The Nation Newspaper

Tag: growth

  • Ours is a jobless growth economy, says Utomi

    Ours is a jobless growth economy, says Utomi

    Respected economist Prof Pat Utomi speaks with ADEKUNLE YUSUF on the state of the economy.

    What are the best indices for measuring the actual health of any economy?

    There are many ways that you can measure the health of an economy. One of my favourite ways is to assess it through the quality of life of the people. Very closely tied to the quality of life of the people is the level of employment or unemployment, because if people are going to live decent, quality of life, they need to have income. And to have income, they have to be employed. There is the United Nations Development Programme (UNDP) Human Development Index (HDI). The HDI tells you a great deal about the quality of life of the people. UNESCO and UNICEF also have indicators that are generally tied around infant mortality, education of young people and all of those things. They matter a lot because in the modern world, you can look at the state of human capital by the quality of education in an environment and easily extrapolate it with the quality of life of the people because the better you are educated, the stronger the human capital, the more productive, the greater the output. So you can use all of those to measure the performance of the economy. But there are some old traditional measures for measuring the economy; they are based on output per person. That is what the GDP and co focus on.

    Which one better measures the status of the economy?

    One of problems of using GDP or output to measure the economy is that you can have a situation in a country where some individuals can have an unfair proportion of the output of the country. It is even more problematic when what they get is significantly disproportional to their input as a situation where you have people who have a lot of money without having a business that is creating wealth or employment. That kind of economy is likely to create a lot of social crises and tensions. Why? If you have no jobs being created as a result of growth, which is what we have in Nigeria now, the so-called jobless growth economy, the tendency that you will have many people who will become militants, insurgents and many people who will take to a lot of crime – obviously, when you have that kind of situation, we can also say that you don’t have development. The most meaningful development is the one that creates a lot of middle class. There might be a few people outstandingly rich and a few people very poor, but most people will generally be middle class people who can live decent quality of life, send their children to good schools, have the means of going to and fro places that are essential, and have their homes. A situation where a few people get very wealthy can be broken into two: a few people getting wealthy with production, as was in the case with Brazil, and a few people getting wealth with very little production where national revenue is mainly extracted as rent or stolen by the way of corruption, as is the case in Nigeria. So the use of GDP as the basis for evaluating economic growth has limited value in terms of issues that are before us.

    So is the national economy growing or what?

    Many years ago, I used to use the cliché saying there are lies, there are damn lies and there are statistics. There is iro (lies), and that is babanla of iro (big lies). With statistics, you can tell a lot of lies about anything because statistics is the father of lies. But the most important thing is the quality of life of the people. It is correct to say the Nigerian economy is growing at 7 per cent, but what is the value of the growth when the people cannot feel the impact of the growth? It is growth for those who are profiting from it, who are very few.

  • ‘Fayemi, others responsible for Christ’s School’s growth’

    Elder statesman Chief Deji Fasuan has attributed the development of Christ’s School, Ado-Ekiti, Ekiti State, to its old students, including Governor Kayode Fayemi.

    Fasuan said the school would have deteriorated if not for the contributions of the old students in the last 30 years.

    He spoke at a news conference on the school’s 80th anniversary.

    Fasuan lamented the “entire neglect of the school by the old Ondo State”.

    At the news conference were old students, including Very Rev. Dr. John Aina, Dr. Ade Fasanmade, Chief Francis Daramola, Mrs. Idowu Ogunrinde (Principal, Christ Girls’ School) and Chief Olusola Bayode, President, Christ’s School Alumni Worldwide.

    Fasuan, who retired as permanent secretary in the old Ondo State, said: “Individual alumni members have built classrooms and sank boreholes in the school. There is a member who spent N20 million over a period of time on various projects in the school.

    “Even Fayemi, before he became governor, gave the school a giant size power generator and renovated some classrooms. The situation was worse when we were in the old Ondo State, when the school was virtually neglected.”

    Fasanmade, who is the chairman of the home branch of the association, said the alumni was not considering the return of the school to missionaries.

    He said: “If improvement in quality teaching and learning would be possible through the return of the school, we accept it. But we are not looking at the return of the school as a singular means to achieve this.

    “The anniversary would feature presentation of awards of excellence/honour to seven monarchs who are alumni members and others.”

  • ‘Insurance panacea for nation’s growth’

    Insurance plays a critical role in an economy’s savings for productive investment and growth, an octogenarian and industrial giant, Deacon Gamaliel Onosode, has said.

    He spoke at the yearly International Education Conference of the Chartered Insurance Institute of Nigeria (CIIN) in Lagos.

    He said the insured, insurer and the nation would be better off if lives and properties are insured.

    The event has as theme: The nation in transformation: Repositioning the insurance industry.

    He called on the public to take advantage of insurance, urging insurers to ensure prompt payment of claims.

    If this is done, he said, insurance business would prosper while the nation would also gain from boost.

    Onosode, who was the Special Guest of Honour at the event, called on insurers to embrace discipline, adding that for an organisation to grow, there should be commitment to discipline.

    Prof. Pat Utomi, Founder and Chief Executive Officer (CEO) Centre for Values in Leadership (CVL), said using pooled risks to reduce uncertainties should be a major role insurers must play in the nation’s transformation.

    Speaking on the topic, Leadership and strategy governance challenges in a transforming economy, he said insurers should also play the role of developing venture capital in its investment and engage in risk and capital formation in the long term.

    He called on insurers to be more proactive and rise to the challenge of questioning whatever seems inimical to growth and development.

    Utomi said Nigeria has the potential to become great in the comity of nations if people contribute their best to it.

    Chairman, First Bank Capital, Mrs Ibukun Awosika, called on insurers to fashion new products that could support industries.

    Outgoing President of the institute, Dr. Wole Adetimehin, pointed out that Nigeria’s transformation is evidenced by activities in both public and private operations in the economy.

    He, however, noted that the conference contemplated the challenges of transforming financial services equation, with emphasis on issues in the financial and regulatory intermediation by the regulatory bodies such as the Central Bank of Nigeria (CBN) and the National Insurance Commission.

    He added that the conference’s theme was borne out of the institute’s commitment to the provision of platforms for continuous professional education and the need to engage its members in constructive revaluation of the business environment.

    “As professionals, our contributions to nation-building cannot be overemphasised. The on-going transformation process which our nation is passing through represents the most critical phase of nationhood and therefore requires our collective support as Insurance professionals, especially at a time when the most challenging and unprecedented developments continue to threaten our co-existence as citizens of one nation,” he said.

     

  • Skye Bank rethinks growth strategy

    Skye Bank rethinks growth strategy

    Skye Bank Plc is rethinking its growth model into a more assertive and forward-looking option that seeks to consolidate its historical value-based organic growth strategy with expansionary and competitive verve with a view to leapfrog and sustain the bank into a top tier bank within the medium to long term.

    Focused on internally-driven value creation, Skye Bank had raised comparatively lower capital and did not make any acquisition in the rush for large capital and acquisitions by several banks. The new growth model, according to a statement from the bank, will combine this historic growth model with a stronger competitive strides aimed at exploring all available opportunities for growth.

    The bank is expected to drive growth largely internally through increased capitalisation and market-facing initiatives but it would also seek to acquire value-adding commercial banking assets that could leverage its balance sheet, spread and customer base.

    The lender has outlined a three-year short-term plan that is expected to double its balance sheet and customer deposits by the end of the plan in 2015. Skye Bank’s total assets opened 2013 at N1.07 trillion while customer deposit stood at N790.1 billion.

    The bank is also expected to significantly improve its profitability in tandem with the targets for total assets and customer deposit.

    A new strategy framework that emanated from a brainstorming retreat between the board and management of the bank and top-flight professional advisers indicates that the bank needs to consolidate its size and expand both organically and inorganically.

    The retreat, meant to chart a new course for the bank, outlined several strategic initiatives to achieve a three-prong objective of continuous survival, enhanced industry ranking and improved returns to shareholders.

    The Asset Management Corporation of Nigeria (AMCON) has announced plan to sell its three banks- Keystone Bank, Enterprise Bank and Mainstreet Bank – starting with the sale of Enterprise Bank. AMCON indicated there were more than 20 bidders for Enterprise Bank.

    Shareholders of Skye Bank last Wednesday approved resolutions empowering the directors of the bank to raise more than N81 billion in new equity and debt capital. At the annual general meeting of the bank in Lagos, shareholders approved a resolution to enable the board raise N50 billion in new equity funds and as much as $200 million in tier 2 capital, otherwise known as debt or quasi-debt issuance. Shareholders also empowered the board to absorb over-subscriptions, which implies the bank could access more than face target of N81 billion.

    Group managing director, Skye Bank Plc, Mr. Kehinde Durosinmi-Etti, last week explained that the bank would raise tier 2 capital before the end of the third quarter of 2013 and seek additional funds through tier 1 issue in the nearest future.

    He noted that given the way the bank has optimised its current capital base, additional capital would lead to better value creation for all stakeholders.

    He said the bank has been strengthening its processes and resources to improve efficiency, reduce costs and enhance risk management noting that the bank is in the process of finalising the centralization of its back-office.

    Key extracts of the audited report and accounts of the bank for the year ended December 31, 2012 showed that profit after tax leapt to N12.64 billion in 2012, representing an increase of 872.6 per cent on N1.30 billion recorded in 2011. Profit before tax had jumped by 480.9 per cent from N2.84 billion in 2011 to N16.51 billion in 2012. The bank maintained steady top-line in 2012 with net interest income and net non-interest income of N44.50 billion and N22.60 billion. On the basis of the impressive bottom-line, it increased cash dividend per share from 25 kobo paid for 2011 business year to 50 kobo for 2012.

    Interim report and accounts of Skye Bank for the first quarter ended March 31, 2013 also showed that gross earnings rose by 24.6 per cent to N34.69 billion in first quarter 2013 as against N27.84 billion recorded in comparable period of 2012. Interest income had grown by 18.2 per cent from N23.04 billion to N27.22 billion, underlining the increasing market share in the banking industry. Profit before tax stood at N4.63 billion as against N4.09 billion in corresponding period while profit after tax rose from N3.48 billion to N3.71 billion.

  • Vocational education as tool for national growth

    Vocational and Technical Education has been defined in various ways by different authors.

    The United Nations Educational, Scientific and Culturals Organisation (UNESCO) defined Vocational and Technical Education as a comprehensive term referring to the educational process when it involves in addition to general education, the study of technology and related science and the acquisition of practical skill and knowledge relating to occupation in various sectors of economic and social life.

    This form of education covers the process of producing skilled manpower for self-reliance and national development. Vocational education is part of total education given to individual in order to acquire the necessary skill and knowledge required for employment in a specific occupation.

    Nigeria as a developing country is highly endowed in both human and natural resources, which is evident in its huge population prospering in various fields of human endeavour including agriculture and the farm product etc (Nanchen and Yacknan, 2007).

    As we continue to move towards a globalised economy, it is apparent that what matters is not how much natural resources a nation possesses but how much value it is adding to these resources, whether they are material or human.

    The only veritable and potent instrument needed to add value to both human and material resources is technical education and training. This has been affirmed by (Benson, Lawrence and Bashiri, 2008) that technical and vocational education and training have been recognised in the world over as tools for alleviating poverty and enhancing technological development.

    Therefore, the salvation of a developing country like Nigeria particularly in this 21st century depends, to a great extent, on sound, relevant, modern and functional technical and vocational education and training.

    This makes it necessary for Nigerian to put emphasis on this form of education as an indispensable element in capacity and competent building for social economy growth and development.

    This is so because technical and vocational education provides the skill necessary for self-employment and employment creation for others.

     

    Omowunmi is a postgraduate student, UNN

  • FirstBank targets 10% loan growth this year

    FBN Holdings Plc aims to grow loans 10 per cent this year for its banking unit, down from 23 per cent growth in 2012, as it tries to balance its capital needs with creating risk assets.

    The CEO, FirstBank, Bisi Onasanya, told Bloomberg at the weekend that the lender had a capital adequacy ratio of 21 per cent and it wanted to balance its capital needs with loan growth, as it had no plan to raise fresh equity capital in the short term.

    FirstBank has deepened its retail dominance as demonstrated with the launch of key retail bank products such as Firstmonie, a mobile financial services solution that enables subscribers conveniently perform banking transactions. The lender said that with the establishment of a few credit bureaux, the industry is now headed towards credit cards and therefore, developed a naira credit card in the last quarter of 2012 and has been aggressively driving it this year.

    The bank said its retail business goals were achieved by further segmentation of the market into affluent, mass and Diaspora markets while providing affordable and segment specific products for each segment. The lender said it has also improved its level of service delivery across all delivery channels by investing in its people and deployment of state of the art Information Technology infrastructures to support the business.

    The bank said it has been successful in growing its consumer/retail loan portfolio and considerably reducing incidence of loan loss often associated with retail lending. These successes, it said, were recorded due to the availability of a vast array of products for each retail segment, superior branch network/support system and improved credit monitoring culture.

     

     

  • Fed Govt partners private sector on economic growth

    THE Federal Government is seeking collaboration with the private sector on the periodic assessment of the nation’s economic growth

    The organisations include the Institute of Directors (IOD), National Economic Summit Group (NESG), Manufacturers Association of Nigeria (MAN) and the Nigerian Employers’ Consultative Association (NECA).

    The government has directed its ministries and agencies to liaise with some sectors to move the business sector forward.

    Vice President Namadi Sambo, said during the IOD’s Convention and Exhibition in Lagos, that the country needs stakeholders who would contribute to the development index and ensure that such growth and development were sustained.

    Speaking on Optimising performance in a growing economy, Sambo, who was represented by the Head, Federal Civil Service, Buka Aji, said the Gross Domestic Product (GDP) of the country stood at 7.1 per cent last year, as against 7.4 per cent in 2011.

    He assured that the government would fast-track measures that would make the country become one of the most industrialised nations by 2025.

    “Like any other human problems, the government will be delighted to see that IOD and other well-meaning groups would forward proposals to us on how to better combat all the challenges facing the economic situation of the country,” he said

    The Chief Executive Officer, Nigerian Stock Exchange,Oscar Onyema, said good economic and corporate governance, including transparency in financial management were essential prerequisites for promoting economic growth and reducing poverty, promote market efficiency,as well as encourage private financial flow

    He said corporate governance practices in companies is at varied stages of implementation. He, however, added that registered companies should be accountable for their corporate practices, adding, the banking sector is leading in this regard.

     

     

     

     

  • Cadbury Nigeria assures on future growth

    •Nigerian Breweries raises dividend payout policy to 80%

    Cadbury Nigeria Plc yesterday outlined strategic priorities for increasing shareholders’ value in the years ahead as shareholders unanimously approved the distribution of N1.6 billion as cash dividends- the company’s first payout in seven years.

    At the Annual General Meeting at The Civic Centre, Victoria Island, Lagos, the board, management and shareholders of Cadbury Nigeria were about the future of the food drink company. They approved dividend per share of 50 kobo, and product-gifts to attendees, appeared to denote the full turnaround of the company.

    Audited report and accounts of Cadbury Nigeria for the year ended December 31, 2012 showed marginal decline in sales, but improved cost and financing management squeezed out more profit than the previous year. Although tax provisions impinged on net earnings, underlying profitability ratios showed stronger performance.

    Gross profit margin inched up to 33.1 per cent in 2012 as against N32.7 per cent in 2011. Profit before tax margin also improved modestly from 14.8 per cent to 16.4 per cent. Both indices indicated that the company witnessed improvement in average profit per unit of sales, in spite of the decline in actual figures. While total sales dropped marginally by 1.6 per cent from N34.11 billion to N33.55 billion, profit before tax increased to N5.51 billion in 2012 compared with N5.05 billion in 2011. However, increase in tax provisions reversed net profit after tax by 5.9 per cent to N3.46 billion as against N3.67 billion in previous year.

    Addressing shareholders at the meeting, chairman, Cadbury Nigeria Plc, Mr Atedo Peterside, said that though the company ended the 2012 business year on a very strong footing, the company remains committed to sustaining the current transformation of its business.

    According to him, the focus on delivering sustainable growth, efficiency and capability will remain the platforms through which the company would deliver increasing shareholder value in 2013.

    He outlined the strategic priorities of the company in 2013 to include investment in the equity of its leading brands, especially Bournvita, TomTom and Tang; increased innovation and introduction of new and exciting consumer brands and scaling up of the company’s route-to-market transformation programme.

    Peterside added that the company would sustain focus on quality and drive improvements in productivity and operational efficiencies with a view to maximising the company’s competitive advantage.

    He pointed out that the company would focus on building a strong sustainable business and developing an organisation with high potential talent.

    In a related development, Nigerian Breweries Plc has increased its dividend payout policy to 80 per cent of its net profit from the initial 60 per cent.

    Speaking at the company’s Investor Forum in Lagos yesterday, Managing Director, NB, Mr Nicholas Vervelde, said the company invested N36 billion on expansion of its various projects to increase its market share value and improve on dividend payment.

    According to him, the amount was an increase of 98 per cent over the 2011 figure. This he said was for business expansion, which will prepare the company for the expected growth in the industry and support growth of its brands.

    “The company is well positioned to take advantage of any growth in the market to sustain its leadership position and maintain healthy yield on investment for its investors. This excellent revenue performance is supported by the continuous investment in rich portfolio of brands as well as their route to the market,” he said.

    The company turnover rose by 19.7 per cent to N252.7 billion in 2012. Profit for the year stood at N38.1billion.

    He said that this outstanding result was underpinned by a robust top line growth of 20 per cent that significantly outperformed the market in a very challenging year.

    The Nigerian Breweries boss explained that the positive revenue resulted from volume growth and reflected the continuous improvement in the supply of the company’s products. This he said, was also supported by the continuous high investment in their rich portfolio of brands.

    Meanwhile, Cadbury Nigeria’s market consideration improved by N1.40 to close at N38.90 per share as strong resurgence in bullish trading halted a two-day decline at the Nigerian Stock Exchange (NSE).

    Aggregate market value of all quoted equities rose to N11.346 trillion as against its opening value of N11.131 trillion. The All Share Index (ASI), the main value-based index for the stock market, trended upward from 34,815.24 points to 35,486.44 points.

    Nestle Nigeria and Nigerian Breweries led 39 other stocks on the gainers’ list with addition of N5 each to close at N915 and N170 respectively. Dangote Cement rallied N3.16 to close at N178.22. UAC of Nigeria rose by N1.10 to N71.10. Zenith Bank added N1.05 to close at N21.40 while Guaranty Trust Bank chalked up N1 to close at N27.

    With 41 gainers, there were only 12 losers in the overtly bullish market. Total Nigeria recorded the highest loss of N4.80 to close at N145.20. Beta Glass placed second with a loss of 20 kobo to close at N9.80. Union Bank of Nigeria dropped by 12 kobo to N9.58 while Costain (West Africa) lost 10 kobo to close at 96 kobo.

    Investors staked N5.02 billion on 390.69 million shares through 5,680 deals. Banking subgroup accounted for 259.27 million shares worth N2.24 billion in 2,343 deals.

     

     

     

     

  • Low adoption of cloud computing threatens growth

    THE low adoption of cloud computing technology may stop Nigeria from achieving growth in the economy, the Group Executive, Business Development, Director BCX Group, John Jenkins, has said.

    Speaking with The Nation, he said: “It would take a huge amount of speculation to put a number to this growth, but it can be argued that without cloud computing, the Nigerian economy would find it difficult to meet the predicted double digit growth percentages generally expected by economists.

    “In most markets, cloud spend is merely traditional information technology (IT) infrastructure and support spend redirected towards a complete service, so our clients traditionally see the opposite; a reduction in their total cost of ownership as opposed to an increased spend. Of course there is a case where there is an untapped market where clients that can benefit from IT infrastructure are not spending any money due to the lack of appropriate solutions.”

    According to him, the cloud technology holds huge potential to cutting down IT spend of firms, adding that it will also remove the barriers of indigenous firms in the country face to compete on the global scene.

    “Conservatively, this new market (cloud computing) can translate into a net growth in IT spend of (between) $3 and $5 million (I calculate 20 per cent of Gartner forecasted IT Services growth of $30 million) per annum over the next three years.

    “But as cloud services remove the barriers to entry for Nigerian companies to compete globally, the positive impact on the larger economy is immense,” he said.

    Acording to him, like the Nigerian economy, the IT sector is vibrant and growing at a pace where, unfortunately, appropriate skills are difficult to come by.

    “The economy is growing at a pace where appropriate skills are hard to come by, and often the available skills were developed so quickly that they have not yet matured in terms of experience and best practices. Likewise, resources such as spares and capital are often not available for planned and strategic initiatives as they are quickly absorbed into expansion projects. The IT fraternity in Nigeria has found innovative ways to overcome these challenges, but at the expense of best practices, long term strategy and scalability,” he lamented.

  • Govt committed to cities’growth

    The Federal Government has expressed its commitment to the development of the aviation sector through the creation of airport cities as centres of economic growth with the aerotropolis concept.

    The Senior Special Assistant to the President on Aviation Reforms, Ms Anne Ene-Ita, stated the readiness of the Federal Government in a message she delivered on behalf of President Goodluck Jonathan at the Airport Cities (Aerotropoli) Conference, in Johannesburg, South Africa.

    The government, Jonathan said, is set to position the sector as a catalyst for the growth of key economic sectors, such as travel, tourism, agriculture, rural development, trade, commerce, manufacturing and communications technology; with all of the attendant infrastructure development critical to sustainable growth of any economy.

    She said the aerotropolis Nigeria, specifically targets a diversification of the economy through increased economic activity, technology transfer, increased trade through global partnerships, value chain development and rural transformation.

    These, he said, would come handy, especially in exploiting the country’s agro-export opportunities, employment potential, new business development and private sector investment, both local and foreign.

    The President said: “The Federal Government of Nigeria remains fully committed, in partnership with the private sector to transform Nigeria into the foremost investment destination in Africa with well connected, economically efficient; offering sustainable, secure and attractive returns on investment.”

    “We are committed to supporting private sector-driven Aerotropoli to rapidly become the commercial nexus, anchoring aviation-enabled trade in goods and services; and driving business development from the aerotropolis to neighboring cities, towns and the entire West African region”, the President declared.

     

    Meanwhile, potential investors attending the Aerotropolis Conference have continued to flock to the Nigeria Aerotropolis Exhibition Pavillion making enquiries on the business opportunities which the project portends for both local and foreign investors. They have generally showed huge interest in the projects and are receiving very useful information from the Ministry of Aviation officials who are readily on hand.

    The Airport Cities Conference (Aerotropolis) Johannesburg, South Africa 2013 has provided a veritable platform for potential investors, aviation stakeholders and the general business community to brainstorm, exchange ideas and develop contacts for the enhancement of the new airport cities concept.

    Nigeria’s delegation is led by the Senior Special Assistant (SSA) to the President on Aviation Reform, Ms Anne Ene-Ita.

    Other key members of the delegation include the Permanent Secretary in the Ministry, Mr George Ossi, the Managing Director of FAAN Mr. George Uriesi, amongst others.