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Tag: Economy

  • PMS pump price reduction and the economy: My takeaway

    PMS pump price reduction and the economy: My takeaway

    It is no longer news that the Federal Government has announced a reduction in the pump price of premium motor spirit (PMS), popularly called petrol.

    While I have made my position known on my Twitter handle that ‘a little over 10 per cent reduction in cost of the final (crude oil) product (PMS) in response to an over 50 per cent drop in the cost of the raw material is a good try and that Nigerians can get a better deal’, I am constrained to make this further intervention for a few reasons.

    There is a sense in the public space that this reduction is politically motivated, given the reactions that have followed it. To the extent therefore that there is a political nexus, it deserves further interrogation because it is an economic issue and this is a major issue in the elections as canvassed by both parties, especially at the presidential candidacy level.

    Gen. Muhammadu Buhari had seized the moment and the importance of the economic issue earlier this month. Through his campaign council he said:

    “Stop stealing from Nigerians and allow them enjoy the relief that has come to consumers of petroleum products globally.

    “For the Nigerian consumers, unfortunately the collapse of crude oil price since October 2014 has not translated into any change in diesel, kerosene and PMS prices across the country.”

    The second reason for my intervention is also economic, and it goes to interrogate policy, particularly this pricing policy, and the consistency of the party in government vis-a-vis its credibility before the Nigerian public.

    The economics of oil

    It must be obvious to any discerning mind that you cannot have a viable democracy without debating the management of the economy.

    This is because the real issue in elections is the way people’s lives have fared during the tenure of the incumbent.

    The question, sometimes spoken, sometimes not, but never forgotten, is this: – Has my life been better in the last few years or not?

    This question always involves an examination of the record of service of the incumbent and many have lost their seats in a bad economy.

    So, the present government must defend its record on the economy and this involves its management of prices and consumer indices.

    The cost of energy, fuel, gas, electricity for transport, cooking, heating and manufacturing is a direct determinant of the cost of living and how far people’s wages can take them before the next pay day.

    It is not therefore surprising that in the last decade and a half, many western countries have gone to war “in order to make peace”, especially in the Middle East, so that there is no scarcity of petroleum (crude oil) supply.

    The reason is simple. Scarce crude means high prices of crude oil, translating to high fuel, gas and production costs, leading to restive domestic population, which can translate to electoral defeat.

    If one remembers Iraq, Libya and Egypt; in spite of the democratic masks that those military interventions wore, it is difficult to dismiss a domestic, political (electoral) self interest in them.

    In the aftermath of these interventions and investment in shale oil as an alternative, leading to the crash of crude oil prices, what have these western countries done at home for their people in terms of oil price management?

    Let us look at a few examples:

    •United Kingdom (UK)

    Drop in price (dollar per litre): 0.52

    Percentage of price drop: 23.75 per cent;

    • United States (U.S.)

    Drop in price (dollar per litre): 0.39  Percentage of price drop: 36.57 per cent;

    • Singapore

    Drop in price (dollar per litre): 1.79

    Percentage of price drop: 21 per cent;

    • Nigeria

    Drop in price (dollar per litre): 0.03

    Percentage of price drop: 10.3 per cent

    My takeaway:

    •It is poor economic management to import the final product of a commodity whose raw material (crude oil) we produce in abundance.

    •A refinery in Nigeria, such as the 400,000 barrel refinery we are supporting by providing land for the Dangote Group in the Lekki Free Zone will keep jobs at home, (instead of in foreign refineries), create income for the Nigerian government by way of companies income tax, and give us better control of pricing by eliminating subsidies and demurrage charges by port delays paid to ship owners in dollars against a weak Naira; and it will eliminate many other charges that are passed on to ordinary Nigerians.

    •Clearly, an inefficient Port management that escalates shipping costs, a devalued currency, and an exorbitant interest rate on borrowing, which are economic failures of the current government, are part of the reasons why Nigeria cannot get a better deal from an over 50 per cent drop in crude oil price.

     Iinterrogation of policy

    In announcing the reduction of fuel pump price, the Minister for Petroleum Resources, Mrs. Diezani Alison-Madueke, stated the reasons for the government’s decision in her own words as follows:

    “As you may be aware, there has been a lot of volatility in the price of petroleum products, particularly crude oil, over the last few months. Invariably, this has meant that the price of the product in Nigeria has also been greatly impacted.”

    When addressing journalists she added:

    “After watching the price per barrel drop over the last few months, we have finally achieved parity… therefore this would be the best time to actually reduce the price. We have been watching very carefully over the last two weeks to ensure that the volatility did not destabilize this reduction in price and we think it’s safe to implement it at this time.”

    Please note she used the words (1) “price per barrel drop” and (2)  “achieved parity” in the oil price regime to justify the reduction.

    (i)       Price per barrel drop

    As I have pointed out, I doubt that a 10 per cent reduction is the best that we can get in response to a 50 per cent drop in oil price, and this is simple common sense.

    If a product is manufactured at X price and the price of the raw material drops by Y per cent, I think it is simple economics to reflect that Y per cent  drop in the price of the final product without doing any damage to the cost of packaging or transporting the product. And this should happen vice versa if the price of the raw material heads in the opposite direction.

    But let me be quick to acknowledge that these price changes may not necessarily be effected overnight in a period of volatility; and this is the relevance of the Minister’s point about “parity”, which I will come to later.

    But the quick additional point to make is that diesel has not enjoyed any subsidy for a long time and there is a loud silence on this product, as far as pricing policy is concerned; and nothing is said about Kerosene.

    So, if this was really meant to bring relief to the people, I think Diesel, which impacts on production costs, power costs in homes through generators, and Kerosene, which ordinary Nigerians use to cook, would have been the place for Government to demonstrate that it understands the plight of the people.

    This would have afforded some cushion against the austerity measures indicated by the  Minister of Finance.

    My takeaway: This price reduction is not-far reaching enough. It demonstrates a knee-jerk reaction to a serious economic issue where the majority of ordinary Nigerians are concerned.

    When we factor the fact that the majority of Nigerians generate their own power at four times the cost of public power, and they mostly use diesel, a reduction there would have reduced the pressure on their disposable income.

    (ii) Achieved parity

    My understanding of the Minister’s use of these words is that government now believes that oil prices will hover around the current prices of $50 per barrel, so that, according to her, “the entire country will benefit immensely from this reduction.”

    If this is correct, then who are we to believe?

    If we go back to the statement of the Minister of Finance, Dr. Ngozi Okonjo-Iweala, on December 17, 2014 when, while defending the oil budget benchmark of $65 for the 2015 Budget which some observers felt was too ambitious, she said:

    “This is what we have done by proposing a benchmark of $65pb. We recognise that prices might still fall further but we do not intend to revise the price further down as price intelligence indicates that prices might average between $65 and $70pb in 2015.”

    If the Finance Minister expects oil prices to get to $70 and the Petroleum Minister says we have “achieved parity,” there seems to be inherent contradictions within the same government.

    My takeaway

    •Are government departments talking to themselves?

    •Who is co-ordinating the economy?

    •Why was the Minister for Finance not part of this major pricing policy briefing?

    •Was this price reduction provided for in the 2015 Budget?

    P.S.

    As I concluded this intervention, my attention was brought to a response by Governor Peter Obi to a contribution I had made, in which he said in ThisDay newspaper that:

    “The President showed that the sound economic policies of his government have brought about macro-economic stability. This has been acknowledged by the renowned economist and former Chairman of the Asset Management Division of Goldman Sachs Group, Dr. Jim O’Neill, who coined the term BRIC (Brazil, Russia, India and China) and MINT (Mexico, Indonesia, Nigeria and Turkey), recognising these countries as the world’s fastest growing economies.”

    I have no issue with Governor Obi, because his role in government and policy making is still unclear to me.

    If he speaks as a party man, it is a measure of credit to him that he knows more about the programmes of a party he joined a few weeks ago, than those he met there.

    But for the record, the same Jim O’Neill, whom he quotes in support of this government’s policy and the leadership of President Jonathan, said:

    “If he (Jonathan) doesn’t get re-elected, and it’s because of Nigerian people wanting something different and something better, I think the markets would be happy with that. Foreign investors are pretty negative about Nigeria, so I don’t dismiss the possibility that if he lost, people actually might react positively.”

    Those who seek the truth should simply visit this link and verify the facts of what Jim O’Neill actually said: http://www.bloomberg.com/news/2015-01-08/o-neill-says-jonathan-vote-loss-may-be-seen-as-nigeria-positive.html

    My takeaway: I think Jim is right. Nigerians want “something different and something better.” They want Change.

     

    • Fashola is the Governor of Lagos State.

  • Time to focus on economy

    The falling price of crude petroleum presents  Nigeria a golden opportunity  for our leaders to put on their thinking caps to come up with reasonable solution to what has become a recurring decimal in the economic life of our country. Even though the price of crude petroleum is not likely to remain low for too long because of several reasons chief of which is the fact that the fracking gas oil which has reduced considerably American oil imports will become uneconomic to produce if the price of crude falls bellow 40 dollars. Secondly the oil majors that are critical to the global economy and its stability will not be allowed to go down with losses totaling trillions of dollars belonging to the investing public that is invariably western capitalists. In other words, it is in the enlightened interest of the West to settle for oil price at between 70 and 80 dollars a barrel.

    In the meantime Nigeria  and such other oil producing countries  like Venezuela  constitute the Achilles heels of the previously formidable cartel of OPEC which unlike Saudi Arabia and the Gulf States can call the bluff of the west and engage in price war to drive the fracking gas and oil industry of Canada and the U.S. out of the market. With trillions of dollars in foreign reserves, Saudi Arabia and the the Gulf States can afford to overproduce at any cost or not to produce at all in order to make a point. Nigeria, Iran Venezuela and Indonesia cannot afford that strategy.

    This is really a pity in the case of Nigeria. Iran and Indonesia are at least semi-industrialized but what do we in Nigeria have to show for all these over 50 years of oil production? We have been talking about diversification  until we are blue in the face  amounting to motion without movement. It seems we may continue like this unless we are forced or compelled to do something. Some years ago an Israeli ambassador told me when he travelled from Ibadan to Kwara State he dreamed about Israel having the abundance of land he saw on his trip and that the ruinous wars his country was engaged in would not have been necessary and that with that land Israel would have been able to feed the rest of West Africa. Imagine then what the  land available all over Nigeria in the hands of a technologically competent country could do for us in our country.

    I am not excited by  the claims of our mobile telephone-distributing minister of agriculture and his claim of agricultural revolution when the whole country is awash with imported rice and other farm products of other countries! But there is no doubt that we must go back to the land. This was the resource that sustained us before hydrocarbon resources. We must support agricultural investment through farm subsidies instead of oil subsidies that are making people rich without working! This will have to be done in such a way that there will be a stampede to become young farmers. The way it is done is  through guaranteed prices for agricultural produce. We have done it here in Nigeria  before through the regime of the abandoned marketing boards which guaranteed prices for farmers even when there was a fall in agricultural produce globally. This was how Nigeria encouraged production of cocoa, Palm produce and groundnuts before the curse of oil on Nigeria which led to our people living a life of indolence and living off commissions as compradore agents of foreign multinational companies.

    Since 1999 when the PDP came into power, we have been told about the plan of power sufficiency. The current president told us that by the end of last year those of us with generators will be begging people to take them off us because by then power will not only be available but would also be cheap . This promise has been fulfilled in the breach! We are daily told of how many thousands of megawatts of electricity we need and how government is going to meet this demand only to be followed the second day on how the power situation has collapsed to 2000 megawatts or less, sometimes worse than where we were in 1999 and after billions of dollars have been spent by the same PDP government that wants to be re-elected. If we are serious about development we should ask serious questions about the urgent need for power for industrialization and reasonably comfortable life free of the environmentally damaging diesel generators that have become permanent feature of our lives whose fumes kill instantly or intstallmentally. Power is key to our survival as a civilized country and the party that can solve this problem should be embraced by Nigeria. We do not need to depend on gas at all so that we are not blackmailed and threatened as we are daily  threatened that unless we abdicate power to people for oil and gas producing states we would have no country. There is enough coal and water to give us power forever in this country. Even without oil we can access resources in the international financial institutions like the World Bank and IMF to support our electric power infrastucture. Industrialization and agriculture will get us to where we want to be. We started well on this route when we had several textile mills all over Nigeria supplied by Nigerian cotton growers but we let all this go to  waste  when we got drunk on oil wealth. Any student of western industrialization knows it was from light textile industries that countries progressed to heavy industries. You can not jump a developmental stage! In all this we have to emphasize power. Indonesia a country with serious spatial difficulty  scattered over 2500 islands is joining China as an industrial hub of the world because of her ability to supply its people power which has made small scale industries and enterprises thrive. There is no magic in all this. We just have to work hard. No amount of prayers in churches and mosques will help develop our country. Our future is in our hands. And we should not expect miracles. God is not a magician! If we do the right things in this country, there will be jobs for everybody to do and it will not matter who is in or out of government or the ethnic group from which the president or governors come.

    What we have had in the hands of the World Bank Trojan horse of Okonjo-Iweala in the last 10 or so years is management of prosperity which is not the same thing as economic policy. Paying off our indebtedness to the Paris Club and London club countries and the Bretton Woods institutions does not require neuro surgery because management of an economy in a time of plenty is easy even Joseph did this in pharaonic Egypt. What is  the big deal publishing state allocations and investing a mere $1 billion in Sovereign Trust Fund  while drawing down billions of dollars in foreign exchange to pay for all kinds of wines and champagne of which we are the largest consumer outside France all in the name of free trade when we do not benefit from dividends of comparative advantage on which free trade is based? What is left of our foreign earnings is then stolen to put it mildly  under the regime of market economy and subsidies for oil imports.  This is an embarrassment of importing oil by an oil exporting country. Why has it taken us more than 15 years to fix the four oil refineries in the country?

    The point I am making is that we should have managed our economy better and allow in things that we need rather than pandering to the dictates of the World Bank regime of free trade when we have nothing to contribute to global trade except raw and crude produce.

    Finally, we have an opportunity to tell our people that the meaning of self government includes taxation. Nigerians for a long time have not been paying taxes. This  is the time to tell our people the home truth. A situation where only salary earners are the only ones paying taxes is simply untenable and unhealthy. Every adult must be made to pay taxes no matter how small. This  is the only way people will have a sense of ownership of their government.

  • Buhari: Jonathan’s govt has ruined economy

    Buhari: Jonathan’s govt has ruined economy

    Nigeria is broke, All Progressives Congress (APC) presidential candidate Gen. Muhammadu Buhari said yesterday.

    “Many states could not pay their workers’ salary in December,” he said as he tongue lashed the Dr. Goodluck Jonathan administration for neglecting corruption and misgovernance  to focus on his health.

    The rumour of his ill-health, he said, is a desperate attempt to take the mind of Nigerians off the basic issues of corruption and misgovernance by the Dr. Goodluck Jonathan administration.

    Addressing a news conference in Abuja, Gen. Buhari also said he had no problem with his certificates with which he contested elections under the guidelines provided by the Independent National Electoral Commission (INEC) on three occasions.

    He argued that rather than address the problem facing the nation, which led to non-payment of workers’ salaries in December, the government was talking about the health of an individual.

    Gen. Buhari said:  “Vanguard reported that I was to jet out for medical check-up yesterday (Saturday) but here I am. I was in Nasarawa and Benue states yesterday (Saturday); tomorrow, I am going to be in two states. The day after tomorrow in two more states. I am doing two states per day.

    “How they got the impression that I was sick, I do not know. Although I got cold, that did not stop me from going on with my schedule.

    “I don’t know of this desperation. The issue we are telling Nigerians is that of corruption in this country and that in the last 16 years, PDP has literally destroyed this country.

    “This is the issue and I don’t understand what my health has got to do with that one. I have been sick on daily basis? And documents have been put on paper, on tweeter that I am sick and ABUTH has said they are forged documents. This desperation is beyond my understanding.”

    Asked to make a categorical statement on his health, Gen. Buhari jokingly asked the reporter: “How old are you? 50 years? I am telling you that if we go to the field, you would not last the time I will last in the field.”

    On the controversy surrounding his certificate, Gen. Buhari said: “Why didn’t Nigerians ask before? I have contested elections three times under the same rules set by INEC where there is a basic education qualification you must have. I was allowed to contest all these elections because my certificate? were in order.

    “There were individuals that wrote to the United States War College and the college answered them and it was published by some of your papers. Really, this desperation of misinformation that is being passed around will do nobody any good because our minds are being taken away from the serious issues of corruption and incompetence by the PDP.”

    The APC candidate spoke also on the alleged fraud in the Petroleum Trust Fund (PTF) where he was chairman during the Abacha regime, “That one has been cleared. There is no fraud in PTF,” Gen. Buhari said, adding:

    “There was an investigation and General Obasanjo has answered that question. He confirmed that there was an investigation and the report was brought to him and there was nothing on ground as far as my management and chairmanship of the PTF was concerned. So, what else can I say when the person who did the investigation because he was the Head of State has cleared me. What else can I say?”

    Lamenting the state of the economy, he said: “Well, the country is broke. Many states could not pay their workers’ salaries. Even in December most families were hungry during Christmas because government could not pay their salary and yet, they are talking about an individual’s health instead of paying the people.”

    Also yesterday, the APC Presidential Campaign Organisation (APCPCO) accused the Peoples Democratic Party (PDP) of circulating a scam medical report on Gen. Buhari.

    A statement from the Directorate of Media and Publicity of the organization, signed by Mallam Garba Shehu, said it was ludicrous for the PDP to throw caution to the wind in its “shameless” effort to pull wool over the eyes of Nigerians because of their rising desire for change of guards at the federal level.

    The statement, which was given to The Nation in Abuja, directed the attention of Nigerians to the glaring errors on the letterhead of the paper on which the purported medical report was written, wrongly identify the institution as Ahmadu Bello Teaching Hospital instead of Ahmadu Bello University Teaching Hospital (ABUTH), as the Zaria-based teaching hospital is known.

    The statement reads: “The attention of the APC Presidential Campaign Organisation has been brought to the circulation of a fake medical record of General Muhammadu Buhari.

    “We are able to track the circulation of the post on a social media platform and we know that the information emanated from the Facebook handle of one of Governor Ayo Fayose’s aides.

    “It is noteworthy that the authorities at the Ahmad Bello University Teaching Hospital (ABUTH) has given a clean bill on General Buhari’s health status. It is also noteworthy for Nigerians to understand that the PDP will stop at nothing to cast aspersion on the person of General Buhari.

    “We knew that the PDP would become unbridled at a point in its desperation to avert the defeat coming its way in the countdown to the February 14 presidential election, but to anticipate that the PDP would go as dirty as spreading falsehood on an individual’s state of health could not have been imaginable.

    “What is important is that Nigerians know today that our country is not healthy. They know that the PDP has driven the country to a near state of comatose. Our national security is very unhealthy and our national economy is right now gasping for breath from the stranglehold of the PDP.

    “It is almost as if official corruption and impunity are matters of state policy in the management of our national economy under the President Goodluck Jonathan administration.

    “That is why a great number of Nigerians yearn for change. Nigerians want a change from the clueless and directionless management of our security and our economy. Nigerians made a call on General Buhari to come on this rescue mission. They called on him because they know he is as fit as a fiddle to fix our unhealthy economy and the insecurity that has consumed a large region of our land.”

    In another statement, Shehu, said the seemingly “exhausted and frustrated” ruling PDP cannot hoodwink the public in its “sickening” attempt to tarnish the towering moral stature of its presidential candidate by dredging up a discredited report.

    The statement said: “President Obasanjo, who set up this panel to probe Buhari’s tenure at PTF, discovered something shocking from the work of the panel”.

    He recalled that after reviewing the PTF report, former President Obasanjo directed the relevant authority to go after those indicted by the report, giving Buhari a clean bill.

    Shehu explained that it was common knowledge to Nigerians that the Interim Management Committee was sacked by former President Obasanjo in March 2000 for alleged incompetence, amidst charges of serious abuse of public trust. Several members of that committee were indicted and made to refund hundreds of millions of naira of public funds, which they illegally took from the PTF.

    He said anyone under the illusion that it could use “a rotten report to smear Gen. Buhari must be living in fantasy”, adding that these “desperate tactics” would only amount to disservice to President Jonathan and his party, the PDP.

    He advised the Jonathan administration to focus its energy and attention on how to help give the country a new lease of life in the face of grim prospects on the economic front instead of wasting time on the futile efforts to smear the APC candidate.

    Shehu reiterated that the PDP administration lacked the credibility to throw stones at Gen. Buhari, who is “by all accounts more credible and trusted” in the eyes of Nigerians.

  • Elections ‘ll have negative impact on economy

    Elections ‘ll have negative impact on economy

    This is election year in Nigeria. Oil prices have gone down while the naira has been devalued. Experts say these developments would worsen the woes of the economy. The Chief Executive Officer, X3M Ideas, Mr. Steve Babaeko, says the economy will be negatively affected by the coming general elections because, according to him, politicians will hold back the cash which would have been used to oil the engine of the economy. He says the advertising industry is operating at “subsistence” level when compared to what obtains in other countries. Babaeko laments the dearth of trained manpower in the industry and how to reposition it. Senior Correspondent ADEDEJI ADEMIGBUJI met him.

    How will you describe 2014 for the advertising industry. What were its high points both for the industry and its practitioners?

    The advertising industry in 2014 was neither black nor white; it’s somewhere in between. To that extent, you can clearly say that so many positive things happened, while some things also happened at the macroeconomic level that were not so positive which affected the integrated marketing communication industry. Some of the positives for the industry last year include the emergence of young and new agencies. There has not been any time in our history, until last year, that  we witnessed a couple of younger agencies coming up strong and competing with the more established players. The new generation agencies came out strong last year and I find this commendable unlike in the past when it’s always same old players calling the shots all over the industry. At the macro level, with the drop in oil price, especially in the last quarter of the year, and its negative effects on the economy, it was an indication of tougher times for the industry and the economy in general. This will definitely affect the whole business climate and of course the advertising segment is not insulated from what happens at the macro level. Again, politics seems to gain the loudest share of voice especially in the last quarter; so this translates to the fact  that if money is not being spent at the centre, more money is going into politics and political activities.  Therefore, the economy will slow down because everybody is holding unto the cash at hand. These are the two indices I saw both on the negative and positive sides.

    What are these new generation agencies bringing to the table that is creating the shift?

    It is a normal shift; the kind of shift you are seeing in Nigeria and it is normal everywhere. If you look at the American, United Kingdom or European markets, there is always a cycle that a new agency emerges – Crispin Porter + Bogusky, Droga 5 and the likes. There is always the rise of some new agencies that is giving everybody sleepless night. This business is about regeneration. What the new agencies are doing in my own opinion is their approach to business that is different.

    Though, I cannot speak for the other agencies, in 3XM Ideas, for instance, the way we look at this business is totally different from  what most of these other agencies have done in the past. Let us now isolate advertising from the business landscape. We dismantled the business model of advertising in Nigeria and we put it together again. How did we do this? Well, we looked at the big picture. Then we asked ourselves: In creating communication and not just advertising, what are the things you need?  We found the answers very simple: You need the brain power for strategy, and creative fire power to turn the strategy into workable ideas. You need music and production.

    We took this business approach and we set up business units, usually with normal advertising agencies, they only control the strategy and the creative development.  We own a record label and production company and some other collaterals that go into developing communication. It is,therefore, easy for us to be in control of some of the other allied elements in creating communication. From that basic point of view, we have revolutionised this market.

    How easy is it to come in and shake the industry?  Does this presupposes that agencies have a life circle?

    The truth is that every brand has a life circle. But what happens is that you need to infuse an element of regeneration in building the brand. If you are a brand and the bulls-eye of your consumers is 30 years and above, it would be wrong of such brand not to create a pipeline that leads to people who are 18 years old or thereabout to begin to build the next wave of consumers for the brand. When you create the pipeline, you have corrected what would have been an ageing crisis for your brand down the line that supplies your main demography. It is the same thing with agencies. Agencies are not about buildings or structures, they are about people. Believe me, this business is not for old people, it is for young people. As an agency, if you want to live long, keep regenerating your people, keep the pipelines of young people coming into your agency fluid and open. An old man can have an agency, yes, that is why we have agencies that are 100 years old and the likes out there but they keep regenerating their people. If one fails to do this, the agency will die. There are no two ways to this.

    This year is an election year. What are its likely effects on the economy and advertising? How will this impact on the industry?

    In the Western world, election time is always a boom time for the advertising industry. Saatchi & Saatchi handles the Labour Party’s multi-million pound campaign in Britain. In Nigeria, it may not be so. This is because the bulk of campaigns here are run and executed by Association of Advertsisng Agencies of Nigeria (AAAN). That is why we see horrible campaigns and terrible posters and election materials. At the macroeconomic level, the issue of holding money for elections will impact on the larger economy. Whether the economy captures the money in the hands of politicians or not, it means that there are certain money that would have otherwise been injected into the system that would have made the economy more buoyant that is missing. If it affects the economy, it will affect the advertising industry. This is because advertising is not living in a silo insulated from the larger society.  Like they say in show business, the show must go on no matter what the economy brings. Advertising is here and people need advertising and it is actually when the economy is down that clients need to advertise the more because people need to be aware of their products and services.  This is what has kept the industry going.

    Do you see any shake up in the advertising industry this year?

    It probably would happen. Right now, there is a paradigm shift happening, especially with younger agencies emerging. The people who were in the fore front are no longer on the driver’s seat. A new power block is emerging. I will not be surprised if there is more shake up this year. Now, for the first time in a long time, we are seeing mergers and people buying into an existing company in the industry.  We are likely to see more of these this year. What we have had were big fishes in small ponds for a long time. People don’t want to be smaller fishes in a bigger ponds and that is the kind of arrangement that pays. People such as Sir Steve Omojafor have talked about merger but no one was taking him serious. It is happening now and I think we are going to see more mergers this year.

    Why is the advertising industry is not going public? What are the fears of practioners?

    In Kenya, there is advertising group that is quoted but it has not happened here yet. I will tell you why? What we have done here is what is happening in the agric sector where farmers are practising subsistence farming. What we are doing is subsistence advertising instead of mechanised advertising. People create business for themselves and their family unlike the WPPsof this world, which are quoted companies. However, it takes time to grow above the mentality of remaining a small agency just for subsistent living. So, if you really want to play in the big league, you can open it up for others to take up shares in the market.  Some don’t even want to give their staff who has worked for them up to 15 years any share not to talk of listing. It is about mind-shift and this needs to happen to the advertising entrepreneurs in Nigeria to get the industry to that place we are talking about.

    What is likely to trigger the mind-shift you just mentioned?

    At some point, the economy will open up more. Nigeria is the biggest economy in Africa. Power generation is very abysmal compared to most other African countries.  If we are able to get electricity right and the level of output goes up, the economy will open up more, then more people will come to Nigeria to do business. Already, we have vehicle assembly plants and then we will have no choice but to run this business as it should be run. Now with Advertising Practitioner Council of Nigeria (APCON) reform, there is a limit to which foreigners will buy shares in advertising industry. May be that law will change when the economy opens up. For this to happen, we need massive amount of capital. How much is the capital base of most agencies in Nigeria? Very negligible, that is why we gave the example of subsistence and mechanised farming.

    Does this mean the new APCON law is defective?

    I respect APCON, and there is need to protect the local industry. However, water will find its level. The industry needs to be protected. I know what the law is trying to say because the outsiders have heavier war chest to run riot over the entire industry- buy up any and kick out the ones they desire to and bring in foreigners to work here. Then we might have killed the baby before it has the chance to grow up. But at some point, the baby needs to grow up and stand on its own, then it won’t need too much protection. I look forward to that time when we will be able to say “may be we have out grown this law and we need to upgrade it.”

    Talking about regeneration to keep the industry growing, where are the schools to close this gap?

    Unfortunately, we have not been able to kick-start the advertising academy. The AAAN had this vision many years ago, but in fairness to the new administration, it is working so hard to ensure the school gets off the ground. But what I have done in the past six or seven years ago is to go to the University of Ibadan (UI) and give lectures and do workshops. There is a young man who now runs a small digital agency, he was part of a workshop I did at UI many years ago. I understand the need to create the pipeline that will create talents. The talents pool is drying up. As an agency today, if you are looking for copy writers, you are going to look for months.  There are no copy writers anywhere and it’s just about the short sightedness of not creating that pipeline that brings young talents into the industry. What we do is to use the small clout that some of us have to tell young people that there is an industry called advertising in Nigeria that provides employment where you can catch so much fun building brand and you can also earn a decent living.  Young ones need see us, look up to us and get excited wanting to join the business.

    3XM is not affiliated. Do you see anything wrong with affiliation?

    Affiliation is like marriage. Nobody will just walk into my agency and take it without showing me what you can offer. I can’t talk to you if you cannot offer me something different that we are not doing. I have decided that I will take some of the best practices of old agencies to run my business and learn from their mistakes.

    Last year, what did you do right or wrong?

    What we did wrong was that we did not join the bandwagon to do anything for any business. For instance I cannot join anyone to defraud the citizens. For me to support your business I must believe in what you stand for. If we had jumped on the bandwagon we probably had made more money but its all about value and principles. We must share values. We have dropped accounts either because the value was not just right or the client is not willing to partner. We want to be partners; we don’t want to be anybody’s donkey. If you look at the brands we work with now, it is like equal seat at the table, we are partners. That is why you see the progress on those businesses. An agency dictated to is like sending a soldier to war with his hands tied behind him. We have been fortunate enough to have found valuable partners to work with. But the ones who would not allow us do what are trained to do and what we believe in we gladly resigned such businesses instead of roasting in there and saying we’ll manage.

  • Firm marks decade of service to economy

    Courteville Business Solutions Plc is marking a decade of service to the economy. The sub-regional business solutions development company, quoted on the Nigeria Stock Exchange (NSE) has over the past decade, recorded consistent year on year growth in clientele base and key financial indices.

    Speaking at the ninth Annual General Meting of Courteville Business Solutions, its Chairman, Murtala Salami said the firm has since inception, the firm has provided exceptional e-service delivery models that are industry standard. He also lauded the firm’s corporate governance and service delivery benchmarks.

    “In less than five years of operations, Courteville Business Solutions Plc became a publicly quoted company. In November 2008, with its Operation and Management systems certified to be compliant with International Standards under the ISO 9001:2008 approved standards, CBS became the only company so certified from the business solutions development sector of the economy,” he said.

    He said the 10 years anniversary will be a one-week celebration starting tomorrow and ends January 17th.

    Activities lined up for the event include;  a two kilometer  “Walk For Life” from the Company’s head office to University of Lagos (UNILAG) gate and back to the head office tomorrow.

    “On Sunday, a thanksgiving service will hold at RCCG, Commercial Avenue, opposite the Head Office. A Seminar themed “Empowerment Strategies to Developing, Social Entrepreneurship” will also take place in Lagos on Monday.

    “On Tuesday, the commissioning of the Head Office by the Company’s Chairman will take place while on Wednesday, staff of Courteville will pay a visit to Modupe Cole Memorial Child Care at St. Finbarrs Road, Akoka, The Old People Home at Yaba and a Public Primary School in Yaba, where food items and educational materials would be distributed respectively,” he said.

    He said that Thursday has been tagged “Cultural day (African dressing) and Raffle Draws “ where staff would dress in their cultural attire and customers would have a chance to pick draws and win exciting gifts, this would take place at the company Head Office.

  • Ojudu: Jonathan should declare emergency on economy

    All Progressives Congress (APC) Senator Babafemi Ojudu has advised President Goodluck Jonathan to declare a state of emergency in the economic sector, stressing that the serious economic crisis may worsen the political situation of the country in the New Year.

    Ojudu, who represents the Ekiti Central District in the Upper Chamber of the National Assembly, lamented the drop in oil earnings, which he said, may spell further doom for budget implementation.

    Ojudu spoke yesterday in Lagos at the yearly review of the socio-political economy by the Afenifere Renewal Group (ARG), led by Third Republic House of Representatives Chief Whip, Olawale Oshun.

    At the parley, the group released its report on the economic and political administration entitled: “Nigeria Democratic Governance Report: Curbing Political Instability and Extravagance.”

    Accompanied by other ARG members, including Mr. Ayo Afolabi, Gen. Sam Odunsi, Mr. Segun Odegbami and Mr. Kunle Famoriyo, the former legislator alerted Nigerians to the reality of state fragility, warning that it could herald total collapse of the country.

    Oshun said: “We crave for stability and economic progress. But, we have voodoo economists managing our economy. They are dedicated to the cause of the free market and global economic market. Local industries are not protected. China has led the way in protecting its producers. India, with a population of 1.2 billion, has protected its economy. It does not import clothes. Nigeria imports everything, including tooth picks.”

    The ARG leader also warned about the consequence of the imbalance between recurrent and capital expenditure. He said the drop in capital expenditure and rise in recurrent expenses could spell doom for the country in its drive for development.

    Ojudu said the conspiracy between the United States (US) and the Saudi Arabia to punish the Soviet Union is affecting Nigeria, urging the Federal Government to pay more attention to the global economic trend.

    HIS words: “The Nigerian oil cargo is being rejected in the oil market. The oil is being offered at a discount. We must begin to tighten our belts and reduce wastages. This is not the time to buy private jets for the President. The Head of the British Government travels in the British Airways.

    “Last year’s budget harboured 45 per cent wastage. In the budget, civil servants were asking for old type writers. Under the military, we had a four-year development plans. That stopped in 1989. We prepared budgets for the benefit of civil servants, who spend more funds on tours, generators, computers, research and development. The money goes to the departments that do not even conduct research.”

    Noting that civil servants hide under the rot in the system to perpetrate evil, the senator said: “In my own opinion, civil servants have become more corrupt than politicians.”

    In his own remark, Ojudu said: “The President should declare an emergency in the economic sector. We must also stop the wastage. Few people will come from abroad, change the pound sterling and dollar, get more naira and buy the electorate.”

    The senator lamented that parliamentary reprimand for the executive because of budget failure has become difficult because the majority of lawmakers respond to issues along party lines.

  • ‘Boko Haram paralysing Northeast’s economy’

    ‘Boko Haram paralysing Northeast’s economy’

    The Minister for National Planning, Dr. Abubakar, has lamented that activities of the Boko Haram insurgency group have devastated and paralysed the economy of the states and communities in the Northeast.

    The minister spoke through the Acting Secretary of the commission, Bassey Akpayung, at a meeting organised with development partners on the security challenges in the zone.

    He maintained that the effects of the insurgency were devastating with the local economy being paralysed, lives and property wasted.

    The minister said the Presidential Initiative for the Northeast (PINE) seeks to develop a framework to revitalise the economy of the zone and leverage on the activities of the states and local governments as well as the development partners.

    He added that the initiative was expected to come up with a sort of Marshall Plan that would be used to mobilise support for targeted intervention funds.

    He  called for deepening of interventions in the region and also reiterated the need to work in a better collaborative manner with the stakeholders in the intervention activities.

    The minister explained that  “the meeting was organised to examine the current situation in the Northeast region and fashion out ways to re-strategise and coordinate the efforts aimed at achieving a better result and also to reach more of the internally displaced persons in the region.”

    “Insurgency seems to be recurring in this part of the country, but the scope, scale and impact of the current intrusion as well as the dexterity of the perpetrators is out of proportion to any previous one. The  current insurgency, perpetuated by the Boko Haram sect, was initially traced to the neighbourhood effects of the Arab Spring in the North Africa,’’ he said.

    Also speaking at the meeting, representative of the National Emergency Management Agency (NEMA), Alhassan Nuhu, said about  868,000  people have been displaced  by insurgency groups and flood.

    Nuhu said the Federal Government, through MEMA, “is providing medical consumables, ambulances, clean water and provision of boreholes for Internally Displaced Persons in various camps.”

  • Jonathan and the economy czar

    Their number is insignificant compared to the total figure of companies and businesses operating in the country. Still, they are known as the custodians of the Nigerian economy.

    They are the top 100 businesses in Nigeria out of the over 3.6 million firms and enterprises scattered in all tiers of the economy. Without them, the economy will crumble.

    Not only are they providing jobs; they also consistently fund the government through their taxes.

    The 100 companies, which are less than 1% of the companies in Nigeria, contribute about 20% of the country’s Gross Domestic Product (GDP).

    No wonder President Goodluck Jonathan is looking up to them and other upcoming companies to move the Nigerian economy to the top 10 economies in the world in the shortest possible time.

    Unveiling the top 100 companies at a presidential dinner in the State House last week Monday, Jonathan said: “You are shining stars, the central component of our economy. It is companies like yours that bring government’s economic policies to life.”

    “This is because you are in the trenches every day, investing, expanding and ensuring that your businesses keep working. The entire nation and I are very proud of you.”

    You are all truly Nigerians; your achievements have been remarkable. You have shown boldness and vision in enterprise and confidence in this country.

    “Through your investments, you have contributed significantly to employment generation, wealth creation and our overall economic development.” he stated

    Speaking at the occasion, the Minister of Industry, Trade and Investment, Olusegun Aganga, disclosed that the 100 companies were selected using simple criteria including turnover, which was extracted from their audited financial statements.

    The data, he said, was obtained from the Financial Reporting Council, Corporate Affairs Commission, Nigerian Stock Exchange and the Federal Inland Revenue Service.

    The first10 of the top 100 businesses are ExxonMobil Nig (Oil and Gas), Shell Nig (Oil and Gas), Chevron Nig (Oil and Gas), Nigeria LNG, Total Nig (Oil and Gas), MTN Nig. (Telecomms), Dangote Group, Oando (Oil and Gas), Eni Agip (Oil and Gas), First Bank (Financial Services).

     

    Honour to whom it is due

     

    The government has been criticised in various quarters for the calibre of persons listed for some national awards. The critics had argued that there were more worthy and deserving Nigerians who have been left out of such awards.

    But this was not the case last Thursday when Prof. Niyi Osundare was conferred with the 2014 Nigerian National Order of Merit Award (NNMA) at the Presidential Villa, Abuja.

    The poet, dramatist and essayist beat 21 other nominees with every voice acknowledging him as the right choice among the lot.

    Conferring the award, President Goodluck Jonathan noted: “I have no doubt that Prof. Niyi Osundare, our awardee this year, meets our nation’s expectation.”

    “There is no doubt also that the knowledge, expertise and contributions of today’s recipient will be of immense benefit to our overall development agenda, in particular, the successful implementation of this administration’s transformation efforts,” he said

    It is hoped that all subsequent national awards will continue to be devoid of politics and other insignificant criteria and really go to deserving persons.

     

    Breaking records in a row

     

    The Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke may be seen as one of the most controversial and highly investigated ministers to occupy the seat, but she somehow has broken records in the petroleum industry and other areas.

    The first record she broke was becoming the first woman Director of Shell Petroleum Development Company of Nigeria and later the first woman on the board of the company.

    She was named as the first woman Minister of Transport in July, 2007.

    As if that was not enough, she became the first female minister to occupy the Ministry of Petroleum Resources in April, 2010 with all her predecessors been male.

    Apart from been the first woman to head any country’s delegation to the annual Organisation of Petroleum Exporting Countries (OPEC) conference in October 2010, she got elected as the first female President of OPEC on November 27, 2014.

    The Federal Executive Council (FEC) presided over by President Goodluck Jonathan last Wednesday congratulated her on the feat.

    Speaking with State House correspndents on the latest position, Diezani said: “First of all, it wouldn’t have happened if the President had not had the courage to appoint a woman into the portfolio of Ministry of Petroleum Resources, which meant that I now headed the country’s delegation to OPEC.”

    “I must say that that was daunting thing, it happened about three and half years ago, I went into a body which is completely male dominated and mostly Arab dominated as well. But I have found that they have come to respect me and respect Nigeria’s voice over the last three years in OPEC very highly,” she said

    Only time will tell what records she will break next. Will she aim to achieve this feat in Bayelsa State Government House or aim to be the first woman Nigerian president?

     

  • ‘Lack of infrastructure hurting economy’

    Until Nigeria has a national quality infrastructure, she cannot join the league of other countries that have been accredited by the International Accreditation Forum (IAF), the regulatory arm of International Organisation for Standardisation (ISO), a Quality Management Practitioner and National President of Association of Systems Management Consultants, Mazi Colman Obasi, has said.

    He said at present, Nigeria lacks a national quality infrastructure, a system of institutions, which jointly ensure that products and services produced in the country meet predefined specifications. It also provides technical support to companies so they can improve their production processes and ensure compliance with regulations or international requirements.

    Mazi Obasi, who spoke against the backdrop of the ‘2014 World Quality Day,’expressed regrets that at present, Nigeria has no national quality infrastructure, and that until the country does so, she cannot be accredited by IAF to allow her enjoy the enormous and  invaluable benefits of having her own accreditation body.

    November 13 every year is set aside by the United Nations (UN) to celebrate quality. The purpose of the World Quality Day is to promote awareness of quality around the world and encourage development and prosperity of persons, organisations and nations. This theme of this year’s  World Quality Day is ‘Building a Quality World Together.’

    Obasi said that in line with global emphasis on quality, accreditation, which is one of the quality infrastructure institutions, is granted to countries by the IAF, and each country so accredited will now have its own national accreditation body that accredits laboratories, training institutions, and management systems for organisations-all to meet world quality standards.

     

     

     

     

     

     

     

  • Oil price fall: FG unveils new economic measures

    Oil price fall: FG unveils new economic measures

    The Federal Government has announced a multi-pronged strategic response to mitigate the adverse effects of the drastic fall in global oil prices.

    The measures are also meant to protect growth, reassure investors and keep the economy on a stable course through the crisis.

    Addressing a Special Media Briefing in Abuja on Sunday, the Coordinating Minister for the Economy and Minister of Finance, Dr Ngozi Okonjo-Iweala declared that the Federal Ministry of Finance has been keeping a close eye on movements in global oil prices because of the critical importance of oil as the country’s most important source of revenue.

    The response is a mix of measures designed to boost non-oil revenues, plug loopholes and waste and cut unnecessary expenditures in order to cope with the situation.

    As part of the response, the Medium Term Expenditure Framework (MTEF) and the 2015 Budget proposal to the National Assembly have been revised. As a result, the federal government will be proposing a benchmark of $73 dollars per barrel to the National Assembly compared to the earlier proposed benchmark of $78.

    The Minister explained that even though the government has been working hard on several scenarios and contingency plans in readiness for any eventuality, it was important to proceed in a measured manner based on a complete understanding of the challenges.

    According to her, “given the nature of the oil market, we needed to see the extent and trend of the oil price in order to take the right measures. Panic is not a strategy. It’s important that our strategies are based on facts and a clear understanding of both the strengths of the economy and the challenges posed by the drop in oil prices which is currently at $79 for our premium Bonny Light Crude.”

    “The drop in oil prices is a serious challenge which we must confront as a country. We must be prepared to make sacrifices where necessary. But we should also not forget that we retain some important advantages such as a broad economic base driven by the private sector and anchored on sound policies. Our strategy is to continue to strengthen the sectors that drive growth such as agriculture and housing while reducing waste with a renewed focus on prudence.”

    The Minister recalled that in the last three years, the Executive in its discussions on the budget with the National Assembly has consistently advocated prudence and a low budget benchmark to encourage more savings.

    She stressed that even though the drop in oil prices is a serious challenge, it is also an opportunity for the country to focus on greater diversification and refocus efforts towards the non-oil sectors in preparation for a future with less oil revenue.

    She stated that the decline in oil prices has given additional impetus to the federal government’s focus on increasing non-oil revenues. In this regard, the collection target for the Federal Inland Revenue Service (FIRS), which has been working with Mckinsey to increase receipts will be revised upwards for next year.

    The country has had good success in reaching the initial target set this year of N75 billion; so far N65 billion of this has been collected. For 2015, the revised target is N160 billion above the 2014 base.

    As part of the efforts to reduce expenditure, international travel within the public service will be severely curtailed. From next year, only critical foreign travels will be allowed with the permission of Head of Service of the Federation (HoS).

    According to the minister, “any other foreign travel will have to be funded by those inviting civil or public servants and all expenses paid by the inviting body. Same goes for training, local training will be encouraged but expenses for foreign training will be borne by inviting foreign host with permission sought from HoS. Evidence of sponsorship detailing all expenses paid for by inviting body must be tendered before HoS will grant approval.”

    She disclosed that there will be a drop in some capital spending but critical infrastructure projects will not be affected because they are key to economic growth and development as well as job creation.

    Investment in infrastructure, job creation and security will not change but there will be prioritized investment in those with significant economic impact like Lagos-Ibadan Expressway, Second Niger Bridge and rail projects.

    The implementation of the new mortgage system including the current processing of over 66,000 applicants for mortgages will go on as planned so that the country reaps the strong benefits that will come from unleashing the housing revolution which is attracting serious interest from local and international investors.

    Also unaffected are public sector wages as well as key initiatives in education, health and other areas critical to the country’s human development.

    The minister said she was “not sure of what direction to take with taxes but that a key initiative on the revenue side is a surcharge on luxury items details of which are being worked out. Government’s efforts from now she said will be to drive to increase Internally Generated Revenue (IGR) of entities and ensure that they remit these IGRs on time to government coffers. “This economy has to stop talking about oil”

    She noted that there will be surcharges on luxury items like champaign, private jets, yachts, so that those well-to-do individuals can contribute more to government treasury.

    Also Ministries Departments and Agencies (MDAs) that make surpluses will now be made to remit such surpluses immediately to government accounts while some taxes will be adjusted to enhance revenue.

    On calls from some quarters that the federal government should respond to the decline in revenues arising from the drop in oil prices by printing more Naira to fund projects, the Coordinating Minister said that such poorly thought out populist recommendations would be disastrous for the country if implemented.

    She said such prescriptions ignore the facts of history as well as the elementary principles of economics. “Printing money without adequate revenue support will lead to serious consequences for the country. It will spur spiral inflation as the experiences of Germany in the early part of the last century and more recently, Argentina and Zimbabwe demonstrate. This prescription will victimize the poor and middle class that it is supposedly protecting.”

    Should oil price fall to $70 or lower, government Okonjo-Iweala said has additional measures to ensure softer landing for the economy. The economy she said “continues to exhibit strength but government will not compensate by borrowing or printing currency but will borrow at very low interest rate and no large domestic borrowing.”

    She explained that the best way to protect the interest of the ordinary people is to control inflation as much as possible, expand the economic base, strengthen the sectors that drive growth, boost critical infrastructure and create more jobs.

    The External Reserve she said is now at $37 billion is still reasonably good, while the Excess Crude Account (ECA) is still good but government will spend part of it on some transparent transactions. “We might tap into half of the ECA between now and the new year. We have arrears on subsidy pending this will be addressed” she said.