The Nation Newspaper

Tag: growth

  • ‘Lending to SMEs key to growth, development’

    A group, Association of Micro Entrepreneurs of Nigeria (AMEN), said improvement in lending to small and medium enterprises (SMEs) is key to boosting economic growth and development.

    Its President, Prince Saviour Iche, said access to finance remains a key challenge to SMEs and a stumbling block to recovery.

    He said banks and financial institutions are yet to tap into the huge market potential of SMEs’ financing.

    Iche, who spokein Lagos, last week, said although many financial institutions are said to have targeted the SMEs segment, the group was yet to feel the impact.

    He said SMEs lending needs to be driven like any retail product and that the number of bank branches suggests that there is a strong distribution of infrastructure in place.

    He said there is an untapped market for SMEs lending and that bridging the huge funding gap in the small business sector, would aid growth and development of this sector.

    He said SMEs requesting loans faced higher interest rates. Credit conditions continued to be tougher for SMEs as small businesses faced shortened maturities and increased demands for collateral.

    According to him, the business environment continues to be a challenge for SMEs. He explained that SMEs and entrepreneurs are crucial for tracing new paths to more sustainable and growth, adding that their role in developing and diffusing innovation and providing employment. However, they can only fulfil this role if they obtain the finance necessary to start and grow their businesses.

    He said there should be adequate funding for small businesses planning to expand into emerging markets.

    He said there are opportunities for small firms to be involved in international trade and that they lack funding to maximise these opportunities.

    He said SMEs were still being turned down for lending, and that those that get approved said the terms were often prohibitive.

    He said small and medium-sized enterprises account for a significant part of the working population.

    He explained that small firms are employing more Nigerians than large enterprises, and so specific policies are required to improve the situation among SMEs.

    According to him, the higher chance of enterprise growth,the greater the opportunities for job opportunities. He said measures should be put in place to improve the chances of SMEs employing more Nigerians.

  • CIPM brainstorms on corporate growth

    The Chartered Institute of Personnel Management of Nigeria, (CIPM) would use its Special Human Resource Forum to address topical human resource issues that could drive effective corporate performance.

    President, CIPM, Dr. Victor Famuyibo, said the forum was specifically targeted to address the needs of top human resource professionals and business leaders who have stakes in human capital management.

    According to him, the theme for this year’s event: Organisational development: Driver for effective corporate performance, was chosen to bring to the fore issues affecting human capital development around the world.

    He noted that the forum was also part of the institute’s way of contributing its quota towards human capital development adding the forum has been heavily subsidised by the institute to encourage members of the public to also attend.

    Famuyibo, who was recently appointed president of CIPM, said as part of its commitment to human resource development in Nigeria, the institute will partner with tertiary institutions within and outside the country.

     

    Guest speaker at the forum is Senior Manager, People and Change, PriceWaterHouseCoopers (PWC), Zimbabwe and Malawi, Ms. Ethel Kuuya, while Managing Director, Guinness Nigeria Plc, Mr. Seni Adetu will be the chairman of the event.

     

     

     

     

     

     

     

  • How firms grow the economy

    Over the years, brands and their parent companies

    have succeeded in building the economy of their countries and foreign hosts.

    This is possible because of the profits the brands make, employment opportunities they generate for citizens and Corporate Social Responsibility (CSR), including provision of electricity, roads, pipe-borne water and manufacturing plants.

    Such is the value they add to natural economy that the companies are really supported by the host countries in period of economic adversity.

    Between 1998 and 2007, Nokia contributed a quarter of Finnish growth rate and in the early part of the 21st century it employed more than 24,000 people. In a country where only natural resources are its vast forests, Nokia succeeded in putting Finland on the world map. It is the first phone manufacturer to own a care centre in Nigeria.

    The company also partnered with the Lagos State government to implement the house-numbering project.

    That is why Nokia users have access to a detailed offline map of Lagos State. They connect with their consumers, sell more with the new improved application that provides detailed offline map. Yet, Nokia has no manufacturing or even assembly plant in Nigeria.

    Among many Chinese companies, Huawei has distinguished itself as a telecommunications’ equipment manufacturer. Today, it is the largest telecoms equipment manufacturer.

    In 2010, the company announced a net profit of over $3 billion. In addition, Huawei runs a training facility in Abuja, where people are being trained. This facility is the first of its kind in West Africa.

    Samsung Group, which has about 80 subsidiaries with Samsung Electronics as its main firm, is responsible for 20 per cent of South Korea’s Gross Domestic Product (GDP). Samsung has a care centre in Nigeria for the servicing, repair and maintenance of its products. In partnership with the Lagos State government, the company also owns a Technical School in Ikeja, Lagos.

    After training, however, beneficiaries still have to go hunting for jobs. In effect, its impact on alleviating unemployment in the country is minimal. If Samsung had a manufacturing plant, the students would have qualified to work there since they already have the technical-knowhow.

    For instance, Nestlé—the consumer-goods company—contributed 15 per cent of Switzerland’s GDP in 2012. It has a vibrant Nigerian subsidiary with a functional manufacturing plant that employs many Nigerians. It has just opened a multi-billion centre in Agbara, Ogun State.

    Guinness storehouse, the home of Guinness, welcomed over one million visitors last year and served as Ireland’s major international major tourist attraction.

    Guinness Nigeria owns a manufacturing plant in the country and undertakes many CSR projects in the community.

    Coca-Cola has over 90,000 employees across more than 200 countries; it contributes immensely to the economy through the employment of many people and execution of projects spread across communities.

    With Toyota as its spearhead, Japan’s automobile industry contributed 10.5 per cent growth to that country’s economy in 2009. It has more than 300,000 employees with the majority being Japanese. Toyota has no manufacturing or assembling plant in Nigeria, yet it is the top selling automobile in the country. Same goes for Germany’s Mercedes Benz.

    Every year, Nigeria churns out graduates in their thousands from different universities with no assurance of employment. Yet, different foreign brands have turned the country into a cash cow.

    It is projected that the sales of smartphones in Nigeria would hit N900 billion by 2015, yet unemployment is at its all-time high, crime in increasing and government is complacent in tackling the malaise.

    These companies have defended their corporate actions. They are shortage of electricity as a crippling factor. The cumulative effect of the staggering cost of generating power in Nigeria is a substantial increase in the cost of production, which means that the goods produced are more expensive than expected.

    Setting up manufacturing and assembly plants should serve to help cut costs for manufacturers since it would mean a reduction in overhead costs such as transportation.

    But when weighed against the astronomical cost of generating power in Nigeria, locating plants outside the country seems a more logical and cost effective choice. The recent spate of insecurity in the country, has served as a further encumbrance as far as this goal is concerned. Would Nigeria continue to be a dump site for these brands? Who is to blame for this misfortune – the government or the companies?

    A Professor of Economics, Makinwa Olusegun, said: “A nation that would grow must first of all grow its manufacturing sector, encourage foreign investors to build their manufacturing plants in the country. Countries such as India grew like that. If we continue to be consumers and not producers, we would end up being stagnant and may not be able to cope with the level of unemployment that would hit the country in another 10 years.

    “The government should first of all create an enabling environment for local brands to grow, and also for foreign brands and investors; make importation almost impossible and make foreign companies see the cost effectiveness of stabling their either manufacturing or assembly plant in the country.

    “For example, many companies are running to Ghana to produce and then come to Nigeria to sell. They sell 90 per cent of what they produce in Ghana here, that fact is quite unnerving. This would surely continue if it does not get worse if the government doesn’t do anything about it on time to salvage the crisis,” he said.

     

  • Competition’ll drive banks’ growth, says RenCap CEO

    Competition’ll drive banks’ growth, says RenCap CEO

    Growth in the banking sector will be driven by competition and improved corporate governance structure, Chief Executive Officer, West Africa, Renaissance Capital (RenCap), Mrs Yvonne Ike, has said.

    In an interview in Lagos, she said growth in the sector would be driven by competition, which could spur fresh mergers and acquisitions taking some lenders to mega bank status. Besides, she said the growing interest of foreign investors in the sector would spur its growth.

    She said: “I think we would see a bit more consolidation in the banking sector. The banking sector is a very strong sector and it is going to continue to be very competitive. We see a bank like Guaranty Trust Bank (GTBank) that has a cost to income ratio of 41 per cent and has return on equity of over 20 per cent. So, we would see people struggling to compete and banks that have the platform and align their strategy with the growth sectors of the economy would outstrip others. We are gradually seeing more international banks looking at the market. This is something that is taking longer than we anticipated.”

    Ike listed poor infrastructure, security and corruption as major factors affecting the growth of the economy. She was, however, upbeat with the ongoing reforms, saying that the country would continue to record economic growth.

    She urged both local and foreign investors to take advantage of the investment opportunities in the economy. “The issues that Nigeria faces predominantly are around infrastructure, corruption and security. But we are seeing developments in those areas. But we are all impatient for it to move a little quicker. We do think that everything is moving in the right direction. That is why we think that the country is an investment destination. You can’t wait for everything to be fixed before you invest. We think that the time to invest especially in the banking sector is now,” she declared.

     

  • Nigeria achieves 7.1% growth in Q4

    Nigeria’s economy grew by 7.1 per cent in the fourth quarter, the Central Bank of Nigeria (CBN) has said.

    Growth was 6.9 per cent in the previous three months and 7.7 per cent in the same period the previous year, the bank said in a report on its website, citing figures from the National Bureau of Statistics.

    The pick up was largely driven by industrial growth, with the non-oil sector expanding 8.2 per cent and accounting for 87 per cent of all output, the bank said. Agricultural “areas adversely affected by the floods during the second half of 2012 were yet to recover fully from the impact.”

    The fiscal deficit of the country rose to N420.8 billion or 3.9 per cent of economic output, in the fourth quarter. That compares with a targeted deficit of N284.1 billion for the period and a gap of N489.5 billion in the previous three months, the bank said.

     

     

     

  • Security vital for growth, says Aregbesola

    Security vital for growth, says Aregbesola

    Osun State Governor Rauf Aregbesola has said security is a pre-requisite for national development.

    He said Osun is safe for investors.

    Aregbesola spoke at the weekend in Osogbo, the state capital, after receiving the 2012 Banker’s Award for Good Governance from the Osogbo Banker’s Clearing House Committee.

    The governor, who was represented at the Dinner/Award Night by the Commissioner for Finance, Budget and Economic Planning, Dr. Wale Bolorunduro, said Osun is the most peaceful place in the country.

    He said: “Very soon, the state government will complete its arrangement to provide area surveillance, which will help the security personnel to move quickly to crime scenes and rid the state of criminals. This will be funded with the derivative fund.

    “It requires a collaborative effort, especially between the banks and the government. We will call on you soon when it is time to inaugurate our Security Trust Fund (STF). We will need the apex and commercial banks to partner with us.

    “I urge you to provide sufficient fund to ensure that residents and their property are safe. I assure you that the government will create the enabling environment for business to thrive.”

    Aregbesola thanked the Controller of the Central Bank of Nigeria (CBN), Osun branch, Mr. Joseph Oyinbo Atteh, for the support for his administration and pledged to improve on their relationship.

    A Deputy Director at CBN, Mr. Samuel Agagu, delivered a lecture, entitled: “Adequate security: Pre-requisite to national development- The role of banks and the CBN”.

    Agagu said the insecurity in the nation has caused poverty, hunger, diseases, fear, uncertainty and disregard for the sanctity of human life.

    He urged commercial banks to cooperate with CBN in the monitoring of financial institutions.

    Atteh said banking and security were indispensable twins that are critical to national development.

    He said: “Today, security is a major challenge in our nation. The challenges are multifaceted across geo-political zones. There is a positive relationship between security and development. It is time public interest became a paramount factor in both banking and security arrangements, not as ends, but because the two sectors are vulnerable and they facilitate national development.”

  • Senate panel: quality products vital to SMEs’ growth

    The Senate Committee on Industry has said standardisation is essential to the growth of Small and Medium Scale Enterprises (SMEs).

    Its Chairman, Senator Nnenadi Usman said for SMEs to be relevant, there is need for them to meet the basic standards so that their goods would be acceptable.

    She was speaking during the committee’s tour of Ethiopia, Kenya and Tanzania.

    The essence of the visit, she said, was to boost trade within and outside the region, adding that the basic thing necessary for economic growth is the development of the SMEs.

    Usman said the Standards Organisation of Nigeria (SON) has a critical role to play in reducing substandard products and encouraging other African countries to set up office and agencies to develop and maintain standards.

    She said the visit would explore Ethiopia and map out areas of collaborations between both it and Nigeria in developing and maintaining standards.

    “Our SMEs should be revitalised to stop dumping. The way forward is to empower SON to train SMEs owners to conform to standards.This would increase their productivity, expand their business; leading to more income and wealth creation,” she said.

    She pointed out that Ethiopia also faces the same challenges as Nigeria in terms of dumping substandard goods, adding that Ethiopia has a new way of resolving their challenges which Nigeria must adopt.

    She said the major challenge most African countries are facing is importation because most importers like to bring in goods at cheaper prices. He said when African products try to compete in the market, they do not do so well.

    “It is cheaper to go to China to make a substandard good than to make a good of standard quality in Nigeria. Most people prefer to use cheaper goods even though it does not last. We have had influx of substandard cheap cables from China where people used to build houses which later resulted in fire outbreak destroying lives and property,” she said.

    She said: “The issue of funding is critical to maintaining standard. We have learnt something about the funding of the agency itself because without fund, the agency will never work properly and it will not produce any result.”

    According to her, the summary of the three visits to the three countries showed that they have spent a lot of money to improve their standards and said that they all have well-equipped laboratories that can compete globally.

    “I think Dr. Odumodu is doing a great job and if better equipped he would do more because he has the will and the capabilities,” she said.

    She said when one organisation should look at standards, ensuring that goods that are substandard do not enter the country.

     

     

     

     

     

     

  • UNIDO predicts real sector’s growth

    United Nations Industrial Development Organisation (UNIDO) report has disclosed that Nigeria and other developing and emerging economies enjoyed significant growth in the manufacturing sector in 2012, with prospects for more growth in 2013.

    A release by UNIDO noted that developing and emerging industrial economies in general maintained a strong rate of Manufacturing Value Added (MVA) growth in 2012, despite some deceleration in industrial production due to a decrease in demand for exports.

    According to the report, the growth rate of world manufacturing output remained low in 2012 due to the prolonged recession in industrialised countries and its negative impact on developing and emerging industrial economies.

    “Developing and emerging industrial economies’ combined share of world MVA in 2012 stood at 35 per cent.

    “World manufacturing output grew by 2.2 per cent in 2012, significantly lower than the 3.1 per cent projected midway through last year.

    “The world’s industrialised countries experienced particularly low MVA growth, with some dynamism in North America and East Asia was largely negated by the sustained recession in Europe. MVA of industrialised countries grew at an average rate of just 0.3 per cent in 2012,” the report stated.

    According to UNIDO, the global economic crisis beginning in 2009 has not only forced huge job cuts in the manufacturing sector of industrialised countries but has also pulled labour productivity down.

    It says net manufacturing output in the world’s eight major industrialised economies (G-8) has fallen by a much higher rate than the number of employees, reflecting the fact that many businesses retain a skeleton workforce even during periods when there are no or few orders for their products.

    “In the longer run, the industrialised countries’ share of world MVA will remain high, as economic progress will mean that more countries will be elevated into the group of industrialised economies,” the report says.

     

     

     

  • ‘Nigeria’s growth accelerated to 7.1% in Q4’

    Nigeria economy expanded 7.1 per cent in the fourth quarter, the Central Bank of Nigeria (CBN) has said. Growth was 6.9 per cent in the previous three months and 7.7 per cent in the same period the previous year, the bank said in a report on its website, citing figures from the National Bureau of Statistics.

    The pickup was largely driven by industrial growth, with the non-oil sector expanding 8.2 per cent and accounting for 87 per cent of all output, the bank said. Agricultural “areas adversely affected by the floods during the second half of 2012 were yet to recover fully from the impact.”

    The fiscal deficit of the country rose to N420.8 billion or 3.9 per cent of economic output, in the fourth quarter. That compares with a targeted deficit of N284.1 billion for the period and a gap of N489.5 billion in the previous three months, the bank said. “The deficit was financed mainly from domestic sources, particularly through the issuance of additional Federal Government of Nigeria Bonds,” it said.

  • ‘Weak infrastructure, ICT application, others retard growth’

    ‘Weak infrastructure, ICT application, others retard growth’

    Operators in the insurance industry have identified weak infrastructure and low application of information communication technology (ICT) as some of the challenges that are impeding the growth in the industry.

    They argue that unless these challenges are tackled, efforts to deepen insurance penetration and increase its contributions to the nation’s gross domestic product (GDP) will never make the desired impact.

    The Group Managing Director, Mutual Benefits Assurance Plc, Mr Akin Ogunbiyi, also another problem is the dearth of affordable insurance products for clients.

    “If we really want to increase insurance penetration in this country, we have to look at the products and services that the common man can benefit from, to meet his needs, creating value for them and making it affordable,” he said.

    Assistant General Manager, Corporate Communication and Brand, Sovereign Trust Insurance Plc, Segun Bankole, said the untapped potentials in the Life segment of the insurance industry is very large and a lot of Nigerians are beginning to see the positive benefits of taking up the policy.

    He said Sovereign Trust is achieving a record 25 per cent increase in their market penetration every year. He said the SWIS – F POLICY, which his company offers Nigerians, has a lot of benefits. If during the period of insurance, the insured sustains bodily injury solely and independently of any other cause by accidental, violent, external and visible means resulting in death or disablement, the Company pays compensation or in the case of death, to his legal representatives.