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Tag: Economy

  • Manufacturing in a depressed economy

    Manufacturing in a depressed economy

    A robust manufacturing sector is fundamental to the diversification of the economy. But the sector, which is credited with the greatest capacity to create jobs, generate wealth and engender sustainable growth and revenue expansion, is at the crossroads. Fiscal and monetary policies and lack of infrastructure are taking a huge toll on manufacturing, with the fear that more companies may close shop, if steps are not urgently taken to stem the tide. Assistant Editor CHIKODI OKEREOCHA reports.

    Despite their resolve to survive, manufacturers face bleak prospects. The challenging fiscal and monetary policy environment and lack of supportive infrastructure have continued to put tremendous pressure on businesses, resulting in declining productivity and competitiveness.

    For instance, because of lack of infrastructure, particularly power, manufacturers spend an estimated N500 billion yearly to run and maintain their power plants, according to the Chairman, Economic Policy Committee (EPC) of Manufacturers Association of Nigeria (MAN), Reginald Ike Odiah, an engineer.

    Odiah, who is Managing Director/Chief Executive Officer, Bennett Industries Limited, said the huge cost of providing alternative electricity is responsible for high production cost. He said it is also responsible for the low contribution by the real sector, especially manufacturing to the Gross Domestic Product (GDP).

    For instance, while Nigeria’s real sector contribution to GDP stands at 9.5 per cent, those of United States of America (US) and China stand at 35.6 per cent and 49.5 per cent. “Manufacturing cost in Nigeria is twice that of Ghana, four times that of South Africa and Europe, and nine times that of China and Malaysia,” the industrialist said.

    Odiah, who spoke at a forum organised by MAN in Lagos, also said the high cost of production is also the reason local and foreign investors lost interest in investing in the country, closure of factories and migration of the few surviving ones to greener pastures. He said this has resulted in job losses, with attendant insecurity and rising crimes.

    Also, because of rising energy cost, most manufacturing firms in Nigeria are contending with falling profit margin, which remains a major threat to business sustainability and global competitiveness.

    The President of MAN, Dr. Frank Jacobs, lamented that manufacturers are paying for electricity not consumed.

    “In spite of the poor energy situation in the country, NERC has maintained increased electricity charges not considering its implication on the economy, especially the productive sector,” Jacobs said, adding that in spite of the high tariff from the Nigeria Electricity Regulatory Commission (NERC), manufacturers spend much on alternative energy sources for production.

    The implication of this development, he said, was increase in the average cost of production in the sector, which lowers the competitiveness of locally produced goods against imported close substitutes. He urged the new government to streamline electricity tariff to reflect the actual consumption by the industries instead of the current use of estimated bills.

    While the nation’s infrastructure deficiency, particularly electricity supply, continues to hurt manufacturers, sometimes forcing some of them to close shop, the prevailing macro-economic indicators also point to a sector irretrievably headed for collapse if nothing is done to stem the tide.

    For instance, inflation rate is hovering around 20 per cent. Cost of funds is high, as much as 20 per cent, while the exchange rate remains unstable.Unemployment is worsening and economic growth rate is declining. And the crippling effects of these negative indicators have pushed not a few manufacturers to the panic mode.

    “Cost of funding is a big issue. For most of them or generally in the economy, cost of funding is well over 20 per cent. And for the real sector operators, it is difficult to sustain a business at that level with that kind of corporate funding, especially when you realise again that you are facing competition from products that are coming from Asia that are very cheap,” says Director-General of Lagos Chambers of Commerce and Industry (LCCI), Mr. Muda Yusuf.

    He blamed this for the high mortality rate of manufacturing firms especially at the medium and the small scale level. According to him, it is also responsible for why return on manufacturers’ investment is slow, while the turn-around is fewer.

    An economist and industrialist Mr. Henry Boyo painted a disturbing picture of the manufacturing sector caused by the crippling effects of the nation’s fiscal and monetary policy framework. He warned: “Manufacturers are at the crossroads, where we may lose some of our members. We may lose 50 per cent of our members, if nothing is done fast to address the current monetary policy framework.”

    While pointing out, for instance, that low rate of inflation, low cost of funds, reasonable exchange rate, and adequate power supply are four critical variables necessary for manufacturers’ survival, Boyo was emphasised that “inflation, which is  hovering around 20 per cent, high cost of power and an exchange rate that is unreasonably unstable is hurting manufacturers”.

    He was guest speaker at the “Business Luncheon for Managing Directors/CEOs” organised by the Ikeja branch of MAN in Lagos, last week. This year’s edition theme: “Manufacturing in a depressed economy. The way forward,” x-rayed the challenges facing manufacturers, particularly under the Foreign Exchange (forex) crisis and proffer solutions.

    At the event, Boyo predicted that without a robust monetary policy to address the challenge of excess liquidity in the system, which is the main driver of the afore-mentioned four critical variables, the naira may fall to N500 to a dollar before the end of the year.

    He explained that the unstable exchange rate, hike in interest rates, and inflationary pressure are a direct outcome of excess liquidity in the system and that the best way to address the problem is to liberalise the dollar.

    Boyo said companies and government agencies whose earnings are in dollar should be issued with dollar certificates with which to approach banks.

    He also wants their dollar earnings exchanged by banks at prevailing rate or at market determined rate, instead of the CBN hijacking the dollar earnings and printing naira equivalent, an approach he said constantly results in liquidity buildup.

    “When this is done, the problem of excess liquidity would have been addressed to warrant decline in inflation rate. With inflation rate trending low, interest rate will fall sustainably. And external reserves could be conserved and built up sustainably. There will be no need for devaluation of the naira,” Boyo explained.

    The industrialist insisted that the crisis of excess liquidity has done incalculable damage to the economy, because there is a strong nexus between the crisis of liquidity, rising inflation, exchange rate depreciation, weakening purchasing power and worsening poverty. He said CBN must stop its obnoxious payment policy if manufacturers must breathe a sigh of relief.

    Also lamenting the negative impacts of CBN’s monetary policies on the manufacturing sector, Jacobs said the sector performed abysmally low in the second quarter of last year in terms of output and contribution to the GDP.

    Citing figures from the National Bureau of Statistics (NBS), for instance, he said manufacturing real output grew by 3.82 per cent in the second quarter of last year, from 14.01 per cent of the corresponding period of 2014. This, according to him, indicates a 17.83 percentage point decline over the period.

    Also, the manufacturing sector’s contribution to nominal GDP in the second quarter of last year fell to 9.29 per cent as against 9.77 per cent of the corresponding period of 2014; indicating 0.48 percentage point decline over the period. He lamented that all manufacturing indices have crashed, as capacity utilisation, production value and manufacturing investment have been declining.

    Similarly, the Chairman, MAN, Apapa branch, Mr. Babatunde Odunayo, lamented that manufacturers were merely surviving following the implementation of certain fiscal and monetary policies.

    “The sector is struggling to survive the very difficult monetary policy regime. Some manufacturing outfits have shut their operations; others are waiting for favourable policies to come up,” he said, at a seminar organised by the branch in Lagos, last week.

    Before the June 15, 2016 flexible, market-driven Foreign Exchange (forex) regime announced by the CBN, more than 200 out of the over 2,000 manufacturing firms in the country were on the verge of closing shop due to the lack of raw materials to continue production, according to Jacobs.

    While about 100 operators in the general goods sector indicated readiness to close shop when they run out of raw materials, 120 operators in the pharmaceutical manufacturing sector were said to be down to two months’ supply of raw materials after which they may be unable to restock. Also, in the food and beverage sector, only few of the 80 operators remained in business.

    In June, last year, CBN’s monetary policy that barred importers of 41 items that can be sourced locally from having access to its official forex window threw manufacturers into confusion. Those who needed the raw materials and products restricted from the forex market as their primary products in the manufacturing process were adversely affected.

    This was, perhaps, why most real sector operators, especially manufacturers, perceived the new market-driven forex regime as a welcome development. Their hope was that the policy will drive down the exchange rate of the naira to the dollar, spur economic growth and development, and encourage more Diaspora remittances, among others.

    For instance, the National President, Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), Chief Bassey Edem, described the new forex regime as “a welcome development,” saying that it will further drive down the exchange rate of the naira to the dollar. It will also open the floodgate for influx of remittances by Nigerians abroad that have lots of dollars

    He, however, told The Nation that consistency is key to the success of the policy. He however said at a meeting CBN had with members of the Organised Private Sector (OPS).

    The CBN Governor Godwin Emefiele promised operators that the policy would not be dropped midway or reversed. He also said the CBN at the meeting informed the OPS that it would not back down on the import prohibition list unless OPS members show proof that any of the items on the list cannot be produced locally.

    In removing the 41 items from access to its forex window, CBN’s good intention was not in doubt. For one, the apex bank believes that those items could easily be produced in Nigeria rather than spend the country’s reserves on importing them. The CBN also said the policy was aimed at encouraging local production of the items.

    Because of the import-dependence of the economy, the slide in oil prices in the international market, which started mid-2014, caused an unprecedented slide in the value of the naira, a development that necessitated the need for a policy intervention to defend the value of the naira and protect the nation’s foreign reserves in the midst of dwindling revenue from oil.

    The CBN always uses the foreign reserves to defend the naira, but the reserves have been badly depleted as a result of sharp fall in oil revenue. Industry watchers say CBN policy of defending the naira is failing, and there is need for the apex bank to allow the naira rate to be determined by market forces, which was what the apex bank did by coming out with  the new forex policy.

    However, while many manufacturers have hailed the policy, it remains to be seen how the government intends to address other institutional and infrastructure challenges holding the manufacturing sector down.

  • Manufacturing in a depressed economy

    Manufacturing in a depressed economy

    A robust manufacturing sector is fundamental to the diversification of the economy. But the sector, which is credited with the greatest capacity to create jobs, generate wealth and engender sustainable growth and revenue expansion, is at the crossroads. The fiscal and monetary policies and lack of infrastructure are taking a huge toll on manufacturing, with the fear that more companies may close shop, if steps are not taken to stem the tide. Assistant Editor CHIKODI OKEREOCHA reports.

    Despite their resolve and will to survive, manufacturers face bleak prospects. The challenging fiscal and monetary policy environment and lack of supportive infrastructure have continued to put tremendous pressure on businesses, resulting in declining productivity and competitiveness.

    For instance, because of lack of infrastructure, particularly power, manufacturers spend an estimated N500 billion yearly to run and maintain their power plants, according to the Chairman, Economic Policy Committee (EPC) of the Manufacturers Association of Nigeria (MAN), Reginald Ike Odiah, an engineer.

    Odiah, who is Managing Director/Chief Executive Officer, Bennett Industries Limited, said the huge cost of providing alternative electricity is responsible for high production cost. He said it is also responsible for the low contribution by the real sector, especially manufacturing to the Gross Domestic Product (GDP).

    For instance, while Nigeria’s real sector contribution to GDP stands at 9.5 per cent, those of the United States of America (US) and China stand at 35.6 per cent and 49.5 per cent. “Manufacturing cost in Nigeria is twice that of Ghana, four times that of South Africa and Europe, and nine times that of China and Malaysia,” the industrialist said.

    Odiah, who spoke at a forum organised by MAN in Lagos, also said the high cost of production is  the reason local and foreign investors lost interest in investing in the country, closure of factories and migration of the few surviving ones to greener pastures. He said this has resulted in job losses, with attendant insecurity and rising crimes.

    Also, because of rising energy cost, most manufacturing firms in Nigeria are contending with falling profit margin, which remains a major threat to business sustainability and global competitiveness.

    The President of MAN, Dr. Frank Jacobs, lamented that manufacturers are paying for electricity not consumed.

    “In spite of the poor energy situation in the country, NERC has maintained increased electricity charges not considering its implication on the economy, especially the productive sector,” Jacobs said, adding that in spite of the high tariff from the Nigeria Electricity Regulatory Commission (NERC), manufacturers spend much on alternative energy sources for production.

    The implication of this development, he said, was increase in the average cost of production in the sector, which lowers the competitiveness of locally produced goods against imported close substitutes. He urged the new government to streamline electricity tariff to reflect the actual consumption by the industries instead of the current use of estimated bills.

    While the nation’s infrastructure deficiency, particularly electricity supply, continues to hurt manufacturers, sometimes forcing some of them to close shop, the prevailing macro-economic indicators also point to a sector irretrievably headed for collapse if nothing is done to stem the tide.

    For instance, inflation rate is hovering around 20 per cent. Cost of funds is high, as much as 20 per cent, while the exchange rate remains unstable.Unemployment is worsening and economic growth rate is declining. And the crippling effects of these negative indicators have pushed not a few manufacturers into panic mode.

    “Cost of funding is a big issue. For most of them or generally in the economy, cost of funding is well over 20 per cent. And for the real sector operators, it is difficult to sustain a business at that level with that kind of corporate funding, especially when you realise again that you are facing competition from products that are coming from Asia that are very cheap,” says Director-General of Lagos Chambers of Commerce and Industry (LCCI), Mr. Muda Yusuf.

    He blamed this for the high mortality rate of manufacturing firms especially at the medium and the small scale level. According to him, it is also responsible for why return on manufacturers’ investment is slow, while the turn-around is fewer.

    An economist and industrialist Mr. Henry Boyo painted a disturbing picture of the manufacturing sector caused by the crippling effects of the nation’s fiscal and monetary policy framework. He warned: “Manufacturers are at the crossroads, where we may lose some of our members. We may lose 50 per cent of our members, if nothing is done fast to address the current monetary policy framework.”

    While pointing out, for instance, that low rate of inflation, low cost of funds, reasonable exchange rate, and adequate power supply are four critical variables necessary for manufacturers’ survival, Boyo was emphasised that “inflation, which is  hovering around 20 per cent, high cost of power and an exchange rate that is unreasonably unstable is hurting manufacturers”.

    He was guest speaker at the “Business Luncheon for Managing Directors/CEOs” organised by the Ikeja branch of MAN in Lagos, last week. This year’s edition theme: “Manufacturing in a depressed economy. The way forward,” x-rayed the challenges facing manufacturers, particularly under the Foreign Exchange (forex) crisis and proffer solutions.

    At the event, Boyo predicted that without a robust monetary policy to address the challenge of excess liquidity in the system, which is the main driver of the afore-mentioned four critical variables, the naira may fall to N500 to a dollar before the end of the year.

    He explained that the unstable exchange rate, hike in interest rates, and inflationary pressure are a direct outcome of excess liquidity in the system and that the best way to address the problem is to liberalise the dollar.

    Boyo said companies and government agencies whose earnings are in dollar should be issued with dollar certificates with which to approach banks.

    He also wants their dollar earnings exchanged by banks at prevailing rate or at market determined rate, instead of the CBN hijacking the dollar earnings and printing naira equivalent, an approach he said constantly results in liquidity buildup.

  • Dangote jobs to stimulate Ghana’s economy

    Dangote jobs to stimulate Ghana’s economy

    Dangote Cement Ghana said it has procured 1, 000 brand-new-trucks to facilitate the distribution of cement products to all parts of Ghana. The trucks, which came in three different vessels, arrived at the shores of Tema Port, last week.

    The company’s Media Relations Manager, Mr. Etornam Komla, who made this known to Reuters, said the company has commenced the process of recruitment of drivers, truck driver assistants and loaders, adding that by the end of July, all the drivers will be on board.

    He said the recruitment was part of the company’s objective of contributing to Ghana’s economic growth through job creation and honoring tax obligations.

    “These are components of the company’s mission in Ghana, which is to stimulate its economy,” Komla said.

    He said the company has also invested over $100 million in the construction of a new plant in Takoradi in the Western region. The plant, which will be a state of the art modern cement grinding plant, will have the capacity to produce about 1.5 million tonnes of cement per annum.

    “This project when completed will further cement the presence of Dangote Cement business in Ghana and is a further proof of our commitment to the infrastructural development of the country and will also enable us to meet the growing demands across other countries in West Africa” he explained.

    Although cement manufacturing remains the flagship of Dangote group’s businesses, the President of the group Alhaji Aliko Dangote has also made foray into oil and gas, investing in a petrochemical, refinery and fertiliser plant in Nigeria.  The petrochemical complex where these plants are being built occupies a land mass in excess of 2,100 hectares. The projects will cost in excess of $12 billion. The oil refinery has a capacity of 650, 000 barrels per day and over 3,000,000 ammonia and urea plants.

    Dangote told Reuters that these businesses will be ready between 2018 and 2019.

    The company also plans to build a 550 Kilometre Gas Pipeline across Nigeria and into West Africa.

  • Azura power project ‘ll boost economy, says Fashola

    Azura power project ‘ll boost economy, says Fashola

    The Minister of Power, Works and Housing, Mr. Babatunde Fashola  has listed the positive spinoffs that would result from Azura Power Plant in Benin, Edo State. He said such projects across the country are in line with current efforts by the government to achieve increased power generation to run the engine of the economy.

    Fielding questions from newsmen after a tour of the facility, which is largely a private sector initiative, Fashola expressed pleasure at the progress of work on the site and said spinoffs such as supply of materials, and employment of members of the local community were positive signs that the efforts of government are impacting positively on the people.

    The minister, who recalled that the approvals and agreements required by the private companies to source for funds for the project could not be signed for more than one year before the current administration assumed office, commended President Muhammadu Buhari for finally signing the required approvals which enabled the investors to commence construction. He added that since construction work started, there has been visible positive impact especially on the host community.

    Fashola ‘s Special Adviser on Communications, Mr. Hakeem Bello made this known in a statement yesterday.

    Speaking about the positive spinoffs of the project on the host community, Fashola described it as “a very strong and positive sign of the impact of the decision of Mr. President” who, according to him, “directed that all the approvals necessary in carrying out this project be given immediately after he took office.

  • NPA seeks export promotion to diversify economy

    The Managing Director, Nigerian Ports Authority (NPA), Malam Habib Abdullahi, has called for the promotion of exportation of agro-allied products to boost the economy.

    He said he was angry that about 90 per cent of container traffic left the ports empty.

    The NPA boss urged the public and private sectors to support the governments efforts to diversify the economy.

    X-raying the ports’ first quarter operations, he said maritime activities dropped compared with the same period last year.

    He said: “The commodity analysis revealed that though all cargo types declined during the period under review, however, containers and general cargo traffic contributed significantly to the overall drop in cargo throughput.

    “There is an urgent need to complement the efforts of the NPA’s massive investments in infrastructural renewal and automation of our port operations, by generating enough export cargo to make up for the shortfall of imported cargo in our ports.’’

    The NPA, he said, has met with the Nigerian Export Promotion Council (NEPC) and Abuja Commodities & Exchange Commission on the promotion of solid minerals and agro-allied products to boost the economy.

    The Federal Ministry of Solid Minerals Development and Nigerian Chambers of Commerce, Industry, Mines and Agriculture (NACIMA), he said, had also briefed.

    “The interactive sessions could be said to be productive, especially in  information sharing and data exchange,” Abdullahi said.

    NPA’s General Manager, Public Affairs, Captain. Iheanacho Ebubeogu, said 1,131 ocean-going vessels and crude oil tankers with a total Gross Tonnage (GT) of 59.4 million called at the ports between January and March.

    “In the period under review, Lagos Port Complex (LPC) recorded a Gross Tonnage of 8.1 million, showing a decrease of 11.5 per cent from 9.2 million tonnes achieved in 2015.

    “A total of 296 vessels were handled in the period under review at the LPC. Tin Can Island Port handled a total Gross Tonnage of 11.8 million, showing a decline of 1.2 per cent compared to Gross Tonnage of 12.2 million achieved in the corresponding quarter of 2015.

    “A total of 417 vessels were handled at the Tin-Can Port in the period under review. Calabar Port complex handled a total Gross Tonnage of 776,718, showing a decline of 15.4 per cent from 918, 237 gross tonnage recorded in 2015. A total of 46 vessels were handled in Calabar port this same period,’’ he said.

  • ‘SMEs’ll help grow grassroots’ economy

    Small and Medium Enterprises (SMEs) have been identified as the catalyst to help reduce the scourge of unemployment and grow the economy at the grassroots.

    The Acting Director-General, Global Centre for Human Empowerment and Entrepreneurship Development (GLOCHEED), Mrs. Rose Gyar, stated this in Ado-Ekiti at a training organised for some youths and women members of the All Progressives Congress (APC) from the 16 local government areas.

    She explained that the centre has keyed into the Federal Government’s resolve to use agriculture and mining to diversify the economy and create job opportunities for Nigerians with the signing of the 2016 Budget into Law.

    Mrs. Gyar stressed that the Federal Government considers the SMEs as critical to the economic future of the country; noting that the training was aimed at opening windows of opportunities for participants to access credit facilities.

    While emphasising the fact that the era of government dolling out money has gone for good, the GLOCHEED boss said youths and women should key in to policies and programmes to boost their capacity to contribute meaningfully to the economy.

    She pointed out that the centre is collaborating with the Raw Materials Research and Development Council (RMRDC) to promote quality raw materials for import substitution.

    Mrs. Gyar advised the youth and women to form co-operative societies to enable them to access loans and other credit facilities from government, the Central Bank of Nigeria (CBN), commercial banks, international development agencies and non-governmental organisations.

    “Government is focusing on agriculture and mining. We need to be aware of how they can partner government in creating jobs and reducing poverty and how they can access funds to boost their capacity.

    “Co-operative approach will allow for mass participation. We also go to the Small and Medium Enterprise Development Agency of Nigeria (SMEDAN) and they have one local government-one-product initiative.

    “The programme will help reduce poverty because we want mass participation and we are going to adopt co-operative model to create enabling environment for the participants.

    “That is the model we can adopt to make more people benefit from it. It will be a group collateral,” Mrs. Gyar said.

    One of the participants, Olajide Akintunde, said the forum was beneficial in the sense that they were trained on how to access loan facilities provided in the 2016 Budget. He expressed confidence that it will breathe life into local economy.

  • ‘Rice smuggling is affecting economy’

    Stakeholders  have decried the high rate of rice smuggling, saying it is having downside effects on the  economy.

    The Federal Government, they said, was losing revenue because of this and called for increased survelliance to address the problem.

    In an interview with The Nation, Executive Director, Nigeria Agriculture Development Watch, Johnson Idowu, said the development has resulted in loss of revenues and jobs at the nation’s seaports  in recent times, while neighbouring countries, such as Niger, Benin Republic, and Cameroon through which the criminal activity is perpetrated are better for it.

    He said the only reason there is increased rice importation in these countries is because they have favourable tariff and policy for rice importation.

    He said the countries are not rice producers, and must be investigated to unravel the secret behind the smuggling of the produce into Nigeria.

    Coordinator of Nigeria Agribusiness Group, Emmanuel Ijewere, said the story of  smuggling of rice in Nigeria is historical because it has been going on for a very long time and has destroyed the country’s industries.

    “Because it has destroyed our local industries and the kind of story we are hearing now that the business of smuggling of rice has increased is a bad omen and to the Nigeria customs in particular. Should we destroy our industries and provide job for our neighbouring countries or provide job for our own people in Nigeria?’’ he asked.

  • ‘Brexit ’ll not affect Nigeria’s economy’

    The outcome of Britain’s exit from the European Union (EU) may have triggered some measure of uncertainty and anxiety in the global economy, but its impacts on the Nigerian economy will not be profiund, the Lagos Chamber of Commerce & Industry (LCCI), has said.

    LCCI Director-General Mr. Muda Yusuf said Britain accounts for only 4.4 per cent of Nigerian global trade, while the EU accounts for 38.8 per cent. He argued that it is, therefore, unlikely that Brexit will have a material impact on Nigeria’s balance of trade.

    Yusuf said if anything, the trade between Nigeria and Britain would further improve on account of the likely depreciation of the British pounds and the affinity with Britain within the context of the Commonwealth.

    He also reiterated the fact that Nigeria is yet to sign the EU Economic Partnership Agreement (EPA), which also reduces Nigeria’s exposure to shocks from the EU economy, especially from a trade perspective.

    On the effect on Diaspora remittance, the LCCI boss said the current sentiments in Britain are to adopt tougher stance on immigration issues. According to him, with over one million Nigerians in the United Kingdom (U.K.), Nigeria is also a major recipient of Diaspora remittances in Africa.

    He, therefore, said the unfolding scenario might have some adverse implications for remittances by Nigerians in the United Kingdom (U.K.). “This will happen from the perspectives of tougher immigration regulations and enforcement as well as the likely slowdown of the British economy,” Yusuf said.

    While emphasising that the impact of Brexit on the Nigerian economy is unlikely to be profound, he said besides, negotiations will still take the next two years.

    “Most of the current responses are driven by uncertainties and expectations, which will fizzle out in the not too distant future, he said.

    The LCCI DG, however, said the British economy, which is worth $3 trillion, is the fifth largest in the world and the second largest within the EU, which makes it a major component of both the global economy and that of the EU.

    “Naturally, therefore, shocks to the British economy will have some transmission effects on the global economy. This perhaps informed the immediate responses of global and domestic financial markets,” he said.

    He added that this dimension of the impact is unlikely to endure as they are responses driven by expectations and uncertainties.

    He also suggested that the British economy will suffer some setbacks arising from the resultant weakening of investors’ confidence within the economy.

    “Brexit implies that investors within the British economy will no longer have free access to the EU market of over $16 trillion and a market size of over 500 million people,” he added.

    He said this would reflect in the strength of the currency as there is a relationship between the strength of the currency and the robustness of an economy.

  • N25b Maryland Mall to boost economy

    N25b Maryland Mall to boost economy

    The commercial arm of the real estate sector is living up to experts’ predictions. At the beginning of the year, realtors had made it clear that shopping malls and office space will be the arm that would be more active in the industry. Across the length and breadth of the country, it is now a common sight to see shopping malls, office buildings and or commercial buildings springing up.

    This trend, it is believed, will boost the retail activities penetration in the country. Available statistics revealed that currently, only two per cent of Nigerians shop in formal retail supermarkets compared to 60 per cent of South Africans; 30 per cent of Kenyans; four per cent of Ghanaians and two per cent of Cameroonians. Similarly, retail trade presently accounts for about 30 per cent of the world’s gross domestic product, (GDP). This is about $22 trillion of retail sales each year.

    Yet, government data shows that Nigeria attracted over $1.5 billion in investments into its formal retail sector over the last three years. It is estimated that over 80 million Nigerians now live in metropolitan areas, creating huge opportunities for formal retail to thrive. One of such retail outlets that has keyed into this prospect is the Maryland Mall, located on the Ikorodu Road axis in Lagos.

    The project, said to have cost about N25 billion, was inaugurated on Tuesday. It was developed by Purple Capital Partners Limited, a financial and real estate Development Company, attracted since been described as being unique in design and rendition, especially because of the commendable use of space as the mall is springing up in a built up area and designed to fit the space available through mainly vertical development.

    The Maryland Mall sits on 7,700 square metres (sqms) of prime land in a built-up neighbourhood which used to accommodate the Maryland Shopping Complex. It has a gross lettable space of about 6,400sqms and it is built vertically, compared to the horizontal buildings that is the style in this clime. Logistics like movement to and around the Mall has been made easy after due studies carried out by the promoters in collaboration with the Lagos State Ministry of Transport, with an estimated 5,000 cars passing through every hour. A dedicated underground car park, said to be the first within any mall in the country, provides ample space for cars. Already, a mix of local and international brands anchored by Shoprite, The Place restaurant, Stanbic IBTC Bank, amongst other retail, hospitality and entertainment brands, have found a home in the Maryland Mall. The exterior of the mall will be a 550 square meter LED screen, the largest in Sub-Sahara Africa. This unique feature will set it apart from any other retail complex in Africa’s most populous nation.

    Declaring the Mall open for business, Mrs Onikepo Akande, President, Lagos Chamber of Commerce and Industry (LCCI) noted that retail is one of the cornerstones of trading and investment, and Purple Capital, the developers of Maryland Mall, have done extremely well to give Maryland a new lease of life through this retail investment.

    “It is my sincere belief that this new mall will help to expose and grow the manufacturing and commercial potential of Lagos state and by extension, the national economy,” Akande said.

    As Nigeria’s industrial and commercial capital, Lagos is expected to lead the national count for modern shopping malls over the next decade, in tandem with the city’s fast growing population, currently put at anywhere between 17 and 20 million people.

    The Chairman of Purple Capital Partners Limited, Mr. Omotola Mobolurin, expressed delight at the completion and opening for business of the mall especially because of its attendant benefits into the economy. “I am delighted about the safe arrival of this new retail, lifestyle and entertainment infrastructure, with the capacity to provide merchants and shoppers with amenities and services that befit the state’s mega-city status. It is particularly gratifying that the construction and financing for this retail development is being concluded on time and within projected funding estimates,” Mobolurin said.

    The Maryland area aptly illustrates the various realities of city life. Located right in the middle of mainland Lagos, Maryland has been a residential district and a hectic hub of social activities for decades: it is also an economic and commercial nerve center; a major intersection connecting citizens and visitors alike to the major thoroughfares across the city, and a perfect exhibit of the city’s quest for affordable, urban development.

  • ‘SMEs’ll help grow grassroots’ economy

    Small and Medium Enterprises (SMEs) have been identified as the catalyst to help reduce the scourge of unemployment and grow the economy at the grassroots.

    The Acting Director-General, Global Centre for Human Empowerment and Entrepreneurship Development (GLOCHEED), Mrs. Rose Gyar, stated this in Ado-Ekiti at a training organised for some youths and women members of the All Progressives Congress (APC) from the 16 local government areas.

    She explained that the centre has keyed into the Federal Government’s resolve to use agriculture and mining to diversify the economy and create job opportunities for Nigerians with the signing of the 2016 Budget into Law.

    Mrs. Gyar stressed that the Federal Government considers the SMEs as critical to the economic future of the country; noting that the training was aimed at opening windows of opportunities for participants to access credit facilities.

    While emphasising the fact that the era of government dolling out money has gone for good, the GLOCHEED boss said youths and women should key in to policies and programmes to boost their capacity to contribute meaningfully to the economy.

    She pointed out that the centre is collaborating with the Raw Materials Research and Development Council (RMRDC) to promote quality raw materials for import substitution.

    Mrs. Gyar advised the youth and women to form co-operative societies to enable them to access loans and other credit facilities from government, the Central Bank of Nigeria (CBN), commercial banks, international development agencies and non-governmental organisations.

    “Government is focusing on agriculture and mining. We need to be aware of how they can partner government in creating jobs and reducing poverty and how they can access funds to boost their capacity.

    “Co-operative approach will allow for mass participation. We also go to the Small and Medium Enterprise Development Agency of Nigeria (SMEDAN) and they have one local government-one-product initiative.

    “The programme will help reduce poverty because we want mass participation and we are going to adopt co-operative model to create enabling environment for the participants.

    “That is the model we can adopt to make more people benefit from it. It will be a group collateral,” Mrs. Gyar said.

    One of the participants, Olajide Akintunde, said the forum was beneficial in the sense that they were trained on how to access loan facilities provided in the 2016 Budget. He expressed confidence that it will breathe life into local economy.