The Nation Newspaper

Tag: downturn

  • Developer rues downturn, unveils multi-million naira properties

    Developer rues downturn, unveils multi-million naira properties

    The Managing Director, OMAIS Investments Nigeria Limited, a firm of estate developers, Chief Omochiere Aisagbonhi, has lamented the downturn in the economy and its effect of the real estate business in the country.

    Aisagbonhi, who noted that governments of other countries  give genuine business men interest free loans and bail outs to ensure that they continue in business, regretted that it has been  the opposite in Nigeria where government stifle and suffocate small businesses with taxes.

    He lamented that his company,   because of economic downturn, has retrenched over 78 per cent of its members of staff and shrunk its operations to about 10 per cent. “Government is talking about security issues, yet people are daily losing their means of livelihood to bad policies,” he lamented.

    His firm, he said, borrowed money at 30 per cent interest rate, and wondered how it can break even. According to him, N100 million was borrowed in 2014  from a bank and has incurred N90 million as interest on the loan, wondering how long the company can keep afloat while operating at 10 per cent capacity utilisation.

    Aisagbonhi, who spoke at the unveiling of his firm’s latest feat in the real estate sector, called on the government to come out with robust policies to help businesses and address the problem of multiple taxation. While specifically mentioning the difficulties associated with procuring approval in land documents and ownership transfers, he advised government to monitor its officials in sensitive ministries and parastatals.

    Top on the list of the now available properties is the estate in Agungi, Lekki, in Lagos. The estate, comprising terraces, which sit on 2, 600 square meters, is located behind Shoprite and French Colony. The spacious property is made of eight units of four-bedroom terrace with Boys Quarters.

    Aisagbonhi listed some of the distinct facilities in the Agungi terraces to include swimming pool, playground for children and recreation. He said no other estate in the axis has such generous space and competitive facility at modest price of N60 million per unit.

    Aisagbonhi said the recession, which seriously hit the sector, had eaten deep into his company’s bottom line. He, however, said he remained to provide exquisite residential apartments for middle to high income areas in Lagos and beyond, adding that he has provided mortgage facilities for between 30 to 35 per cent to prospective clients to enable them move into their apartment while they continue with their monthly mortgage plan.

    The developer, in a chat  said, his company’s semi-detached duplexes in Gbagada comprises two units 4-bedroom semi-detached duplexes with one room boys’ quarter goes for a modest price of N55 million each. This, according to him, has between 6 -18 months mortgage to enable prospective subscribers have part of the tastefully furnished upscale residential buildings.

    According to him, the third apartment, a 10-unit super luxury apartments at Shonibare Estate, Maryland, is one of the most secured areas in Lagos, especially with security being an issue in the city.

    The apartments, he said, have fitted kitchen, stainless steel appliances, washing machine, 24-hour security service, Closed Circuit Television (CCTV), electric fence, automated alarm system, water borehole, among others.

  • Economic downturn: Labour urges new strategy

    •Kaigama returns as ASCSN President

    organised labour has urged the President Muhammadu Buhari-led administration to fashion a strategy that will turn the nation towards a new direction in view of the economic downturn.

    The Association of Senior Civil Servants of Nigeria (ASCSN), at the opening of its Third Quadrennial Delegates’ Conference in Abeokuta, Ogun State, said it was obvious that the country is facing a hard time.

    ASCSN said the government needed to engage a think-tank of technocrats to chart the way forward.

    At the conference, incumbent President Bobboi Bala Kaigama, who was returned for a second term, said: “We, in the Association, believe very strongly that the time has come for our dear country to develop a new economic model that will take into consideration variables that are relevant and consistent with the Nigerian situation.”

    Kaigama, also the president of Trade Union Congress (TUC), noted that the welfare of workers should be paramount to states and Federal Government for the nation to achieve meaningful development.

    On the non-payment of workers’ salaries by many state governments, he said governors, despite owing workers still move around as if nothing is happening. He said the country has never  had it so bad.

    Kaigama said: “Many of our governors are guilty of massive looting of the treasury, thereby causing miseries in the process. There is no excuse that can be given to justify owing workers salaries for eight or nine months. It is nothing but sheer wickedness to pillage the treasury and leave workers to go home for months without salaries.”

    He charged the Federal Government to kickstart the process of paying workers at the federal level their entitlements.

    The Ogun State Governor, Senator IbikunleAmosun, pleaded with workers whom he described as the landlord to bear with the governors owing salaries, noting that the governors are not magicians, and could only pay with what is available.

    Amosun, who admitted that some states actually owe workers for several months, stressed that there is a need for the country to diversify the economy to meet the yearnings of workers.

    His words:“When things are not going well, it is appropriate for us to accept responsibility and we know that many states are having problems, which is why they cannot pay workers salaries. There is no governor that will not want to pay workers, but we have so many responsibilities on our hands.”

    Amosun said he always paid civil servants and teachers before settling other issues.

    “We spend over N4 billion monthly to pay the salaries of civil servants in the state. We also pay pensioners, and sweepers, and in doing this, I ration diesel in my office as the Governor, when there is no electricity supply,” he said.

    The National President of Construction and Civil Engineering Senior Staff Association (CCESSA ), Isaac Egbugara,  however, urged organised labour to end internal rift and intra-union crisis, stating that such often prevents the labour movement from exercising its right and carrying out its primary functions and objectives.

    He said: “As union leaders, we should understand that a house divided against itself cannot stand. We should learn and be determined to work and promote those values that unite us rather than the ones that divide us; to have strength to confront our common challenges, which are majorly how to improve on the condition of service of our members.

    “Unless there is unity of purpose and we shun internal squabbles and come together, trade union cannot pose a formidable opposition against the government and other employers of labour.”

  • ‘How firms can take advantage of economic downturn’

    Price Waterhouse Coopers (pwC) Nigeria has listed steps businesses can take to minimise the effects of economic downturn and position their organisations to emerge stronger.

    The professional services firm enumerated these at a breakfast meeting held in Lagos for business leaders and executives. Its theme was “Preserving Value in Challenging Times.”

    According to PwC, the Nigerian economy is facing several challenges largely due to declining global oil prices, which resulted in a scaling back of public spending, uncertainties around the exchange rate, double digit inflation and a reduction in Gross Domestic Product (GDP) growth.

    The International Monetary Fund (IMF) has also slashed its growth forecast for Nigeria, stressing that a combination of plunging oil revenues and weakened investor confidence will push the economy into recession. According to the IMF, Africa’s largest economy is expected to contract by 1.8 per cent this year. This situation has negatively impacted the financial performance of most businesses as many struggle to remain afloat.

    However, PwC believes that there is an opportunity for companies to turn their challenges into opportunities. They noted that the most successful businesses during challenging times are those that react the quickest, take tough decisions early and lead rather than follow.

    Kwabena Asante-Poku, a partner in PwC Nigeria’s Advisory Deals practice, said: “Effective managers must consider the effects of the downturn and what it means for their business and its survival. Then, they should address the key questions – what do we need to do differently, what do we need to do better? Often the secret of survival will be getting the simple things right rather than embarking on wholesale radical change in every aspect of their operation.”

    The firm advised that businesses must first understand the true impact of the downturn on their operations and subject their assessment to stress testing and scenario planning. This knowledge is critical to coming up with a new strategy.

    Asante-Poku further said they should identify unprofitable products and customers and determine effective future working capital for the business. Also, businesses, he said, need to implement cost reduction strategies especially by targeting discretionary expenditure, separating the essential from the desirable while limiting outgoings.

    Seyi Akinwale, an Associate Director in PwC Nigeria’s Advisory Deals practice, said: “Strategic interventions that can help companies preserve value include Strategic Alternatives and Business Planning, Operational Improvements, Review of Contractual Obligations, Liquidity and Cash Management, Refinancing and Recapitalisation, Turnaround Management, Carve-Outs and Exit Management.”

    In addition, PwC advocates that corporates and their bankers explore the use of informal restructuring workouts to preserve shareholder value and reduce the required specific provisions for non-performing loans. These informal restructuring arrangements between creditors and debtors will prevent greater loss and through this, the banks can work with the distressed debtors to resolve financial difficulties that would otherwise likely lead to liquidation.

    Akinwale also said: “Informal arrangements include any out of court restructuring arrangements and these are critical given the absence of adequate insolvency laws with provisions to govern business restructuring in Nigeria. These informal workouts serve as a timely alternative to recovering funds loaned to borrowers and ensuring the survival of businesses.”

    He also stated that avoiding bankruptcy of potentially viable businesses helps to prevent job losses and can be a driver of economic recovery.  “Formal insolvency proceedings in court often delay the turnaround process, can be expensive or can end up being more complex due to the adversarial nature of the judicial process. It is therefore, in the interest of both the borrower and its bankers to utilise and adopt informal out-of-court restructuring solutions,” he said.

    Other strategies, which the firm outlined, include maintaining an experienced and well-resourced finance team, proper and careful tax planning and ensuring effective performance management and forecasting. It also said companies should ensure appropriate and sustainable financing arrangements and communicate constantly with stakeholders.

    Asante-Poku concluded saying that “in a downturn, numerous difficulties present themselves, all important and urgent. A natural response may be to batten down the hatches and focus solely on the immediate problems of the day.

    “Prudent management is of course necessary but it is also important to recognize the opportunities presented, to challenge old ways of doing things, to take advantage of weaker competitors and plan for the changed market place that will emerge. Effective management and taking the right decisions will help business emerge through the bad times re-energised and fit for the future.”

  • How Nigeria can survive economic downturn, by NLC, NES, others

    •ECA, SWF not in tandem with 1999 Constitution, says groups

    The  establishment of a Stabilisation Fund can help the country get out of its economic downturn, a report has said.

    The report, which was put together by a group, which includes the Nigeria Labour Congress (NLC) and the Nigeria Economic Society (NES), added that Nigeria is occupying  the 55th position of 69 nations rated for savings and investment.

    The depletion of the Excess Crude Account (ECA) when oil prices were high was also said to have contributed to the financial meltdown which the nation is facing.

    These facts are contained in a report by 43 groups under the auspices of the Citizens Wealth Platform(CWP).

    The groups include Nigeria  Labour  Congress (NLC); Nigeria Economic Society(NES); Nigeria Bar Association(Abuja); Institute of Chartered Accountants of Nigeria (ICAN), Abuja;  Trade Union Congress (TUC), Abuja; and International Centre for Development Budget, among others.

    The report said the nation’s Excess Crude Account (ECA) and the Sovereign Wealth Fund (SWF) may not stand the test of constitutionality  because they are at variance with constitutional provisions setting up the Distributable Pool Account in Section 162 of the 1999 Constitution.

    Quoting statistics from the SWFI, the report described Nigeria as a late starter to savings.

    “It is clear that the issue of savings and investment is a common practice around the world and Nigeria is a reluctant late starter.

    “Virtually, all major oil producers have SWFs with substantial sums tied to the production and marketing of oil.

    “There are also SWFs that are funded  from non-commodity sources, including pension funds. Other countries started their savings, investment and futures funds a long time ago.

    “It would, therefore, not be in accordance with fit and good practices and international norms to scrap the SWF or any other stabilisation fund. This will be a sign of fiscal indiscipline.”

    The report gave insight into how Nigeria ran into financial crisis and why its SWF had been a paltry $1.4 billion.

    The document added: “The trajectory of crude oil revenue and distribution since 2008 shows that we have been spending the funds in ECA at a time of high oil prices. Essentially, we refused to save and have virtually exhausted the funds in ECA. It also shows that the accounting for crude oil revenue and the funds in ECA appear not overtly transparent.

    “So many countries in the world have SWFs which have components on stabilisation, infrastructure investments and a futures fund. Nigeria started its SWF late with a total worth of about $1.4 billion.”

    It recommended a stabilisation fund for use during economic downturn.

    The report said: “Savings remain one of the hallmarks and signs of fiscal responsibility. It is an aphorism that the propensity to save is inversely related to the propensity to consume while the propensity to invest is directly related to the propensity to save.

    “Going by the foregoing, it is clear that if Nigeria desires to make steady progress, there is need to sustain a stabilisation fund for use during economic downturn.”

    The report said the nation’s ECA and SWF are at variance with Section 162 of the 1999 Constitution.

    The report said: “From the review of the legal framework, it appears stricto sensu that the stabilisation provisions setting up the ECA and the SWF may not stand the test of constitutionality as they seem at variance with constitutional provisions setting up the Distributable Pool Account in Section 162 of the 1999 Constitution.

    “There may be need for constitutional amendment to align ECA, the NSIA or any other stabilisation mechanism with the constitution.”

  • Economic downturn: 60,000 construction workers sacked

    Economic downturn: 60,000 construction workers sacked

    No  fewer than 60,000  construction workers have lost their jobs in the last four months, the National Union of Civil Engineering Construction, Furniture and Wood Workers (NUCECFWW) has said.

    The union’s President, Comrade Amechi Asugwuni, blamed  the development on the country’s economic downturn.

    He described the development as a minus to the country’s quest to create jobs, grow the economy and add value to people’s lives.

    Asugwuni deplored the infrastructural deficit in the country, urging President Muhammadu Buhari to address the problem and other social vices to reduce poverty, joblessness and insecurity.

    “The economy is slowing, and promised infrastructural reforms are taking too long to implement, as over 60,000 of our workers have lost their jobs as a result of infrastructural deficit in the last four months,” he said.

    The union called on the Federal Government to unfold its blueprint on infrastructural reforms to accelerate economic growth.

    Asugwuni said there was no way the government could create jobs without focussing on infrastructural development.

    His words: “We have not seen the blueprint of the government on infrastructure, but we want to urge the Federal and the state government to channel the same effort used in fighting corruption into infrastructural development.

    “We believe that Buhari would re-activate all uncompleted projects. The target of any government will not just be on construction of roads, it would be on the development of every other sector of the country.

    ”As a result of the lapses observed in contract awards and execution by previous governments, we are calling on President Buhari to constitute a monitoring committee to check anti-labour practices by employers and poor execution of contracts.”

    To tackle the nation’s economic problems, the union suggested jobs creation through infrastructural development; re-activation of on-going projects to stimulate employment and extensive rail/road networks construction, among others.

    Asugwuni noted that the Ministry of Labour has not been effective, calling on President Buhari to monitor the ministry.

  • Equities break 11-day downturn with N51b gain

    The Nigerian stock market heaved a sigh of relief yesterday as bargain-hunting transactions rallied the market against the downers that had dominated the market all through the early days of the second half. After 11 days of recession, investors looking for undervalued stocks helped the market to a modest recovery, although the lingering selling sentiments remained.

    The All Share Index (ASI), the value-based common index that tracks all quoted equities on the Nigerian Stock Exchange (NSE), rose by 0.25 per cent to close at 31,047.99 points as against its opening index of 30,970.51 points. Aggregate market value of all quoted equities also rose by 51 billion from N10.577 trillion to close at N10.628 trillion.

    The modest recovery moderated the negative average year-to-date return at the stock market to -10.41 per cent. With 20 gainers to 29 losers, the market recovery was boosted by gains recorded by several highly capitalised stocks, especially in the banking, breweries and oil and gas sectors.

    Guinness Nigeria led the gainers’ list with a gain of N2 to close at N142. Ecobank Transnational Incorporated followed with a gain of N1.66 to close at N22. Total Nigeria rose by N1.30 to close at N160.90. Oando added 50 kobo to close at N12.60. Guaranty Trust Bank rallied 44 kobo to close at N26. Stanbic IBTC Holdings gathered 40 kobo to close at N23.95. Access Bank gained 23 kobo to close at N5.03. Vitafoam Nigeria rose by 18 kobo to close at N5.78 while Nascon Industries and Ikeja Hotel chalked up 17 kobo and 16 kobo to close at N6.90 and N3.99 respectively.

    On the downside, Forte Oil led the losers with a loss of N8.77 to close at N188.10. Mobil Oil Nigeria dropped by N4.35 to close at N150. Unilever Nigeria declined by N1.99 to close at N37.91. Cement Company of Northern Nigeria depreciated by N1.08 to close at N10.42. Nigerian Breweries and UACN Property Development Company dropped by 40 kobo each to close at N128.20 and N9.80 respectively. Champion Breweries declined by 27 kobo to close at N5.31. Dangote Sugar Refinery and Nigerian Aviation Handling Company dropped by 21 kobo each to close at N5.71 and N4.76 respectively while Okomu Oil Palm lost 19 kobo to close at N25.82 per share.

    Total Turnover stood at 222.22 million shares worth N2.83 billion in 3,701 deals. Financial services sector remained the most active with a turnover of 159.49 million shares worth N1.11 billion in 2,084 deals. Fidelity Bank was the most active stock with a turnover of 23.25 million shares worth N36.17 million in 112 deals. Guaranty Trust Bank followed with a turnover of 20.53 million shares worth N525.23 million in 265 deals. AXA Mansard Insurance placed third with a turnover of 20.30 million shares worth N55.83 million in 16 deals.

    The overall market situation remained cautious as investors continued to weigh macroeconomic outlook and corporate earnings.

    “Given the market reversal witnessed today, we anticipate a mixed trading pattern next week as the unfolding weak macroeconomic dynamics have slowed investment decisions. The unimpressive half-year 2015 results released so far have also not excited the market,” said analysts at SCM Capital, formerly Sterling Capital Markets, after the trading session yesterday.