The Nation Newspaper

Tag: growth

  • Nigeria, Angola fuelling global growth, says DHL boss

    Nigeria, Angola fuelling global growth, says DHL boss

    While Oil and Gas activity in West Africa is nothing new, it is the activity in East Africa which is creating a stir amongst exploration companies and of course, their suppliers.

    This is according to Steve Harley, President, DHL Energy Sector, who says that while Angola and Nigeria have always been the most notable producers within the Sub-Saharan region, more recently, significant gas discoveries in Tanzania and Mozambique, has led to East Africa now receiving its share of attention from global oil companies and potential investors.

    “Oil discoveries in Uganda and Kenya have also added to the excitement in the sector as new players look to enter these markets, including some of the largest independent and international oil companies, otherwise known as the super majors, who are now also witnessing the potential in this region.”

    He says that in addition to the developments in East Africa, both Namibia and South Africa are also on the radar of investors within the sector. “South Africa in particular is receiving much attention, mostly because of the potential of shale gas in the Karoo, but also because it has a long and largely unexplored coastline, off which many believe large hydrocarbon fields may exist. As a result of the region’s potential, there are several offshore drilling exploration expeditions currently being planned in South Africa by the major oil companies.”

  • Africa set to utilise pension funds for growth

    Africa set to utilise pension funds for growth

    Pension professionals, stakeholders and regulators in Africa and from other parts of the world gathered last week in Nigeria for the World Pension Summit, ‘Africa Special,’ co-hosted by the National Pension Commission (PenCom). The agenda was to brainstorm on how best to harness the continent’s pension fund assets as catalysts for economic development and prosperity. OmobolaTolu-Kusimo, who was at the summit, reports.

    Within 10 years, the pension industry in Nigeria has experienced phenomenal growth from a deficit of N2 trillion in form of pension liabilities in 2004, to accumulation of pension fund assets worth N4.3 trillion by the end of last year.

    The achievement in the industry will further grow with the recent passage of the new Pension Reform Act, 2014 by President Goodluck Jonathan.

    These developments and more were showcased at the just concluded World Pension Summit ‘Africa Special,’ hosted by the National Pension Commission (PenCom) which held for the first time in Africa.

    Thoughts and experiences were shared among African countries in particular, and the world in general on how pension funds can evoke pragmatic, sustainable and most effective initiatives for pension fund governance and regulation in the continent.

    According to PenCom, the summit was also held in recognition of the increasing significance of pension funds in shaping Africa’s future.

    Speakers, panelists and other discussants dissected many of the issues and proffered solutions that will ensure that Africa remains at the cutting-edge in the conception  and implementation of sustainable pension policies.

    They also deliberated on strategies for developing an appropriate framework for leveraging pension funds across the continent to accelerate the implementation of critical high-impact infrastructure projects.

    Prior to pension reform and the establishment of PenCom in 2004, pension schemes in Nigeria had been bedeviled by many problems. The public service operated an unfunded Defined Benefits Scheme and the payment of retirement benefits was budgeted for annually.

    The annual budgetary allocation for pension was often one of the most vulnerable items in budget implementation in the light of resource constraints. In many cases, even where budgetary provisions were made, inadequate and untimely release of funds resulted in delays and accumulation of arrears of payment of pension rights. It was obvious therefore, that the Defined Benefits Scheme could not be sustained.

    In the private sector, many employees were not covered by the pension schemes put in place by their employers and many of these schemes were not funded.Besides, where the schemes were funded, the management of the pension funds was fraught with malpractices carried out by the fund managers and the trustees of the pension funds.

    This scenario necessitated a re-think of pension administration in Nigeria by the administration of President Olusegun Obasanjo. Accordingly, the administration initiated a pension reform in order to address and eliminate the problems associated with pension schemes in the country.

    The outcome of the reform was the enactment into law of the Pension Reform Act 2004 and the establishment of the National Pension Commission (PenCom) to regulate, supervise and ensure effective administration of pension matters in Nigeria.

    At present, there are 20 Pension Fund Administrators (PFAs) and four Pension Fund Custodians (PFCs) under PenCom.

    Since its establishment, PenCom has been able to implement the contributory pension system that has pension administration and custodianship intertwined; duly licensed Pension Fund Administrators (PFAs) open Retirement Savings Accounts for employees, invest and manage the pension funds in a manner that the Commission may from time to time prescribe, maintain books of accounts on all transactions relating to the pension funds managed by them, provide regular information to the employees or beneficiaries of the fund and pay retirement benefits to employees . The Pension Fund Custodians, on the other hand, are responsible for the warehousing of the pension fund assets. The employer sends the contributions directly to the PFC, who notifies the PFA of the receipt of the contribution and the PFA subsequently credits the retirement savings account of the employee.

    Meanwhile, the new Pension Reform Act 2014, which repeals the Pension Reform Act, No.2, 2004, is meant to further fortify the pension assets against mismanagement and systemic risks, govern and regulate the administration of the uniform pension scheme for both public and private sectors in Nigeria.

    The 2014 Act also empowers PenCom, subject to the fiat of the Attorney-General of the Federation to institute criminal proceedings against employers who persistently fail to deduct or remit pension contributions of their employees within the stipulated time. This was not provided for by the 2004 Act.

    Similarly, the new law allows PenCom to revoke the license of erring pension operators.However, the huge pool of funds that the contributory pension scheme has put together has been identified by analysts and other stakeholders as a firm backing to the economy.

    The Acting Director-General, PenCom, Chinelo Anohu-Amozu, while speaking at the summit, said the outcome of the event has set modalities that can address the challenges of infrastructure gaps in Africa, which will indeed help in creating the economic pre-conditions needed for longer-term growth as well as to foster poverty alleviation.

    She said in achieving the set goals, African government must be mindful of the fact that our hopes and aspirations as a continent are primarily hinged on the evolution and development of retirement benefits into a veritable instrument of social change, not in a theoretical or abstract sense, but in terms of an intrinsic transformation of our institutions, and our operators.

    She said: “We need to attempt to set out what could be considered a set of challenges that pension professionals and regulators around Africa must surmount, in order to engender the evolution of a retirement pension system that will be rooted in our collective social consciousness.

    “We also need systems that are relevant to the fundamental needs of our continent, which are dynamic enough to initiate and also respond to developmental challenges facing the continent in an increasingly interdependent global economy.

    “Infrastructure development remains a key driver and a critical enabler of sustainable growth in Africa and the current favourable economic landscape on the continent provides a unique opportunity for the public and private sectors to collectively address the infrastructure gaps. Focusing on Africa’s infrastructure challenges will indeed help in creating the economic pre-conditions needed for longer-term growth as well as to foster poverty alleviation.

    “Given the size of pension fund assets across Africa, there is a real opportunity for policymakers to collaborate with pension professionals so as to effectively leverage these assets for sustainable progress.”

    Mrs Anohu-Amazu stressed that as the proportion of retirement income provided by private pensions continues to grow, the regulatory framework designed to protect those funds becomes even more crucial.

    She noted that the theme of the summit, ‘Shaping the Future’ underscores the imperative of institutionalising a risk-based approach, which ultimately allows the regulatory agencies to channel their resources towards, issues that pose the greatest threat to the stability of the industry.

    The Chief Executive, Kenyan Retirement Benefits Authority, Edward Odundo, while citing the Kenyan example, said pension operators in Kenya are not attracted to private equity and venture capital.

    He said they rather tilt towards lending to workers for housing purposes.He said: “One of the ways that pension fund could put to good use to the benefit of contributors is to allow Retirement Saving Account holders to borrow from the scheme.  If one has N10 million accumulated savings, instead of going to the bank to borrow at 21 per cent interest rate, he could be allowed to borrow from his accumulated fund and repay at a friendly interest rate while his savings serve as collateral for the credit.  This is the case with Kenya, he added.

    “Pension Reform in Kenya has resulted in a sea of change in the operations of retirement benefits schemes in the country. This has led to rapid growth of the industry coupled with enhanced member protection and security. Building on this success, the government has introduced further reforms aimed at securing and consolidating these gains.”

    Edo State Governor, Adams Oshiomhole who spoke on investment of the pension assets in capital market, faulted the investment of pension assets in the capital market saying the fund should rather be deployed to areas that would benefit contributors directly.

    He observed that the fund is largely being invested in government bonds and quoted stock in the capital market, saying it wasn’t the poverty of government that informed the scheme but old age poverty.

    He added that the instruments benefit the rich who have the capacity and connections to access the fund to do business and make profit while the workers who are contributing the fund don’t have access to it noting that investing pension assets in the capital market is tantamount to pooling the resources of the poor for the benefit of the rich.

    The Vice President, Nigeria Labour Congress (NLC), Issa Aremu, concurred with the Kenyan regulator, that pension assets should be used to provide houses for the working people. He charged pension stakeholders to deploy pension asset to financing home ownership schemes for workers. This is one of the ways to deploy pension funds for the benefits of contributors directly, he added.

    He said houses are expensive when mortgage institutions and other intermediaries build for sale to workers stating that Kenya workers are allowed to borrow from their retirement savings to build houses.

    Chairman of the Senate Committee on Public Service, Mr. Aloysius Etok on his part identified some lacuna in the new Pension Reform Act, 2014.He said the National Assembly was discovered though belatedly that the pension law left out employers and political appointees.

    He advised that the pension stakeholders should do everything possible to ensure that the law is returned to the National Assembly to be upgraded with a view to bringing both employers and government appointees under the contributory pension scheme.

    Niger State Governor, Alhaji Babangida Aliyu raised the issue of non-compliance by some states of the pension reform law.He said it is important that PenCom ensures the law permeates the states.

  • Making a case for regional growth

    Making a case for regional growth

    Whoever thought about forming economic blocs must have known that combining two ‘good’ heads to form one is better than ploughing ahead solo at achieving success. Hence, it does not come as a surprise when various professional bodies, community, and nationalities gather together to gain from the powers of synergy.

    Such liaisons have galvanised into the formidable associations like the United Nations (UN), North Atlantic Treaty Organisation (NATO), and the Association of SouthEast Asian Nations (ASEAN). Closer home to Nigeria, the Africa Union (AU) and the Economic Community of West African States (ECOWAS) have been established. The gains of such unions can never underestimated, hence, some jostling to belong have occurred. It was these gains that brought about the formation of the European Union (EU) by 12 countries in 1993.

    And in the country, the call for regional economic bloc has also been screamed. In the early years before Nigeria’s independence and shortly after, regions such as the southwest pioneered integration. The region championed development causes such as farming and industry and it quickly became an economic force to reckon with. Well, that was before the discovery of oil in the Niger Delta and the country’s dependence on the black gold.

    But in recent times, the southwest comprising Yorubas, have come up with Development Agenda for Western Nigeria (DAWN), a regional success road map. And complementary to that, two companies – Vintage Press Limited, publishers of The Nation newspaper, and CEEDEE Resources, – organised in 2012 and 2013, a Legislative Summit in Ibadan and a southwest Expo in Osogbo respectively. It was a product of that synergy that resulted in the book, Regional Integration; Strategy for National Development.

    The 162-page book is a compendium of papers from politicians, technocrats, academics, as well as traditional leaders, all pursuing the goal of regional integration.

    The Osun State governor, Ogbeni Rauf Aregbesola, posited that the time for the idea of regional integration has come. He also advocated that the policy thrust should focus on some critical areas such as employment, education, transportation, healthcare and agriculture.

    And looking at the future to expand the tentacles of DAWN beyond the current states of Lagos, Ogun, Oyo, Osun, Ekiti and Ondo States, Dipo Famakinwa, the director-general of the DAWN Commission stated: ‘DAWN is a challenge of leadership. The whole world is leaving us behind and we cannot continue to put the lives and well-being of about 40 million in jeopardy.’

    To this end, the region would synergise efforts, especially concerning trade and industry, and setting up target landmark projects in road and rail construction, healthcare and provision of a ‘Regional Technology City).

    He also canvassed extending DAWN’s gains to include people in Kwara, Kogi, Edo and Delta States.

    A former governor of Ogun State, Aremo Olusegun Osoba considers the drive for regional integration as a return to the region’s early success.

    ‘The regions enjoyed measurable autonomy from the centre,’ he stated. ‘They enjoyed fiscal federalism, retaining at least 50% of revenues derived within their territories. They had their own separate constitution as well as regional police to ensure security.’

    According to him, had the arrangement progressed, Nigeria could have currently been at par with the Asian Tigers.

    And while most presenters spoke glowingly of regional integration, Hon. Abike Dabiri-Erewa, chairman, House of Representatives Committee on Diaspora, observed that ‘regional integration is very imperative in Nigeria today because the federalism practiced today is not only lopsided, but it is also counter-productive.’

    She also skimmed on some demerits of regional integration to include rivalry for donor funds, contradictory obligations and loyalty for member states, fragmented economic spaces and inconsistent objectives and conflicting operational mandates.

    The contributors also include Governor Kayode Fayemi of Ekiti State, Governor Abiola Ajimobi of Oyo State, Senator Olorunnimbe Mamora, Hon. Olawale Oshun, the chairman of Afenifere Renewal Group, and Hon. Adeyinka Ajayi, chairman, House of Representatives Committee on Aids, Loan, and Debt Management. Others were Professor Akin Oyebode, Professor Adebayo Williams, and High Chief Omowale Kuye, Otun Olubadan of Ibadanland.

    Overall, the book comes across as a distillation of a peoples’ idea and their efforts toward achieving socio-political and economic strength, the ‘bringing back’ if you may, of something they had enjoyed in the past.

  • India expects faster economic growth

    India’s economy will improve this fiscal year, the government predicted on Wednesday, as a gradual increase in investment helps revive activity, although high inflation and political rumblings in other countries pose hurdles to a strong recovery.

    The South Asian economy is expected to grow closer to the lower end of a 5.4 per cent-to-5.9 per cent band forecast for the current year, according to a survey, which essentially is a review of the economy conducted by the finance ministry. It grew 4.7 per cent in the year ended March 31.

    The government said factors such as “institutional reforms to quicken implementation of large projects and a stronger-than-expected recovery in advanced economies would help the Indian economy clock a higher rate of growth.” However, inflation is expected to moderate only by the end of 2014, the government said, adding that India could also face economic pressures due to prospects of below-normal rainfall this year, which could hurt agricultural output and contribute to food-price inflation.

    The government didn’t provide inflation projections. Most recent data show consumer inflation was at 8.28 per cent in May. That is well above the six per cent level that India’s central bank would like to hit by January 2016.

    The government also gave indications of better fiscal management, promising fresh regulations aimed at providing more transparent policies with the “teeth” to strictly enforce fiscal-deficit milestones set out for the government.

    India in the past enacted a law setting fiscal-deficit targets for the government. Those targets were abandoned by the previous government as it increased social-sector spending.

    After growing as much as nine per cent in 2011, India’s economy slowed sharply to less than fivre per cent growth in the past couple of years. High inflation sapped consumer demand, while both foreign and domestic corporate investment weakened.

    Earlier this year, the Bharatiya Janata Party won national elections in a landslide. The party’s leader and India’s new prime minister, Narendra Modi, have promised to make it easier for businesses to operate and open up more sectors of the economy to foreign investment.

    The government has already drawn up plans to allow greater foreign ownership in local defense and insurance ventures. On Tuesday, it announced plans to seek foreign investment for developing the country’s railway network, following up on last month’s sharp increases in railway passenger fares and freight rates aimed at boosting revenue.

    Investors are now watching for the federal budget to be announced Thursday for fresh policy moves to encourage an ailing manufacturing sector, increase infrastructure investment and simplify tax policies.

    There is also the possibility that the new budget includes measures to reduce government subsidies. Such measures could prove to be politically unpopular, although the government report said: “Addressing the key fiscal risk of food, fertilizer and petroleum subsidies is critical for achieving better quality fiscal marksmanship.”

    “The survey presents a realistic assessment of the national economic situation,” said Sidharth Birla, president of the Federation of Indian Chambers of Commerce and Industry.

    “We would look for specific proposals in the budget on further subsidy rationalisation.”

     

  • Somotex foresee immense business growth

    The distributor of Midea commercial air-conditioning systems in the country Somotex has shared its recent research with its trade partners at three dealers’ conferences held across the country.

    The event has as theme Innovation for creating new possibilities. Vice President, Somotex Nigeria Limited, Mr. Ajay Singh, said Nigeria has enormous potential due to its size and population, which is in excess of 160 million. “Nigeria, no doubt, will perform better in near future, as the country is set to witness an immense growth in civil constructions and Infrastructural development,” he said.

    According to Singh, these facilities’ requirement for air conditioning will grow exponentially. He advised key dealers of Midea and users of commercial air conditioning systems to be positioned for the opportunities which will begin to come to the fore soon.

    As an investor in the country with diversified business interests spread across Commercial air-conditioning; consumer electronics and home appliances; electrical LT switch gears, cables and Inverters; and automobile tyres, the Somotex chief said business challenges in the country are access to funds, paucity of infrastructure and project delays which reduce profits and cause delay in payments.

  • A push for growth in outdoor advertising

    A push for growth in outdoor advertising

    With huge challenges confronting the growth of outdoor advertising business in Africa, the Lagos State outdoor advertising sector is pushing for growth through strategic partnership with countries in Africa to foster growth, write Adedeji Ademigbuji and Adeyinka Aderibigbe.

    The outdoor advertising business in Africa may overcome some of its challenges if the solutions proferred at the African Outdoor Advertising Conference and Exhibition are adhered to.

    The conference gave media buyers, creative agencies, outdoor advertising practitioners, the government, as well as foreign investors in Out-Of-the-Home (OOH) advertising business, the opportunity to reveal some of the challenges that confront the business and hamper growth of the industry.

    During the gathering in Lagos, which is home to about 60 per cent of Nigeria’s advertising business, the Managing Director, Lagos State Signage and Advertising Agency (LASAA), George Noah, said though the industry has a healthy potential for growth, the challenges hampering the industry, such as lack of empirical data, amongst others, have continued to make advertisers price the business low unlike other platforms of advertisement, such as TV.

    Noah, who said he is often worried about the untoward effect of this on the advert businesses, noted that in packaging the event, the agency aimed at deepening the sector’s capacity to respond to the global trends, meet the demands from clients in order to leverage on the network of information, tools and systems that such a forum could put at operators’ disposal.

    Although Noah admitted some of the prolonged challenges, the sector has witnessed huge transformation in the last decade as a result of the regulatory intervention from LAASA which he believe has enshrined sanity in the outdoor advertisements sector in Lagos in particular. He said one of the wars the agency had to fight was with those who deface the face of Lagos with posters.

    With no data on eyeball traffic hitting the advertisements, he said LAASA is checking indiscriminate pasting of so that advertisers will no longer cut down advert spend for outdoor business. As a result of that, he noted that the agency has carved out zones where posters could be pasted all year round.

    With determination to reposition for global competitiveness, Noah said the Lagos outdoor advertisement sector has recorded significant success in terms of revenue. According to him, despite the challenges, the sector accounts for over N50 billion turnovers while Lagos State with a population of 22 million accounts for 60 per cent of Nigeria’s total advertising market though he said this insignificant when what accrues to other sectoral growth within the sector is considered as cost of doing business is almost shrinking the OOH business.

    Noah said outdoor media buying agencies generate about N8.6 billion, fabricators, rake in N1.5 billion; installers, N382 billion; large format printers, N8.27 billion. Also, outdoor specialist agencies generate N21.9 billion, outdoor protection services, N370 million; adverts N1.25 billion, while other areas account for N8 billion. He pointed at the huge employment opportunities of the sector, which employs over 100,000 people in Lagos alone.

    With about 100,000 signs and 800 outdoor structures in Lagos, Noah also said the industry’s growth potential have been hindered by some of these challenges which also includes loss of market share to television, radio and social media marketing.

    Also, the Chairman, Outdoor Advertising Agencies of Nigeria (OAAN) Mr. Charles Chijide challenged the government to open the space for all stakeholders to operate. He said the changes in road architecture, lifestyles, business practices, policy directions and inadequacy of power are chief among the debilitating challenges facing operators.

    Chijide,who is also the President of the African body of Out-of-Home operators said the cost of fuelling two giant generators that often powers any display site is colossal, a situation which is not helped by the lack of access to capital or loans from the banking sector.

    He listed other challenges facing stakeholders to include multiple taxation, the menace of area boys and street urchins’, lack of data and lack of certificates of occupancy (Cs of O) on most of the sites being used for businesses.

    Speaking on the challenges and prospects of out of the home Advertisement in Africa, Chijide said though these challenges seems local to Nigeria, they exist in relative measures and are common to all members of the association in the continent.

    He said the platform which started in Nigeria in 1956, has evolved over the decades to digital, and his corporate members has moved from two when it began to 158. He said all stakeholders especially the government must give the necessary support to the sector realising that out of the home practitioners are changing life, changing the economy and changing the face of business in the country.

    He noted that one of the ways government could support the sector is to ensure the stability of power supply, and the issuance of temporary certificates of occupancy for members sites to enable them use this to procure facility from the bank.

    The Director of Commerce, Ministry of Commerce and Industry, Mr. Akeem Adeniji, who represented the Commissioner Mrs Olusola Oworu, tasked outdoor practitioners to key into the Lagos State Development Plan (LSDP) which has four parts: Economic development; infrastructural development, social and security development and sustainable environment.

    He challenged all operators having issues with the state government to make use of the right channel in making the government aware of the gray areas they wanted addressed. He recalled that the Babatunde Fashola administration last year began the Lagos Corporate Assembly, an assembly of all business operators in the state, where issues hindering their profitability in business could be addressed.

    However, Governor Mr Babatunde Fashola challenged the operators to think out of the box in repositioning the sector and make out of the home advertisement sector a vibrant platform.

    Fashola, who was represented by the Commissioner for the Environment Mr. Olatunji Bello, said issues such as the lack of empirical data to support media buying into the platform and even power could be mutually resolved if operators decided to look inward and reapply themselves to resolving the peculiar challenges to their businesses.

    “When there is no data to support advertisement buying,” he said, “the buyer is at sea and loss of market share to other viable options becomes the alternative.

    Also, the Managing Director, Insight Communications Mr. Jimi Awosika, likened a poor outdoor advertisement to an actor with a minor role (waka pass) in the thespian world said in a world of “democratised noise,” only an advert with a telling presence, creatively conceived and delivered would be remembered in the crowd.

    He canvassed more synergy between the advertisers, the advertising agency and the outdoor practitioners in such a way that the messages meant to be communicated had desired impact in the market.

    A resource person, Mr. Jerry Coasters of Out of Home Africa, while speaking on the challenges of OOH, re-affirmed that despite the challenges impeding the businesses, Nigeria remains an investment destination for investors.

    The Commissioner for Information and Strategy, Mr Leteef Ibirogba, challenged operators to rededicate themselves to professionalism, adding that the government’s desire to regulate the industry is borne out of the desire to ensure that marketing communication messages are better packaged and uniquely presented. “Government will always play the regulatory role because it is the way to go in sustaining business anywhere. If this business must continue and be profitable, it must be professionally packaged. If we all come together, we will get better for it,” Ibirogba said.

    The Director-General, Oyo State Signage and Advertisement Agency (OYSSAA), Mr. Yinka Adebodun, praised the Lagos State for blazing the trail in outdoor signage and advertisement industry.

    Over 200 exhibitors from Europe, Asia, America and Africa converged at the Eko Hotel expo hall to display their products as the Africa Signage and Outdoor Conference and Exhibition.

  • State-run telcos inhibiting growth

    State-run telcos inhibiting growth

    The telecoms sector has made enormous contributions to the growth of the gross domestic product (GDP) of some African countries. Nigeria is one of them. Experts have said this trend will be sustained with the appropriate policies. This growth projection may, however, remain wishful thinking as some state-run telcos in the continent are still pulling back the hand of the clock. These firms have kept prices high for customers and stalled the modernisation of many economies. 

    A decade ago, fierce battles were fought to get a number of Africa’s state owned telcos into private hands and to strip them of their monopoly privileges. This happened in all but two of what are now sub-Saharan Africa’s most successful economies: Ethiopia and Tanzania.

    These state-owned incumbent telcos stand in the way of developing a country’s economy for some reasons. Almost without exception, they are poorly run and the quality of infrastructure and service they provide is sub-standard.

    Because they are monopolies, they keep prices high for other players in the marketplaces, such as Angola, Cameroon, Ethiopia and Djibouti have some of the highest international, national wholesale and surprising retail prices on the continent.

    Because they are owned by cash-strapped governments, they are under-invested in and wages for their employees are often late. Chinese loans have helped with under-investment but cannot deal with the other problems identified here. Incumbents are significantly over-staffed and under-skilled.

    Hardly any one of them has a business strategy that is worth the paper it is printed on. Like the baobab tree, very little grows in their shades so they become the only pool for certain types of skills and these remain sub-standard.

    The easiest part of the Gordian knot at the heart of the divestment problem is that governments protect them because they fear what will happen if there are wide-scale redundancies. Therefore, they are reluctant to remove the monopoly protection from them. In places such as Mali, when there was more competition from Orange, the government Sotelma lost customers quickly and they largely stayed lost.

    However, governments such as Kenya and Ghana that bit the bullet on this issue lived to see another day. Some like Nigeria have made such a mess of the process that they have lost most of whatever the value might have been of the assets of NITEL and its mobile arm, MTel.

    Others like Niger and Zambia privatised only to see the collapse of Lap Green during the Libyan civil war mean that they had to re-nationalise. Zambia has held on to Zamtel because a new government felt that the previous deal to sell was not at a fair price.

    The trickier part of the conundrum is about politics. Often corruption extends back into the owners, the government. Politicians have a nasty habit of treating these telcos as cash tills that could be dipped into, particularly at election time. In the case of Swaziland, the ownership is directly held by the King. Why should he sell it off in those circumstances?

    Where corrupt money is not involved, patronage has gone a long way to help wreck what efficiency might notionally exist. Everybody’s brother who is connected potentially gets a job and the management jobs are plum positions under political control in many countries.

    African politicians would like to persuade the citizens that state telcos are a key part of closing the digital divide and joining the information societies. Because the rhetoric is warming and positive in intent, does not mean that they should be believed. All the countries identified are lagging behind in closing the digital divide.

    One of the key issues in African telecoms liberalisation has been the way that state monopoly incumbents hold up the development of a more complex, higher skilled market. If the incumbent sells wholesale capacity to local internet service providers (ISPs), you can be sure that its employees are going to those ISP customers and trying to poach them.

    Furthermore, these kind of state companies have no idea of the cost of providing wholesale capacity for two reasons: firstly, they lack the commercial ability to work it out and secondly, there is no benchmark price in the market.

    To tackle this problem, some governments have taken the sensible step of separating wholesale and retail functions. Ghana Telecom was sold on the basis that this had to occur and though there was skepticcism, it has worked better than expected. Botswana has done the same with BTC while holding on to both parts.

    Also, the World Bank has sponsored and helped financed operator consortia to eat away at the more egregious of these monopoly privileges such as landing stations and national networks (as in Burundi).

    So, there are 31 countries where there is a state owned incumbent telco that is either dominant or has monopoly privileges that hamper the growth and efficiency of the market.

    These are Algeria, Angola, Benin, Burundi, Cameroon, Central African Republic, Chad, Comoros, Congo-Brazzaville, DRC, Djibouti, Egypt, Equatorial Guinea, Eritrea, Ethiopia, Gambia, Guinea, Guinea-Bissau, Libya (which has several state entities), Mali, Mozambique, Namibia, Niger, Sao Tome, Sierra Leone, Swaziland, Tanzania, Zambia and Zimbabwe.

    Several of these countries are in political turmoil that make it imposible to do anything about privatising the incumbent telco. Others such as Comoros are going through the privatisation loop again.

    But in Africa, telcos to be privatised are in:

     

    Ethiopia

     It is the North Korea of telecoms regulatory practice and maintains what is now called EthioTelecom plays a crucial role in closing the digital divide. Its equipment and network procurement has been a mess and even with Chinese loans, it is still serving less customers than it might if it were in private hands. Prices remain high and market development was not helped by things like the ban on short message service (SMS) for several years. It remains, more or less, the only company in the market whereas other more open economies have seen jobs and skills flourish. Rather cheekily, we’re going to add their traditional enemy Eritrea in here as it is the only telco without an international fibre landing station or any plans to build one.

     

    Mozambique

     It is going through a phase of talking about privatising but don’t hold your breathe. Incumbent telco TDM retains a number of monopoly market privileges and charges neighbouring countries high transit prices for access to international fibre capacity.

     

    Cameroon

     There was one attempt to privatise Camtel and either the government didn’t like the price or no one came to the party. Despite the huge amount of pride some Cameroonians still have in Camtel, it is inefficient and its monopoly control of both the landing station and national fibre networks mean prices are higher than they should be. It refused World Bank money to create a national wholesale fibre consortium and its market development has been delayed by not dealing with this issue.

     

    Namibia

     Telecom Namibia is one of those cozy unnoticed monopolies. The country is small and has a relatively high standard of living compared to many of its neighbours. It has a relatively well-equipped national infrastructure but keeps national wholesale prices high. In an act of hubris it had a commercial strategy to get involved in neighbouring telcos in Angola and South Africa. Like the investments of South Africa’s Telkom, these were without exception a disaster.

     

    Zimbabwe

     It hasn’t been for want of trying as the endless stream of rumors about potential buyers show. But the recent spat about whether an ISP can run voice over internet protocol (VoIP) services shows that there are still red lines in what is now otherwise a competitive market. The issue here is that the government clearly wants more money than potential buyers are willing to pay. Something has to give and it’s probably the government’s negotiating position.

    Privatising a state-owned telco in the African context is about a government making a commitment to having an efficient economy that will produce sustainable jobs and grow the national economy substantially.

     

    •Culled from The Balancing Act.             

  • 700m euro Dutch Growth Fund coming

    700m euro Dutch Growth Fund coming

    Nigeria is one of the countries to benefit from the Netherlands’ 700million euro Growth Fund to be launched in July, the Netherlands Minister of Foreign Trade and Development Co-operation, Ms. Lilianne Ploumen, has said.

    The decision to include Nigeria in the preferred list of countries came on the heels of the discussion between Nigeria’s Minister of Industry, Trade and Investment, Mr. Olusegun Aganga, and his Dutch counterpart, last year.

    Aganga confirmed this during the Nigeria-Netherlands Business Forum in Lagos.

    The Netherlands minister is currently in Nigeria with a delegation of over 20 Dutch businessmen to tie win-win trade and investment relationships.

    The Dutch Growth Fund will enable the country’s entrepreneurs and SMEs to form Joint Ventures with their Dutch counterparts, expand their businesses and also invest in critical and thriving sectors.

    Aganga said: “Netherlands is one of Nigeria’s largest trading partners. Within the last five years, the value of trade between Nigeria and Netherlands has grown from about $2.5billion to about $10billion.

    “In addition to the fact that there are so many Dutch companies operating and doing well in Nigeria, there is also the E700m Dutch Growth Fund, which the Government of Netherlands is planning to establish which will be accessed by Nigerians in partnership with Dutch entrepreneurs who can bring in their know-how and innovation. This will make Joint Ventures easier between the two countries.

    “I want to commend the Dutch Government for this. When I went to the Netherlands about two years ago when the Fund was about to be created, I appealed to the Netherlands Minister of Foreign Trade and Development Co-operation, Ms. Lilianne Ploumen, that Nigeria should be included as one of the countries that will benefit from the Fund.”

  • PBOC’s Zhou: China’ll enjoy steady growth

    People’s Bank of China Governor Zhou Xiaochuan said he was confident China would enjoy steady growth and financial stability that would ensure market confidence in its currency.

    According to Reuters, Zhou said that China was in the process of liberalising its capital markets, and that markets would determine the extent of the use of the yuan as an international currency, which is also known as the renminbi (RMB).

    “Although we are faced with many challenges … we have full confidence that we will maintain steady economic growth and financial stability,” he said.

    “We will provide a very solid foundation, a very good macro environment for RMB,” he said.

    Zhou was speaking in London at a conference to promote financial links between Britain and China.

  • Cassava as driver of economic growth

    Cassava as driver of economic growth

    Given the increase in its production to meet rising demand from operators in the livestock feed, starch and bio fuel markets, cassava is gradually becoming a major cash crop and driver of industrial development. DANIEL ESSIET writes.

    A Few decades ago, cassava was not a major cash crop. But today, the story has changed. The crop is being transformed from a humble root crop into a money spinner of sort for farmers and a prized industrial input. Much of the turnaround in the fortunes of the crop is driven by increasing production and rising demand from the livestock feed, starch, and bio-fuel markets.

      The Nation learnt that because of the intervention on cassava under the Agricultural Transformation Agenda (ATA) of the government, demand for cassava has grown so strong that those who traditionally engaged only in subsistence farming  grow cassava as a cash crop. This made cassava a dynamic cash crop, helping to drive industrial development while delivering higher incomes to small holder farmers.

    Addressing a Cassava Adding Value for Africa Stakeholders forum in Lagos, the Coordinator, Cassava Value Chain, ), Regional Hub for East Africa, International Institute of Tropical Agriculture (IITA), Tanzania, Dr. Adebayo Abass, said cassava has multiple uses and markets, ranging from on-farm consumption as food or livestock feed to local wet or dry starch processing enterprises and large-scale commercial operations. Besides, wet starch extraction and transformation has been the business of cassava trading clusters.

    Abass said there was a tremendous opportunity for the industry to create 30 million jobs across Africa. These opportunities, he said, arise from demand for cassava starch and chips, which are likely to increase strongly in local and international markets, signaling a bright future for the domestic cassava industry. He said cassava has a huge potential and could turn from ‘a poor people’s food into a 21st century crop’ if grown according to a new environment-friendly farming model.

    According to him, cassava yields have increased due to the planting of new high-yielding varieties and the adoption of more sustainable production practices across the continent and many factories have invested in the upgrade of their production technology. With tremendous support coming from the government, he predicts that demand for cassava would continue to increase, adding that the domestic market would also see high demand for cassava by-products as raw material for enterprises. He noted that cassava farming is a great business and that there is a huge market for the commodity, which could be grown in all parts of the country.

    The Minister of Agriculture and Rural Development, Dr Akinwumi Adesina, said the cassava transformation project seeks to create a new generation of cassava farmers oriented towards commercial production and farming as a business. H said the plan was to link them up to reliable demand either from processors or a guaranteed minimum price scheme of the government.

    Represented by the Technical Adviser (Cassava Value Chain), Mrs. Toyin Adetunji, the Minister said the overall strategy of the cassava transformation is to turn the cassava sector in Nigeria into a major player in local and international starch, sweeteners, ethanol, High Quality Cassava Flour (HQCF), and dried chips industries by adopting improved production and processing technologies, and organising producers and processors into efficient value-added chains. To  boost  domestic  production of  cassava bread, the minister  said  the  Federal Government has given the Bank of Industry (BoI) the mandate  to manage the N4.3 billion Cassava Bread Development Fund to support Small and Medium Enterprises (SMEs), master bakers and large industrial cassava flour mills.

    He further said the fund would also be used to support research and development efforts on cassava bread, training of master bakers, and support for master bakers for the acquisition of new equipment for production.

    The Minister earlier said in another forum that the Federal Government was to provide machines for the cultivation of 29,500 cassava farms. This would be funded from the Cassava Bread Development Fund managed by BoA.

    Adesina said cultivating the farms would cost N915 million. He said the government would supply 1,770,000 bundles of planting materials to the owners of the farms at the cost of N708 million. In addition, the government would supply 118,000 bags of cassava-specific fertiliser at N708million and 88,500 litres of herbicides at N88.5 million to the farmers.

    According to him, the farmers are to produce 59,000 metric tonnes of cassava roots in line with the transformation plan. Adesina said the ministry was facilitating the procurement of 22 medium-scale high quality plants of 60 metric tonnes capacity to meet the annual demand for high quality flour. He said the ministry was carrying out the enumeration of all farmers, including the cassava farmers with their bio-data for input into a database. The objective, he explained, is to have a baseline upon which levels of intervention could be measured in terms of outreach and impact. In 2012, he said 21,059 farmers benefitted from free 315,898 bundles of cassava stems, while in 2013, 1,546,720 bundles of improved stems were distributed to 64,000 cassava farmers for 25,779 hectares expected to yield 644,475 metric tonnes of roots.

    He reiterated government’s commitment to building robust fresh roots supply chains for cassava processing plants; supporting large/medium HQCF mills, SMEs producing HQCF and master bakers who use 20 per cent of HQCF in bread production. According to him, HQCF can be used as an alternative for starch and wheat flour in a variety of industries. These include raw materials for the production of glucose syrups, industrial alcohol, bakery products, and in the production of adhesives, as an extender for plywood glues and as a source of starch in textile sizing. He said efforts have been made to develope a simple and appropriate process for producing HQCF that is suitable for baking. This was tested in the baking and confectionary industries; it was found successful and the cost implications were favorable.

    For the Minister, the introduction of cassava starch in the food and non-food industries has transformed the cassava utilisation industry. This is because it is used as an ingredient in manufactured foods (infant foods, confectionary, glucose, alcohol) and in non- food industries (glues, oil well drilling, adhesives, paper sizing and bonding, textile sizing and strengthening).

    He  said  Nigeria  is  one of the leading  production  of  cassava in the  world  and that  production has witnessed a tremendous increase  following  the introduction of high-yielding, disease-resistant varieties.

    The Country Manager, Cassava Adding Value for Africa, and President, Nigerian Institute of Food Science and Technology (NIFST), Prof. Lateef Sanni, called on the government to pass the bill regulating the institute to guarantee food safety. Cassava, he  noted, is used as food, dried chips for feed, alcohol, and starch, and for industrial uses and is the staple food crop of the nation’s population. Under CAVA, he said there is a roadmap to increase the national average yield per hectare, taking cognizance of the bright financial prospect being offered by the cassava sector.

    The Project Director, CAVA 11, Dr Kola Adebayo, said Africa has shown remarkable success in cassava processing. This followed the introduction of machines for most unit operations to ease the labour-intensiveness of the trade. He said there are processors involved in producing traditional foods or intermediate products, such as chips, high quality cassava flour and starch.

    According to him, there are some exclusive cassava-based products being traded in countries served by CAVA project. Adebayo said the project  has  worked  to  encourage  local fabricators  in processing technology, adding  that  farmers  can  now  have  access to locally fabricated mechanized and high-capacity equipment to get involved in the  business. The project gives farmers the opportunity needed to develop and test an integrated approach that keeps the benefits of cassava production and processing in rural communities. For him, cassava trade is expanding quickly, particularly in response to burgeoning exports of dried cassava chips and starch to China.

    Experts believe the cassava boom largely depended on local processing of cassava into wet and dry starch, which is then transformed into higher value food and industrial products – from noodles, glucose, and maltose to textiles, pharmaceuticals, cardboard and glue. Also, crop varieties were tested along with improved production, soil erosion control practices – specifically better use of fertiliser.

    The new cassava varieties from IITA’s collaborative breeding efforts have been grown on   cassava areas where they have doubled average crop yields. Shortages of cassava roots is however still a challenge though the higher yielding varieties and cassava roots are sourced from IITA and other research institutes.

    Experts, however, said how much farmers benefit from increased cassava trade depends a lot on two things: how well they are linked to markets and how well they manage their crop.