The Nation Newspaper

Tag: growth

  • Afe Babalola: Nigeria’s growth depends on people’s ability

    Eminent lawyer, Chief Afe Babalola, has said Nigeria’s growth depends on the people’s ability, attitude and the country’s economic, social, political and cultural institutions.

    He spoke yesterday when he visited the Alaafin of Oyo, Oba Lamidi Adeyemi III, to commiserate with him on the fire that gutted a section of his palace.

    Babalola described Alaafin’s palace as second to none in Yoruba land.

    He said the ancient edifice should be preserved and given a befitting status as a national monument.

    Said he: “We will rebuild the palace because it is the pride of the Yoruba nation. “There is need for a comprehensive and integrated review of the past of the people who make up the entity called the Yoruba.”

    Babalola presented a cheque to the monarch as an interim step, with a pledge to rebuild the palace.

    Oba Adeyemi thanked Babalola for his support. He described him as a “committed, selfless and God- fearing Nigerian whose contributions to human development are unequalled.”

    He went on: “In and out of law, Afe Babalola towers above his contemporaries. His university is not only one of the best in the world, his law chamber remains a reference point for others in the legal profession. None of the lawyers who have worked in Afe Babalola’s chamber could be ignored in matters of jurisprudence. They excel in the cases they handle.”

    Also at the palace was one of the children of the late Ooni of Ife, Prince Bowofade Aderemi, who presented some artefacts to the Alaafin.

    He described the monarch as “a father of immeasurable value, whose long standing relationship has been inspiring, thoughtful and beneficial.”

    Six professors from the Institute of African Studies, University of Ibadan (UI), led by its Director, Prof. Olawale Albert, also visited the Alaafin.

  • Mobile payment review’ll foster growth, says NeFF

    The mobile payment system will receive a boost, after the ongoing review of its operational guidelines, the Nigerian electronic Fraud Forum (NeFF) has said.

    NeFF Chairman, Mr Emmanuel Obaigbona, said activities in mobile payment industry would take a new dimension after the review.

    The review, he said, would make the mobile payment system productive, remove certain bottlenecks impeding its growth, and make it competitive.

    He said: “The review will help in improving infrastructure, and foster an enduring relationship among telecom companies, licensed mobile payment firms, agents, among other relevant stakeholders in the mobile payment chain. When this happens, the industry is bound to improve in terms of operations and profitability.

    Obaigbona said the review is taking place years after its guidelines were released.

    “From 2003, many guidelines have been released by the Central Bank of Nigeria (CBN) to bring about the necessary growth in the industry. These include Electronic banking guidelines, Point of Sales (PoS) guidelines, Switches guidelines, Automated Teller Machine guidelines, the mobile payment guidelines, among others. But what we are doing is the reviewing of mobile payment guidelines. We hope to conclude it soon. We have gone far on it. It is about to be ready. When it is ready, it would be presented to the CBN and the Bankers’ Committee,” he said.

    According to him, increased attention is being given to the development of the nation’s electronic payment system to strengthening the economy.

    A Senior Official of Shared Office Department, CBN, Mr Chidi Umeano, had earlier told this newspaper that the apex bank would tackle certain problems affecting the mobile payment sub-sector.

    Umeano said infrastructure is one of the major problems facing the mobile payment operators, stressing that there are on-going efforts to address the issue.

    In the same view, the Managing Director, Nigerian Inter-Bank Settlement System (NIBSS), Mr Adebisi Shonubi, had in a review of the performance of mobile payment firms, said the value of transactions recorded by the operators has not been too impressive.

     

  • Creating the environment for sustainable industrial growth

    Creating the environment for sustainable industrial growth

    The fact is undeniable that national transformation and industrial growth are inextricably intertwined. Investigations and explorations by scholars have shown very clearly that higher productivity is a sure means of boosting sustainable economic growth and raising standards of living in any country. Formulating and implementing effective productivity schemes have undoubtedly assisted many economies to pull out of global recession and set them on the course of sustainable growth.

    According to the statistics recently published by the National Bureau of Statistics (NBS), the industrial sector of the economy which is made up of crude petroleum and natural gas, solid minerals and manufacturing, contributed an average of 40% to the national Gross Domestic Product between 2007 and 2011.

    Manufacturing which should ordinarily form the bedrock of industrialization contributed less than five percent to the pool while crude oil and gas contributed 95%.

    The above is a glaring indication that the industrial sector of Nigeria is still in a state of gross underdevelopment despite various reforms being implemented by the Federal Government. Although infrastructural problems must be acknowledged as a big challenge to industrial growth, I believe there are more critical issues stifling the sustainable growth and development in the industrial sector.

    However, the situation in the industrial sector is not altogether gloomy. Specifically, Manufacturers Association of Nigeria (MAN) reported that most of the variables that measure the performance of the real sector have been on the upward swing, albeit marginally. Capacity utilization of the sector is now about 49% compared to the 47.5% average in 2011, indicating that more companies in the country are putting more resources to use in their factories than they did in previous years. The value of industrial production has also increased, although marginally from N130billion to almost N350billion at the end of 2012.

    As indicated earlier, the problems posed by the current infrastructural decay is obvious but unavailability of reliable data for critical decision making is a major challenge to industrial growth in Nigeria. As a matter of fact, reliable data for critical business decisions are in most cases non-existent. In cases, where there they exist, the integrity of such data requires serious authentication before it can be used as a basis for decision-making.

    Corruption is another impediment to sustainable industrial growth in Nigeria. Although this has become a global scourge, Nigeria’s experience is particularly worrisome because of its widespread nature in the system. Despite the huge sum of money from crude oil earned over the years, most indices still show that Nigeria has barely begun its journey towards sustainable industrial growth. It is a sad commentary that Nigeria was described as a rich nation floating on oil wealth “but almost none of it flows to the people” (San Francisco Chronicle, March 11, 2007). The mentality that public money belongs to no one runs through the entire cadre of public service. That is why corruption has become a monster that all previous and current governments are finding difficult to tame.

    Closely linked to corruption are bureaucracies in business regulatory services such as property registration, business licensing, tax administration and commercial dispute resolution and advocacy by private sector and civil society weakened by lack of organization, poor resource mobilization and paucity of research evidence among others. These have hampered business climate in no small way.

    Corruption and bureaucracies affect the cost of doing business thereby making industries incapable of competing globally. In “Doing Business in Nigeria” report published for 2013, exporting a standard container of goods in Nigeria requires 10 documents, takes 24 days and costs $1,380. Importing the same container requires 10 documents, takes 39 days and costs $1,540. Globally, Nigeria ranks 154 out of ranking of 185 economies on the ease of trading across borders while Ghana and South Africa rank 99 and 115 respectively.

    Excessive document requirements, burdensome custom procedures, inefficient port operations and inadequate infrastructure all lead to extra cost of delays and corruption, thereby stifling the potential for industrial growth. Beside this, the overall quality, integrity and efficiency of services delivered by public institutions are rated extremely low, also due to corruption and bureaucracies.

    Policy somersault, involving periodic reversal of policies generally deemed to be in support of promoting the growth of local industries is also identified as a major inhibition to industrial growth and economic development in the country. Policies inconsistency in respect of unregulated importation of goods that are being produced locally has affected the local industries negatively. A recent example is the cement companies who are currently experiencing low capacity utilization occasioned by weak demand.

    Another challenging obstacle facing the industrial sector especially manufacturing industry today is the lack of skilled manpower. The problems facing Nigeria is that its educational institutions are not designed for the modern economy. They lack the tools to produce good quality graduates to manage the affairs of the nation. Majority of them (the graduates/workers) lack the skills that drive human productivity.

    No nation would make any meaningful socio-economic and political stride without viable educational institutions. Some schools’ curriculum is as old as the institutions. They are rarely updated to accommodate the requirements of modern economy. Invariably, the institutions produce half-baked graduates who are misfits into the new industrial environment.

    Building a vibrant economy or restoring growth to a sluggish economy requires a solid legal and institutional framework. To ensure long-term growth and prosperity, Nigeria must use its resources wisely, invest in advanced technology and rebuild the legal systems and institutions without which the economy will not gain from the ‘power of productivity’. Investors would definitely be wary of bringing funds into an economy with weak legal and institutional framework for enforcing contractual obligations and resolving conflicts as evidenced by the unceremonious exit of governments from Public Private Partnership arrangements entered into with some institutional investors.

    Doing Business in Nigeria for 2013 confirms that globally, Nigeria stands at 155 out of 185 economies on the administrative burden of complying with multiple taxation for businesses. The report further states that, “on the average, firms make 41 taxes and pay total taxes amounting to 33.8% of profit”. MAN has always lamented on the negative effects of multiple taxation on sustainable industrial growth. The exact number of taxes and levies collected from entrepreneurs in Nigeria are not clearly defined as a result of the non-specificity of the number of taxes chargeable and the continuous introduction of new ones.

    Easy access to credit is also a major problem for industrial growth in Nigeria. While the cost of fund in the economy is significantly high compared to other vibrant economies in the world, access to credit is even a more serious problem, in view of the tight monetary policy stance of the CBN, which affects the credit conditions. For instance, the collateral cover requirement by banks to access credit is beyond many SME investors, which impedes access to credit, slows down the tempo of economic activities and undermines intermediation role of banks in the financial system.

    High level of insecurity is also an impediment to industrial growth in Nigeria. Major challenges faced by the industrial cum manufacturing sector include insecurity in most parts of the North and few spots in the South, which impeded sales and distribution of goods and services. It was reported last year that telecommunication companies lost an estimated sum of N1.0 billion as result of the destruction of masts by Boko Haram insurgents in some Northern part of Nigeria.

    Research findings clearly suggest that structural transition from low to high productivity is a necessary pre-requisite for economic development and that industrial sector remains a key engine of growth in the development process (Oyelaran-Oyeyinka, 2006). Economic transformation and prosperity will remain a mirage in Nigeria unless we keep our attention focused on creating an enabling environment for sustainable industrial growth.

    • Jimoh is Group Managing Director, Odu’a Investment Company Limited.

  • Key drivers for insurance growth in 2013

    DESPITE the inability of insurance industry to meet its set target of N1 trillion premium income projections last year, operators are optimistic that the entrenchment of some basic fundamentals last year would prop the industry to lofty heights this year.

    To reposition the industry, stakeholders have identified proper budget implementation, enforcement of insurance laws, adherence to ethical practice, among others, as key drivers that will propel growth in the industry.

    President, Chartered Insurance Institute of Nigeria (CIIN), Wole Adetimehin, said the operators hope that the implementation of the budget would be timely and decisive, adding that the government has raised the hope of the public by ensuring that the budget was passed before the close of last year.

    President, Nigerian Council of Registered Insurance Brokers (NCRIB), Mrs Laide Osijo, noted that the government should ensure that the budgetary provision for insurance should be well used, and that it should not be diverted.

    She said the response of insurers to the budget would also help to drive the industry and the operators’abilities to study the budget to ascertain where to take pragmatic steps to tap into it, would help push the industry up.

    The enforcement of compulsory insurance laws, such as motor third party policy, insurance of buildings and buildings under construction, among others, would help prop the industry.

    Observers believed there should be a collaboration between the industry and government’s security authorities to ensure implementation of the laws.

    Managing Director Riskguard-Africa Nigeria Limited Yemi Soladoye, said the N1 trillion projection tied to the Market Development and Restructuring Initiative (MDRI) programme failed due to delayed implementation.

    He noted that the programme was to start in 2009, but took off in 2011, leaving two years out of the implementation schedule.

    “Most people are reading the strategy document and not relating it to when implementation took off. If there is a projection that in year four, we will get N1 trillion and as we could see from the paper, we were to start in 2009, we had what we were to achieve in 2009, 2010, 2011 and 2012. So, N1 trillion is in year four which is 2012. If implementation started in 2011, it will be a case of shifting the deliverables forward based on the difference on the ground between the strategy crafting and the implementation,” he said.

    The policy on ‘No Premium No Cover’ has been adjudged as one of the best initiatives to sanitise and boost the industry’s premium income.

    Osijo said what the administration in National Insurance Commission (NAICOM) has done to bring sanity into the industry is a right step in the right direction, adding that underwriters accusing brokers of non-remittance of premiums will be a thing of the past with the introduction of the policy.

    NAICOM has said from January 1, this year, any underwriting firm that provides insurance cover without collecting the premium would be liable to a penalty of N500, 000 or lose its licence.

    It noted that insurance covers shall only be provided on ‘no premium no cover’ basis, adding that only cover for which payment has been received, directly by the insurer or indirectly through a duly licensed insurance broker, shall be recognised as income in the books of the insurer.

    NAICOM said any insurer, who grants cover without having premium in advance or notification from the relevant insurance broker shall be liable to a penalty of N500, 000 on each cover so granted, and in addition, may be a ground for suspension of the licence of the insurer.

    On professional practices, the Chartered Insurance Institute of Nigeria (CIIN) has threatened to withdraw its certificates from members who engage in unethical practices.

    Its President, Dr Wole Adetimehin, said the institute reserves the right to withdraw its certificate from any holder, if it discovers any breach, adding that further reason for such withdrawal of certificates may emanate from acts unbecoming of a holder of the institute’s professional qualification.

    “Permit me to reiterate the policy of council regarding certificates issued by the institute as the institute’s property, which could be withdrawn from the holders if the institute has good reasons to do so.

    “Let me state categorically that the institute reserves the right to withdraw its certificate from any holder, if it discovers any breach of the examination process. A further reason for such withdrawal of certificates may emanate from acts unbecoming of a holder of the Institute’s professional qualification, “ he said.

    Curbing the unethical practices between underwriters and brokers, observers say that would enhance the industry’s performance and build a lasting trust that would make the industry grow high premium income.

    Over the years, underwriters and brokers have often engaged in premium war, which, observers believed, has hampered growth.

    Proper implementation of the Nigerian Content Act on insurance would open up the billion dollar oil and gas business to operators, who have been empowered to underwrite 70 per cent risks in the sector.

    Insurers have called on oil and gas operators to lower the hurdles placed on their way. They believed their engagement would give them the opportunity to acquire more knowledge on oil and gas underwriting.

    Insurance brokers are worried by the enormous demands by the Nigerian National Petroleum Corporation (NNPC) in engaging them for its risks.

    They said the NNPC has placed difficult hurdles to restrain brokers from qualifying for risks allotted to local brokers by the Nigerian Content Policy.

    They said 34 brokers were engaged for the NNPC account in 2011, but the number was reduced to 14, last year. Insurers have, therfore, called for a rise in the number this year.

    Operators called for the development of infrastructure to reduce their overheads and enable them to enhance their operations.

    Adetimehin said: “We do hope the government would do a lot more this year to ensure better development of right infrastructure in power supply, energy and job creation. Because, these are basic elements that could propel economic performance.”

    Observers believed the fight against corruption would help insurance attract positive image home and abroad.

    They appealed to the public to join hands with the government in the fight against corruption, stressing that corruption is a problem that cannot be fought by the government alone.

    They noted that though the public look up to the government to set the pace, the citizens should operate on high integrity to ensure that they shun corruption, so that the nation’s image and ranking before the rest of the world could be improved upon.

  • LCCI foresees economic growth in 2013

    LCCI foresees economic growth in 2013

    The Lagos Chamber of Commerce and Industry (LCCI) expects an improvement in the productive capacity of the economy this year.

    The body said businesses would improve during the year, as well as the welfare of Nigerians will improve this year.

    Its President Goodie Ibru, in a statement entitled: Expectations for 2013, made available to The Nation, said the economy would grow once obstacles to productivity and efficiency have been addressed.

    He said this could only be achieved, when the government improves the cash flow in the economy; adopt strategies that would address security problems; ensure the passage of the Petroleum Industry Bill (PIB) in the first quarter of 2013; and the passage of 2013 budget.

    He listed other growth initiatives to include deceleration of debt accumulation to protect the economy from the looming debt trap; better disposition of public institutions towards investors and entrepreneurs; renewed commitment to fight corruption; to patronise the locally manufactured products; commitment to local content policy in oil and gas among other sectors of the economy.

    He said: “ We hope to see a public sector that is driven by the true spirit of public service. This would enhance private sector development in the overall interest of the economy and the citizens.

    “Also, the security concerns heightened investment risk and depressed sales in 2012. We hope for an improvement in 2013.”

    According to him, the economy is bleeding profusely from corruption, adding that there is high expectation that the bleeding will be moderated in 2013.

    He said the government could tackle corruption, by putting in place appropriate policy choices, sanctions for perpetrators and rewards people that demonstrate integrity.

     

  • Nigeria, South Africa lead region’s growth

    Nigeria and South Africa account for major portion of Africa’s Gross Domestic Product (GDP), the International Monetary Fund (IMF) report has shown.

    It said intra-regional trade and financing links within sub-Saharan Africa have been expanding significantly in recent years. However, it recognised that there is a long road to travel in terms of achieving close economic integration at the regional and subregional level.

    “As this integration proceeds and economic linkages deepen, the importance of spillover effects from large countries to the rest of sub-Saharan Africa, and within their own subregion, will grow: closer economic linkages inevitably imply increased exposure to shocks, both favorable and unfavorable, in partner countries,” it said.

    IMF African Department senior economist Cheikh Gueye said that to a large extent, South Africa is shaping the structure of trade within sub-Saharan Africa. He said that at least 12 countries in sub-Saharan Africa export to South Africa and this represents one per cent of their GDP.

    “On the investment side, we have noticed that South African companies are investing in the rest of Africa, and this has an impact in shaping trade flows. Third, there are linkages in the financial system,” he said.

     

     

     

     

     

     

     

  • ‘Nigeria, South Africa drive region’s growth’

    ‘Nigeria, South Africa drive region’s growth’

    Nigeria and South Africa account for major portion of Africa’s Gross Domestic Product (GDP), the International Monetary Fund (IMF) report said.

    It said intraregional trade and financing links within sub-Saharan Africa have been expanding significantly in recent years. However, it recognised that there is a long road to travel in terms of achieving close economic integration at the regional and sub-regional level.

    “As this integration proceeds and economic linkages deepen, the importance of spillover effects from large countries to the rest of sub-Saharan Africa, and within their own sub-region, will grow: closer economic linkages inevitably imply increased exposure to shocks, both favorable and unfavorable, in partner countries,” it said.

    IMF African Department senior economist Cheikh Gueye said that to a large extent, South Africa is shaping the structure of trade within sub-Saharan Africa. He said that at least 12 countries in sub-Saharan Africa export to South Africa and this represents one per cent of their GDP.

    “On the investment side, we have noticed that South African companies are investing in the rest of Africa, and this has an impact in shaping trade flows. Third, there are linkages in the financial system. Since 2005, Nigerian banks have extended their operation in many countries in sub-Saharan Africa. That is also true of South African banks,” he said.

    According to him, Nigeria has different trade policies through its neighboring countries, and these policies have been a source of transmission of shock from Nigeria to the other countries.

    “Let us look at South Africa and its trade channel because it is quite large. South Africa is part of the SACU, the South African Customs Union.  The country and the other members of the SACU have what we call a customs revenue sharing formula.

    This means almost 50 per cent of the customs revenues within the zone will go to the remaining countries of the SACU,” he said.

     

     

     

     

     

     

  • Economic growth driving Nigeria’s foreign policy, says Jonathan

    Economic growth driving Nigeria’s foreign policy, says Jonathan

    Nigeria’s foreign policy focus is on how to attract greater foreign direct investment to accelerate domestic growth and create jobs President Goodluck Jonathan has said.

    He spoke Wednesday in New York at a dinner organised in his honour by the Corporate Council on Africa.

    The President is attending the 67th United Nations General Assembly Session.

    Jonathan, according to a statement by his spokesman Dr. Reuben Abati, said his administration is wholly committed to promoting the development of a knowledge-economy that will enhance the security of lives and property, thereby accelerating growth to provide more employment and reduce youth restiveness.

    The President told the gathering of leading American businessmen and investors that attracting foreign investment to support the realisation of the Federal Government’s Agenda for National Transformation is the topmost priority of Nigeria’s diplomacy abroad.

    “Let me restate here that Nigeria’s foreign policy is now anchored on the realisation of this Transformation Agenda through the attraction of Foreign Direct Investment. Under the new policy thrust, our Diplomatic Missions abroad have been directed to focus more on attracting investment to support the domestic programmes of government with a view to achieving not only our Vision 20: 2020, but to bequeathing an enduring legacy of economic  prosperity,” he said.

    President Jonathan assured guests at the dinner that adequate safety nets has been established to protect all foreign investors in Nigeria. Such measures, he said, included the establishment and strengthening of the Infrastructure Concession and Regulatory Commission and the Bureau of Public Procurement.

    The President said his Administration is dealing decisively with Nigeria’s security challenges. “We have some security challenges now, but let me assure you that the Nigerian Government is on top of it. We are dealing with the issue decisively; it will soon be a thing of the past.

    “Opportunities abound for would-be investors with capital and technical know-how in key areas of Nigeria’s economy with a high rate of return on investment. I invite our friends in the United States to take advantage of existing incentives and invest more in Nigeria. I am confident that by the year 2015, Nigeria would have witnessed transformation in all sectors to the benefit of not only its citizens, but also those who have an interest in Nigeria,” President Jonathan concluded.

    Welcoming President Jonathan to the dinner earlier, the United States Assistant Secretary of State, Ambassador Johnnie Carson, pledged that the Obama Administration will continue to support Nigeria’s efforts to attract greater foreign investment.

    Noting that Nigeria is already a very important destination for American companies and the second highest recipient of American direct private sector investment in Africa, Mr. Carson said he is optimistic that Nigeria could become  a great economic success over the next decade.

    The Assistant Secretary of State announced that the US-Nigeria Bi-National Commission, which has been established as a primary platform for the promotion of trade and economic cooperation between the two countries, will meet again in Nigeria next month.

    President Jonathan’s other engagements in New York on Wednesday included meetings with President Sauli Ministo of Finland and the President of the Swiss Confederation, Mrs. Eveline Widmer-Schlumpf.

    The President also met with President Francois Hollande of France, the Emir of Qatar and President Jacob Zuma of South Africa. He also received representatives of the over 200 Nigerians who work for the United Nations and its agencies.

    President Jonathan and Prime-Minister Jens Stoltenberg of Norway with whom he serves as Co-Chairperson of the United Nations Commission on Life-Saving Commodities for Women and Children also participated at an event to promote its work. Guests at the event included former U.S. President Bill Clinton.