken the market to the new levels.

    Dangote had last year promise to support the management and work with all council members to ensure restoration of investor confidence.

    He had pledged that during his tenures as NSE president, he would be guided by five key elements. These are: transparency and improved governance of the market; improving the liquidity, turn-over and size of the market; enhancing market efficiency by ensuring clearer and updated rules, processes and procedures; provision of world-class infrastructure and technology for our market and massive capacity building and rapid skill enhancement of the staff of the stock exchange and investor education.

    He almost promised not only to turn around the market but also to ensure it becomes the leading light in Africa.

    Dangote said: “We are one of the best in the sub-Sahara Africa. In fact we are number three in Africa but we are targeting to be number one and we will soon get there.”

    Analysts said the NSE has made progress in achieving some of these milestones in the market. The NSE has improved disclosure and governance level in the market, introduced market making, retail bond trading and raised the level of investor education.

    Commenting on the performance of the market under Dangote, the Chief Executive Officer of Lambert Trust and Investment Company Limited, Mr. David Adonri, said the NSE has undergone transformation from a mono product capital market to that with multiple products offering.

    “Dangote has successfully restored a firm order to affairs of the NSE within the past one year. The Board room crisis that he inherited from the previous Council has become a thing of the past. The NSE is once more poised to taking its rightful position in the process of capital formation for the Nigerian economy,” Adonri said.

    Another broker and Chief Executive Officer of Investment Centre Limited, Mr. Ifeanyi Odunwa, said the market has done exceedingly well in terms of restoration of investor confidence, quantum positive leap in market indices and return of local investors back to the market in the past one year under.

    “The market that defiled various corrective policies put in place since the meltdown years suddenly started responding positively on a sustained basis since his return as the NSE President. Dangote’s personifies investment, hardwork, integrity, resilience, humility, the Nigerian can-do spirit, goodwill, transparency, trust and confidence which are necessary ingredients that positively drive a stock market.

    “It is not a surprise that his experience, charisma and global contacts were brought to bear on the market coupled with the professionalism and hard work of the NSE management led by Oscar Onyema that ensured the implementation of world-class policies and best practices which finally turned the market around,” Odunwa said.

    In his own assessment, Chairman of Lagos State Pension Commission, Tunde Dabiri said he was not surprised at the exploits of Dangote’s leadership at the Exchange because of his ability, doggedness and antecedent. “I am not surprised at the extent of his success in the last one year at the Exchange. He is a well-focused business man and he knows what he wants at any particular time.

    “His presidency is beneficial and don’t forget that he has a stake and he has to make sure the system works and improves. I wish him all the best as he continues to be a major driver of manufacturing in Nigeria. We can only encourage him to do more.”

     

  • Industrial sector still in doldrums

    In the past, the industrial sector, especially the textile industry, was one of the highest employers of labour. The story has since changed as most industrial estates have been turned into worship and event centres. Despite government’s consistent pledge to revamp the sector, the operating environment remains unfriendly, reports TOBA AGBOOLA.

     

    IN the past few years, Nigeria’s development has been private sector-led.

    There is no doubt that the industrial sector is still underdeveloped, despite various reforms being implemented by the Federal Government, especially in the manufacturing sector.

    The unconducive environment, especially lack of infrastructure, such as power, is the biggest challenge to industrial growth.

    According to the data recently published by the National Bureau of Statistics (NBS), the industrial sector of the economy, which comprises petroleum and natural gas, solid minerals and manufacturing, contributed an average of 40 per cent to the Gross Domestic Product (GDP) between 2007 and 2012. Sadly, manufacturing sector, which should be the bedrock of industrialisation contributed less than five per cent to the pool, while oil and gas contributed 95 per cent.

    Similarly, 2011 GDP statistics of countries published by the International Monetary Fund (IMF) show that, while the industrial sector of emerging economies, such as China and India contributed about $3.4 trillion and $482 billion, to their GDP, the Nigerian industrial sector contributed a mere $122 billion, of which 95 per cent was from oil sector.

    It is an indication that the industrial sector is still grossly underdeveloped.

    The manufacturing segment remains a fundamental pillar upon which enduring economic growth and development are hinged.

    However, manufacturers find it difficult to operate at optimal capacity due to many economic and environmental challenges that have continued to hamper productivity.

    Operational difficulties include epileptic power supply; decreasing credit facilities from banks and other financial institutions; importation of fake and substandard products, as well as inconsistent and unfavourable government’s economic policies, among other issues adversely affecting the sector.

    All these impediments have prevented the sector from contributing substantially to the overall economic advancement of Nigeria.

    Also, a recent survey by the Lagos Chamber of Commerce and Industry (LCCI) through its Business Confidence Index (BCI) for the second quarter, showed that unless the Federal Government addressed some of its unfriendly business policies, the nation’s goal of reviving its industrial sector as well as enhancing bilateral trades remains a dream.

    Though the report showed a modest improvement of 16.5 per cent from the 10.5 per cent in the first quarter of 2013, the BCI scores for the two periods remain far below the 50 per cent global confidence threshold.

    According to the LCCI, some of the factors responsible for the slow-paced growth are that investors and business leaders are still wary because the state of the economy and the unfriendly business environment.

    Specifically, the BCI, which assessed the peculiar factors that impact domestic business outcomes in Nigeria in 14 sectors and 37 sub-sectors, showed a gloomy outlook for 2013, noting that the real sector growth is largely constrained by rising socioeconomic uncertainties.

    According to the research, the factors that weakened the index score include: poor access to credit, inhibitive tendencies of monitoring and regulatory agencies, sustained insecurity situation across the country, dwindling public power supply and budget approval/implementation crisis.

    The President, LCCI, Goodie Ibru, reiterated the need for the government to give due consideration to economic diversification, noting that recent developments in the global economy underscore such urgent need, as the risks of oil prices volatility are real.

    He said: “We are concerned about the weak impact of the growth performance on private sector and the welfare of the Nigerian people. Virtually all business segments lamented the harsh operating environment. The power situation deteriorated as we now have a relapse into a chronic power failure. The refineries are still underperforming; unemployment level is still high and cost of fund is still high.

    “The credit situation is still a major problem for investors in the economy. As in the previous quarters, lending rates were well above 20 per cent. Many small and medium scale enterprises still have serious challenge in accessing credit even at this high rate. The tight credit situation is a major inhibiting factor to the capacity of domestic enterprises to take advantage of the robust Nigerian market.

    “We reiterate our call for both fiscal and monetary authorities to work together to ease the credit conditions, especially for the small and medium scale enterprises and more importantly domestic businesses. This is critical as well to stem the gradual crowding out of domestic entrepreneurs by foreign investors.”

    He urged the government to create a conducive operating environment for investors, considering the involvement in economic transformation, inclusiveness of nationals in the growth process, job creation and general improvement in the welfare of Nigerians.

    At the Fourth Manufacturers Consultative Forum in Ikeja recently, the Chairman, MAN), Ikeja branch, Rev. Isaac Agoye, said the manufacturing sector was on the throes of death and would witness total collapse if the government continued to deny it the enabling environment.

    The chairman said many manufacturing industries have closed shop, adding that most of the company premises have been turned to worship centres while others have become event centres.

    He said the ever-busy industrial estates have become shadows of their past glories, lamenting that what the government at all levels keep saying indirectly is that they need more funds and the manufacturing sector must provide it without a commensurate provision of an enabling environment.

    “Our universities are churning out thousands of graduates without the hope of gainful employment. The level of abject poverty in the land has deepened, the degree of insecurity has become unprecedented simply because we have failed to bring the manufacturing sector out of the woods,” he said.

    He said a possible solution to the many questions about the country is for the manufacturing sector to be given the opportunity to thrive and live up to its bidding as a catalyst for employment generation.

    He further said there was the need for the government to urgently act in ways that would make the country attractive for investors.

    Agoye also criticised the Central Bank of Nigeria (CBN) over its practice of substituting naira for dollar–derived revenue, adding that this is responsible for the ever declining rate of the naira, as this framework translates to too much naira chasing relatively modest sums of dollars auctioned by the CBN every week.

    “We observe that the villain militating against our economic growth is the payment system in which the CBN captures national export dollar revenue and substitutes hundreds of billion of naira as monthly allocations to the three tiers of government.

    “We note the ever-present scourge of excess liquidity caused by CBN’s frontloading of naira in substitution for dollar revenue is also responsible for government’s accumulation of an unnecessary debt burden that attracts huge interest payments annually to predominantly the same bank that are the prime beneficiaries of the largesse of deposits of huge naira allocations every month,” he said.

    The President, Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture, (NACCIMA), Dr. Herber AJayi, canvassed an enabling environment for their operations, especially in power generation and security challenges to bolster the attainment of government’s development objectives.

    He urged the Federal Government to implement policies that would ease the business environment, especially policies that affect the Micro, Small and Medium Enterprises (MSMEs).

    The Director-General, Nigeria Employers Consultative Association (NECA), Dr Segun Oshinowo, also blamed dearth of infrastructure as one of the reasons for the poor business development in the country.

    He noted that the poor performance of business was as a result of the inability to access funds by members of the Organised Private Sector (OPS).

    According to him, another factor that negatively affected business is insecurity, which works against the private sector and the government’s goal of bringing more foreign investors into the country.

    “The security situation in the country affected both the local and discouraged many foreign investors from coming into the country, especially the northern part of the country. Federal Government must take drastic steps to arrest insecurity in the country and provide the necessary conducive business atmosphere.

    “There was no significant transformation in business environment in year 2012 because business and economic environment was typically characterised by upsides and downsides,” he said.

    Oshinowo said though last year and the first quarter of this year offered huge opportunities to investors, especially indigenous entrepreneurs, they were constrained by some challenges, which greatly affected the sector.

    He called on the Federal Government to create a conducive business environment.

    On a positive note, however, the country seems to be making modest achievements, especially in the manufacturing sector.

    For instance, the MAN reported that most of the variables for measuring the performance of the real sector have been on the upward swing.

    The report stated that the capacity utilisation of the sector was about 49 per cent compared to the 47.5 per cent average in 2011/2012, indicating that more companies are putting more resources to use in their factories than they did in previous years.

    It says the value of industrial production has also increased, though marginally, from N130 billion to almost N350 billion at the end of last year. New investments entered the sector and the firms like Dangote Group, Lafarge Cement WAPCO, De United Foods, Procter and Gamble as well as Guinness plc added more to their production lines, as well as built new factories, thereby creating additional industrial jobs.

    In his contribution, LCCI Director- General, Muda Yusuf, noted that the business and economic environment was typically characterised by upsides and downsides, but the latter seemed to have outweighed the former.