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Tag: hurdles

  • 10 years of tobacco control: Nigeria fails domestication hurdles

    As the global community marks the tenth anniversary of the World Health Organisation Framework Convention on Tobacco Control (WHO FCTC) Parties are again reminded of their obligation to prioritise health in their national policies through full domestication of the treaty.

    The WHO FCTC is a the product of proven researches which showed that more than 5.4 million people, mostly in developing nations like Nigeria die annually from tobacco smoke. The FCTC is the first international treaty negotiated under the auspices of the WHO. It was adopted by the World Health Assembly on 21 May, 2003 and entered into force on 27 February, 2005. It has since become one of the most rapidly and widely embraced treaties in United Nations history.

    To mark the accomplishments of Parties to the treaty during this decade, on February 27, the WHO Convention Secretariat brought together ministers, ambassadors, representatives of intergovernmental organizations, civil society among others to look at the journey so far and proffer ideas to further scale down the rate of tobacco-related deaths.

    Life-saving provisions of the FCTC which can cut down growing tobacco-induced deaths include price and tax measures, ban on Tobacco Advertising Promotion and Sponsorships (TAPS), provisions of packaging labeling, ban on sale to minors, among others.

    The WHO says that full implementation of the FCTC    will support global commitments to achieving a 25 percent reduction in premature deaths from non-communicable diseases by 2025, including a 30 percent reduction in prevalence of tobacco use in persons aged 15 years and over.

    It is no news that Nigeria is one of the signatories to the treaty. Nigeria signed and ratified the FCTC in 2004 and 2005 respectively As a Party, Nigeria is obligated to domesticate the Treaty and this has come in form of the National Tobacco Control Bill (NTCB) which was passed by the Senate and the House of Representatives in 2011 but unfortunately was not signed into law by the President Goodluck Jonathan.

    In April 2014 was re-packed by the Federal Ministry of Health and submitted to the Federal Executive Council (FEC) which gave its nod to it going forward. Though the repackaged NTCB has passed Second Reading at both Senate and the National Assembly, went for Public Hearing at both Houses, it still staggers on as the life of the seventh National Assembly nears terminus.

    The stagnation of the NTCB at the National Assembly has become very worrisome to public health experts in view of the huge cost on the economy in terms of lives that are lost daily to the tobacco malaise and the health burden the government bears.

    The delay in the passage of the bill will very well suit the tobacco industry which supports “weak legislations” or “no legislation” at all.

    The proposals of British American Tobacco Nigeria (BATN) and groups like the IPPI at the recent Public Hearings organised by the Senate and House of Representatives lend credence to this view.

    At the public hearing organised by the House Committee on Health chaired by Ndudi Elumelu, last year, BATN argued against increased taxes on tobacco products, a recommendation which the FCTC puts forward as a key to cutting back on the number of people who buy cigarettes.

    Interestingly, BATN tries to suggest that increasing taxes will fuel smuggling and puts this forward as the basis of advocating a weak legislation that makes it possible for minors to be able to afford cigarettes.

    The tobacco company and its front groups also wants Corporate Social Responsibility (CSR), donations and other initiatives that tend to “induce” the public to be removed from a prohibition list that the FCTC advances. But activists insist that such legislation will only increase the number of smokers and by extension, deaths caused by tobacco products.

    It is in this light that our lawmakers must focus on and draw from what the WHO describes as achievements in the last decade that the 10th year anniversary marks. The WHO says that following the life-saving recommendations of the FCTC, 80% of countries have strengthened their tobacco control legislation since becoming Parties. In like manner, the cost of a packet of cigarettes has, on average, increased by 150% among Parties. Others are:

    – There has been a great increase in the use of graphic health warnings – such warnings cover 75-85% of cigarette packages in many countries and plain packaging initiatives are increasing;

    -Many countries have banned smoking in indoor and outdoor public spaces, which has helped to ensure that smoking is no longer seen as socially acceptable;

    -Some Parties have set the explicit goal of becoming “tobacco free” (with less than 5% prevalence of tobacco use), including Finland, Ireland and New Zealand, and the Pacific Island countries.

    The WHO believes that full implementation of the FCTC would support global commitments to achieving a 25% reduction in premature deaths from non-communicable diseases by 2025, including a 30% reduction in the prevalence of tobacco use in persons aged 15 years and over.

    For Nigeria, strict adherence to the FCTC in the domestication of the tobacco bill is definitely the way to go.  This National Assembly must leave a legacy of public health by speedily passing the National Tobacco Control Bill. This time we hope that President Goodluck Ebele Jonathan will do the needful by signing the bill into law immediately it is presented.

     

    •Dejo Iyiola

    Ilorin, Kwara State.

  • Hurdles before retail business

    Hurdles before retail business

    Though on the upswing, with prospects for bountiful returns on investment, the retail services segment of the market, which parades mostly upscale shopping malls, is not an all-comer affair. TONIA ‘ADIYAN writes that the landscape is littered with challenges only serious and discerning investors can surmount.

    The fundamentals favour the growth of retail services in Nigeria. With a large population to support more shopping malls, a growing middle class with increasing purchasing power to contribute to retail growth, Nigeria’sretail services market is on the path of sustainable growth. It has been so in the last nine years when the boom in retail business set in with the emergence of Palms Shopping Mall in Lekki, one of the highbrow areas of Lagos, Nigeria’s commercial capital.

    Since then, a number of upscale shopping malls such as City Mall in Ikeja, Leisure Mall and Adeniran Ogunsanya Mall (both in Surulere), Omisson Emporium at Lekki, Bayero Mall in Kano, Kwara Kall in Ilorin, Jabi Lake Mall and Ceddi Plaza in Abuja, among others, have sprang up. There is also a South African retailer, Mr Price.

    On the surface, it would appear that the scramble by these retail chains, mostly foreign-owed, for the soul of Nigeria’s booming retail business, is indicative of a sector that does not challenge the financial power and determination of investors. Far from that. The challenges in retail business in Nigeria are many and daunting, only the lion-hearted investor can navigate the landscape to remain in business.

    For the operators, the biggest challenge is getting access to the right land in the right location. Most of the existing shopping malls in Nigeria are located in choice areas of commercial cities where it costs a leg and an arm, literarily, to purchase a piece of land. For the operators, such choice locations are necessary since a substantial size of Nigeria’s growing middle class with the disposal income reside there. 

    Apart from the high cost of acquiring virgin land, retail owners are also saddled with the huge cost of building modern shopping structures comparable to those in most city centres across the world. This often leads to rentals that many retailers cannot afford if they had to be tenants in those malls. With interest rate as high as 30 per cent, investors say capital is one of the major challenges facing the Nigerian retail market. The project cost of building shopping structures here is expensive and it is often with limited local expertise.

    Experts say that the cost of completing a project in Nigeria is almost three times that of South Africa. As former Broll Chief Executive Officer, Erejuwa Gbadebo, pointed out, retail in Nigeria is not for boys. “Mall rentals are high because of infrastructure and development costs, which in turn, demands high turnovers. Infrastructure is poor, red-tape is plenty and officials often interfere. The supply chain also takes far greater focus, with a host of potential obstacles to be navigated,” he told The Nation Shopping.

    “It is true that doing business in Nigeria is a challenge,” says South African Sander Norman, who manages Ikeja City Mall. He however, noted that “Investors who offer middle class Nigerians the right price, product, service, quality and choice, have the sky as their limit. According to him, “operators are advised that foreign investors should be prepared to change their models for the Nigerian consumer. If they do so, they stand to gain a firm foothold in a marketplace and a country where consumers are brand loyal and value good service, which is still in short supply.”

    While stating that the Nigerian market is vastly different from South Africa’s and its neighbouring countries, Broll (a body which oversees all the malls in Nigeria) believes that research is essential to understand the unique set of consumer needs and norms in Nigeria before venturing into its exceptional territory. For instance, retailers need excellent warehousing to overcome shipping issues in Nigeria where goods don’t move as fast as they do in South Africa. Also, the choice of clearing agents is important and there is often a price attached to clearing goods.

    Gbadebo pointed out that though, Nigerians are interested in malls and shops because of convenience, there are things to be put in place. “A place where you can go in and get everything is more inviting than going to a market where everything is open, crowded and crazy. People always want to shop in a modern environment,’’ she said.

    She observed, for instance, that “in 2005, when The Palms opened, there were trade bans in place. But in 2011, when some of those trade bans were lifted, international tenants came on board and a different retail phenomenon in form of response from citizens now attracts more retail investors and trade has been booming.

    Today, investors keep focusing on how to improve the Nigerian shopping environment with tenants who have promised to expand their scope of business. For instance, South African retailer, Mr Price keeps opening more stores and has created a website to enable it render better services. The store will be growing the Mr Price brand in Nigeria for many years to come not minding the challenges.

    But what is the driving forced for the proliferation of shopping malls in Nigeria despite daunting challenges? Experts say that the growing economy has led to a demand for quality housing and other related real estate infrastructure, including adequate shopping centers, which formed the basis for retail businesses to thrive. Retailers are critical economic agents who help to create demand because of their affinity with both the consumers and producers.

    Also, retail sales are an important economic indicator because consumer spending drives much of the economy. Besides, the 2003 ban on an array of imported goods that included clothes, shoes, and selected foodstuff by former President Olusegun Obasanjo, which was intended to stimulate local production, saw some Nigerians flying to Dubai and other regional commercial centers to do their shopping.

    However, all that changed in favour of Nigerian-based retail shops that have gained in diversity and in sophistication, and have also benefited from increasing public affluence in the industry. Shoprite, widely renowned as Africa’s leading retailer, has also made significant inroads into the country thereby, causing a massive growth.

    Perhaps, more importantly, findings show that potential buying power of Nigerians has increased and is recognised by the outside world. Also, the country has become a market place whose economy is growing exponentially and will remain an enticing prospect for potential investors for years to come. That is why more foreign investors see the possibility of several projects in the country and despite the constraint they face they still want to do business here.

    “The market and spend needed for retail success is here and growing. Retailers wanting to enter this market need to customize their models to meet the unique consumer needs and aspirations as malls are gaining the support of more Nigerian shoppers,” Feyi Shoyinka of Leisure Mall said.

    Shoyinka is right. Nigerians enjoy a first-world shopping environment that is pleasant, safe, cool, unrushed and offers a complete retail experience from shopping to relaxing at the food court. This perhaps, explains why Broll suggests that retailers planning to enter the Nigerian market should start with using a cash-based model initially, rather than counting on sales from accounts or cards. And that they shouldn’t be hindered by challenges here.

    Already, part of the challenges has been taken care of by the mobile phone boom in Nigeria. Also, with an increasingly tech-savvy population, digital and social media marketing have become effective tools for investors in this segment of the market. “For retailers who are prepared to develop a country-specific model and invest in research to support a supply chain, which are; the right stock, the best price and service, they should be assured that there’s a bright future in Nigeria,” Broll said.

    For Erejuwa,  the regime of shopping malls development in Nigeria is a pointer and an icing on the cake to what the future holds for shopping and sight-seeing experience in the country regardless of the challenges. This, she said, was evident in all of the massive state-of-the-art shopping structures strategically positioned in the country, from Lagos to Ibadan, Kwara to Abuja, Kano to Enugu, Delta to Edo and so on.

    At the moment, Nigeria’s retail opportunities keep growing on the back of mass urbanization, emerging middle-class, rising retail awareness, and an increasing consumer culture. While the growth in the retail business could be attributed to rapid economic development and to an extent, favourable economic policies, experts advise that for the country to maintain or even surpass the rate of growth, solutions to the challenges facing the industry must be provided.

  • Hurdles before Agent Banking

    Hurdles before Agent Banking

    It has been three years since the Central Bank of Nigeria (CBN) introduced agent banking to boost savings. But the scheme has been bogged down by poor network, the erratic biometric-enabled Point of Sale (PoS) and tedious account opening process, writes COLLINS NWEZE.

    Since 2012 when it launched the National Financial Inclusion Strategy, the Central Bank of Nigeria (CBN) has been clear about its vision of ensuring that banking is no longer the exclusive preserve of the rich, literate and powerful.

    The apex bank also wants to ensure that illiterates keep their money in banks, while distance, cumbersome account opening requirements, lack of awareness of financial products and services should no longer be hindrances to them.

    To achieve this, the CBN introduced the Agent Banking Model which liberalised the financial system in favour of the poor.

    The CBN’s target is to, via agent banking, reduce the number of adult Nigerians excluded from the formal financial services from 46.3 per cent in 2012 to 20 per cent in 2020, with specific targets for payments, savings, credit and insurance. This, it explained, can only be achieved with the support of the banks.

     

    Operational channels

    Managing Director, Enhancing Financial Innovation & Access (EFInA), a financial sector development organisation, Ms. Modupe Ladipo, said that promoting financial inclusion in Nigeria and sustaining the country’s development hinge on ensuring that at least 80 per cent of all adults have access to affordable financial services as well as the right environment within which to flourish economically.

    She said agent banking model would ensure increased activity in the delivery of banking services outside the traditional brick and mortar bank branches. This, she explained, can be done through additional financial access points such as existing retail stores, petrol stations, post offices or via PoS devices and mobile phones.

    But Maduka Okonkwo, a Lagos resident, expressed fears over grassroots banking in the country. He said there are several cases where smaller banks closed shops, and the people lost their money. He said operators of the agent banking project needed to assure depositors that their funds are safe.

    Fatai Amoo, Group Head, e-Business, Sterling Bank Plc, said the bank’s agent banking operation takes security of funds seriously, adding that the bank is determined to have the highest level of agent outlets in the country provided such locations have sizeable number of commercial activities and do not pose any risk to depositors.

    “We can only set up in locations that have some semblance of commercial activities. The agent must have a running business, integrity, and be a respected person. The environment also needs to be secured. We need someone who is able to read and write,” he said during a meeting with agents at the bank’s headquarters in Lagos. Amoo said agents have better opportunity of accessing credit from the bank.

     

    Available services

    Some of the services expected to be rendered by the agents are transactional, and include: deposits, withdrawal, cash transfer, account opening, cheques request, bills payment and balance inquiry.

    But Yusuf Obe, an agent, said though banks promised that the biometric-enabled PoS will help in the payment of utility bills, that service is not available. She also complained of tedious account opening process and inability of the machines to check customers’ account balances. Obe said fixing botched transactions is frustrating and takes months to resolve and that has been very bad for the business.

    Other agents also expressed fears encountered in the business such agent fraud, unauthorised fees, loss of customer assets and records, data entry errors, and system failures. Amoo said the bank is working on installing a technology that enables the customer to hear their balances in local languages. “We have all these facilities but they have to be installed in phases so as not to confuse the customers. We also have dedicated team going round, ensuring that nothing goes wrong. We will be in every location that is potentially viable,” he assured.

    He said for security reasons, the bank ensures that the agents do not handle more cash than they should ordinarily do. “The agents are economic agents that do transactions and the kind of limit we will allow each of them to do, is also a function of the amount of cash the person can handle,” he disclosed.

    He said such agents can also take deposits, but cannot accept deposits above the set limit to ensure they are not exposed to more cash that brings extra security risks around the agent. He said how much an agent earns is a function of volume and value of transactions done. “The agents must be able to go to the bank as quickly as possible to withdraw funds or deposit cash. The more accessible such agent is to the bank, the better,” he said.

    Heritage Bank is also one of the banks offering agent banking services in the country. The bank had in March launched its agent banking scheme with the opening of what it calls the ‘Corner Shop’ bank in the Gbagada Plank Market, Lagos.

    Ifie Sekibo, managing director, Heritage Bank Limited, said the customers now have the opportunity to enjoy financial services without visiting any physical branch location. He said banking services is for everybody. “With the small bank we have opened in the market, we are offering banking services to everybody in this market, irrespective of your educational background and what you do. From this small bank, you can enjoy a lot of banking services, which is available in the bank branches. You can send money to people, receive money from others, buy recharge card. You even send money to people abroad. You can do all these at this corner shop bank,” he said.

    Subairu Akano, a trader, said banking is not complete without the customers being able to access credit from the bank. He said there is also need for the bank to assure them of security of funds and efficient services. “We do not want to hear bad story. We want mutually beneficial banking services,” he said.

     

    Stakeholders speak

    Managing Director, Nigeria Deposit Insurance Corporation (NDIC) Umaru Ibrahim said though Nigeria has not reached an advanced stage in its implementation of agent banking project, it is making progress.

    He said agent banking would go a long way in reaching out to the largely unbanked population, creating banking representations where banks ordinarily do not have enough resources to establish branches. Ibrahim explained that agent banks is a complimentary policy that is worthy of emulation as it provides simple banking services to a variety of people on behalf of various banks.

    He dispelled fears that banks with national banking licence would become lax in branch expansion with the introduction of the agent banks, saying “the banks will now be able to decide which will be more cost effective for them in reaching out to their customers, either opening up branches or using agent banks.”

    Bismarck Rewane of Financial Derivatives Company (FDC) Limited said banks’ commitment to financial inclusion will help reduce the level of poverty and underdevelopment in the country advising that funds and credit must flow with ease to those who need them.

    He said viability of agent banking will be determined by Gross Domestic Product (GDP) growth, per capita income, poverty and literacy level, mobile phone and internet penetration, electricity and level of insecurity among other factors.

    Paul Eluhaiwe, Director, CBN’s Development Finance Unit, said agent banking requires the engagement of pre-qualified individuals in different locations that are predominantly financially-excluded to serve as agents to the bank under the CBN approved model.

    Eluhaiwe said CBN’s Consumer Protection Unit has been established to ensure that customers have an adequate level of protection. This, he said, would build consumers’ confidence in the industry as previously unresolved issues are now handled appropriately. He said there are different layers of inspectors ensuring that customers deal with only banks’ approved agents.

    He recalled that in 2009, the CBN had commenced measures to open up banking channels to non-bank agents. An amendment to the Banks and Other Financial Institutions (BOFIA) Act allowed banks to start using agents to deliver financial services. However, it was in 2012 that the financial industry, along with other stakeholders decided to make financial inclusion a top priority and launched a National Financial Inclusion Strategy.

  • 2015: Hurdles before Lagos PDP

    Ahead of the 2015 general elections in Lagos State, there is a particular interest among adherents of the Peoples Democratic Party regarding the possible scenarios that could play out which could either lead to the formation of the state government at Alausa or go down as a perennial loser. In other words, it is a make or mar election. And the burning desire of members is to make history by winning the state for the first time in this Fourth Republic.

    From inception in 1999, except for the remarkable election of 2003 where the late Engr. Funso Williams proved to be a formidable politician and a grassroots mobiliser, the party has repeatedly lost vital elections to the ruling All Progressives Congress, then known as Action Congress. In recent times, though, there are indications that the PDP could actually give the APC a good run for their money. The last local government elections are pointers to this assertion.

    Yet, the situation in a general election involving the governorship may not be that so easy on account of the ruling party’s long stay in power and the attendant influence on the major indices of electoral advantage.

    From this standpoint, it becomes a major issue for the Peoples Democratic Party to look inwards and make judicious amends as the race for the 2015 elections begins in earnest.

    The starting point though would have to be a holistic reconciliation of the various facets of the party from the state leadership to the local government and the wards, ensuring that the party goes into the next election as a unified body. It is noted that the usual disagreement over choice of candidates especially for the governorship ticket and the resultant effect on apathy and indeed members working against their own party at elections must be well addressed ahead of time.

    Of course, the tendency to allow so many aspirants dissipate energy and vital resources in conducting primaries must not be encouraged ahead of the 2015 election if the PDP must make any appreciable impact. Every succeeding primary elections had created more troubles for the party which had also resulted in fractured house, with the losers who may have thought they were cheated or not given a fair treatment embracing a “siddon look” attitude and never given the party’s flag-bearer the needed support and this usually led to failure at the elections. This recurring decimal must stop and the way to go this time is to let all stakeholders embrace a consensus candidate.

    This is a major hurdle which should be carefully resolved through give- and- take since the whole objective is a collective approach to win at least for the first time in a period spanning 16 years in political wilderness. Then there is the tactical selection of the candidate which must also be done in such a way as to destroy every political calculation that could give the ruling party any political advantage. As a matter of realistic political strategy, PDP must also pick its governorship candidate from where APC picks its own candidate but the party should allow the ruling party make the first commitment. With the current Speaker of the Lagos House of Assembly, Hon. Adeyemi Ikuforiji from Lagos East angling to run for governor, the PDP should have it as Plan A or B that their own candidate could possibly emerge from the same zone. His position in the government as well as those of others from the area including Dapo Ambode and Leke Pitan, Senator Gbenga Ashafa, as reported in the media and for obvious reasons may tilt the selection towards Lagos East should be instructive to the PDP leadership that their strategic thinking and effective counter-punches against the APC is key in this all- important election. Similar focus should also be on other prominent names being touted in the media from other zones for effect. Here we have the likes of Senator Ganiyu Solomon, Ariyo Gbeleyi, Olasupo Sasore, Tokunbo Abiru, Femi Hamzat, Adeola Ipaye, Waheed Enitan, Tunde Faula, Muiz Banire and others who may yet indicate interest. What we cannot overlook here is the strategic role of APC leader Asiwaju Bola Tinubu and the incumbent, Governor Fashola, in who eventually emerges which should also be of interest to our leaders. It should be a collective action with the sole aim of “how can we win in 2015 by thwarting every move and political advantage of the APC?” It shouldn’t be a sectional affair like before but a united front to make history. Arguably, the APC has always had superior tactical approaches to elections since 1999 and why the PDP must be ready to match or surpass them this time.

    Yet, success in the 2015 election will necessarily go beyond the above hurdles as important as they are. Aside from proper resolution of internal schism and a viable consensus candidate from the “right” and politically correct district from the state, the party will also have to contend with financing of the elections. Retaining the state is very dear to the ruling party and will fund the election so massively as they have ever did, which would make it the more tasking for the opposition trying to snatch victory from them. So PDP must start right now to gather all their brains together and strategize on financial viability for a possible redemption. Besides this is the urgent need to burnish the image of the party as a vibrant one ready to take power from the ruling party for renewal. The current image of the party should be transformed from that of an overwhelmed entity with a record of perennial electoral misfortune and an appendage of a crisis-prone federal government to one with fresh offers to serve the public good.

     

    • Chief Balogun is a chieftain of the PDP.

  • Hurdles before South Africa/Nigeria’s free trade

    Hurdles before South Africa/Nigeria’s free trade

    What are the benefits and hurdles before freeing trade between Nigeria and South Africa? Inter Press Service examines the need to free trade between Africa’s largest economies 

     

    If a Free Trade Area were to be negotiated between Africa’s two largest economies, South Africa and Nigeria, it would have a powerful effect on trade across the sub-continent and would challenge other countries to respond.

    “In my view it would bring substantial economic benefits to both sides in terms of exports, investment, competition enhancement and, ultimately, productivity,” Peter Draper, a senior research fellow at the South African Institute of International Affairs, told IPS.

    The countries have already entered into an informal agreement of cooperation. In May, South African Trade and Industry Minister Rob Davies announced during a visit to this country by Nigerian President Goodluck Jonathan that South Africa pledged to help Africa’s most populous nation make the automotive sector the West African nation’s flagship industrial sector.

    However, there are concerns that an FTA would give one-sided benefits to the South Africans, who have a developed manufacturing sector, at the expense of the less-industrialised Nigeria.

    “That is not to say South Africa is not favourably disposed, but rather to suggest that to the extent there is political will behind the idea it would be in favour of a limited trade arrangement and not a comprehensive one,” Draper said.

    Johannesburg-based businessman R J van Spaandonk has the official licence to import Apple computers, phones, tablets and other products into both the South African and Nigerian markets. He told IPS that the proposed FTA would send a very positive signal, as the two governments seem to be getting closer and closer all the time.

    “But in practice the benefits may be limited. Many South African companies operate in Nigeria through non-South Africa entities, so it is not clear if they could be considered as beneficiaries of such an FTA.”

    However, he did suggest that it would be a welcome move if it were to make it easier to trade between Nigeria and South Africa.

    “I would welcome more transparency on what rules and regulations apply – in terms of import restrictions, product certification, visas, and so on – and faster execution and processing. On both sides, probably.”

    Jabu Mabuza, president of Business Unity South Africa, said that there is big potential for closer relations between the two countries, but said he would need more time to decide whether or not an FTA was the best approach.

    “I personally welcome the coming together and reigniting of the relationship between our two nations. To the extent we can have mutual socially and politically-rewarding relations, we should do all that it takes.”

    However, Dianna Games, the chief executive of consultancy ‘africa @ work’, told IPS that she believes there is enough current and future trade between both nations to look at the issue of an FTA. However, she is concerned about the lack of non-oil trade from Nigeria to South Africa.

    “The manufacturing sector in that country is still at a fledgling stage, partly because of serious power shortages,” she explained.

    “Although Nigeria is one of South Africa’s main suppliers of crude oil, there is almost no non-oil trade taking place.”

    The South African Revenue Service reported that in the first three months of 2012 Nigerian exports to South Africa were worth 750 million dollars, with 740 million dollars made up of mineral products, mainly oil. In the same three months, South African exports to Nigeria were worth 150 million dollars.

    “The Nigerian market itself is huge and under-served so what capacity exists is easily swallowed up by the local market itself, with some trade into the West African region. There is nothing to suggest that South Africa will be a market of choice for Nigerian goods and services for some time to come,” she said.

    This caution was echoed by Foluso Phillips, the chairman of Lagos-based Phillips Consulting, a business consultancy of branding advisors.

    “There is much that South Africa can offer Nigeria, but there has been a problem of attitude and lack of trust as well as divergent objectives by both parties,” he said.

    “However, there must be a strong spirit of win-win, as the track record and perception makes it all look one-sided in South Africa’s favour.”

    He said that any agreement between both countries had to be on real technology transfer and of value to Nigeria. He added that if an FTA were negotiated, “South Africans (could) not come to the table with a ‘smarter by half’ attitude.”

    He insisted that there would need to be a focus on bringing value to Nigeria and not on making his country a dumping ground for South African goods if his country’s borders were to be thrown open to South African exports.

    “Nigeria cannot continue to fund imports paid for by oil – so if the value proposition from South Africa is predicated on local input but joint ownership, then we are on to a winner.”

    Games said that while there was recognition of the importance of both countries to each other and the continent generally, Nigeria would need to be persuaded of the benefit to its market.

    “Such a move has positive spinoffs in terms of South Africa assisting Nigerian companies to build industrial scale and capacity.

    “The discussion about developing linkages between South Africa and Nigeria in the auto industry (which took place when Jonathan was in South Africa) is an example of something that could be replicated in other sectors.”

    She also believed that it would be important symbolically to highlight a greater level of cooperation between the two countries, which she sees as the two pivotal states in Africa, both politically and economically.

    “The economic success of each is important not just to their respective hinterlands but also to the broader development of the continent, and if an FTA proved to be politically acceptable – not just to politicians but also other stakeholders such as business – it would help to cement ties between the countries,” she concluded.

    Meanwhile, Draper said that if Nigeria and South Africa were to bring their regional neighbours into the negotiation “it could lead to a juggernaut effect of competitive liberalisation incorporating southern and western Africa. Managing this would be, to say the least, challenging.”

     

  • Operator lists hurdles against airlines

    The Federal Govrnment has been urged to provide domestic carriers with low cost capital to enable operators to remain in business.

    An indigenous operator, and the Chief Executive Officer of Overland Airways, Captain Edward Boyo, who made the call in Lagos.

    He explained that such initiative would not be too much a price to pay to keep domestic airlines afloat, as such funds will enable the airlines acquire aircraft at lower costs.

    The repayment of such funds should  spread over a long period, he added.

    Boyo told The Nation that such initiatives have been taken by some governments across the globe with the aim of bailing their ailing airlines from imminent collapse.

    He described the provision of low cost capital as the best reform the government could take to prevent domestic airlines from imminent collapse, arguing that previous attempts to provide intervention funding for the carriers did not yield the desired results.

    He listed low capacity of funding institutions and high lending rates as among factors militating against domestic airline operators.

    Other factors, according to Boyo, are prohibitive maintenance costs, which have made domestic airline operators in the country to ferry aircraft abroad for major checks such as C and D, high import duties and taxes on aircraft parts,  which adds to operators’ spiralling  operating cost.

    He also listed skyrocketing price of aviation fuel, which has caused operators over 40

  • Experts list hurdles to IFRS implementation

    Experts list hurdles to IFRS implementation

    Income taxes, employee benefits, business combinations and share-based payments pose challenges for banks in the implementation of International Financial Reporting Standards (IFRS), The Nation has learnt.

    The Managing Director, IFRS Strategic Consultants Nigeria Limited, David Raggay, who confirmed this in a statement, said these areas, termed, accounting for financial instruments, remain a hard knot for banks to crack.

    He explained that for financial instruments, the difficulties arise from a mixed-measurement model promulgated under the relevant standards. For instance, there are four standards in issue by the International Accounting Standards Board (IASB), which relate to financial instruments. They are: IAS 32 Financial Instruments: Presentation; IAS 39 Financial Instruments: Recognition and Measurement; IFRS 7 Financial Instruments: Disclosures; and IFRS 9 Financial Instruments.

    Chairman of Publicity Committee, Chartered Institute of Taxation of Nigeria (CITN), Chukwuemeka Eze, said IFRS presents some daunting challenges for tax consultants, especially where the tax free areas in the old system contradicts with the IFRS format.

    Eze, who spoke with The Nation yesterday, said the method of computing in the IFRS differs from the old system. “The IFRS may not have given a headline in areas such as taxing profits, salaries of directors or other remunerations,” he said.

    He said that the Institute of Chartered Accountants of Nigeria (ICAN), CITN and other stakeholders in taxation are already looking at ways of harmonizing and addressing these challenges.

    Former Chairman of the IASB, Sir David Tweedie disclosed that IFRS 7, which bothers on disclosures, will lead to greater transparency about the risks that entities run from the use of financial instruments. This, combined with the new requirements in IAS 1, will provide better information for investors and other users of financial statements to make informed judgments about risk and return”.

    The key objective of IFRS 7 is to provide disclosure requirements that enable users of financial statements to evaluate: the significance of financial instruments for the entity’s financial position and performance; the nature and extent of risks to which the entity is exposed; and how the entity manages financial risks.

     

  • APC: The hurdles ahead

    APC: The hurdles ahead

    SIR: The deluge of reactions and comments that have greeted the recent announcement of the merger of the country’s major opposition parties- All Progressive Grand Alliance (APGA), All Nigerian Political Party (ANPP), Action Congress of Nigeria (ACN) and Congress for Progressive Change (CPC)-which has given birth to the mega alliance: All Progressives Congress (APC), are not by any mean surprising. These reactions stemmed from the fact that the electorates are tired of the present “come and chop” political arrangement as symbolised by the ruling Peoples Democratic Party (PDP) at the centre.

    It is a notorious fact that the nation’s 13-year old democracy has been battered and bastardised beyond description by no less persons than our corrupt politicians, who keep amassing stupendous wealth to themselves at the detriment of the larger populace. Indeed, the PDP has largely contributed to these 13 years of misrule and squandering of our collective wealth. Again, there is no gain saying the fact that the so-called dividends of democracy have become as elusive as the thin air. The level of disconnect between the masses and their leaders has never been this glaring since the country’s independence!

    To further aggravate the injuries, the culprit of this hopelessness, the ruling PDP, has severally bragged to remain in the saddle for the next 60 years!

    It is in view of the above gloomy picture that the need for a strong and virile opposition, that will offer a better alternative to the already disillusioned people, has become imperative. It is, therefore, gratifying that the All Progressive Congress (APC) is offering this alternative. However, how the new party is able to do this depends largely on its ability to overcome certain hurdles which have been widely acknowledged as obstacles in our politicking. These “symptoms”, include (1) god-fatherism (2) dearth of internal democracy (3) selfish interest of the leaders, amongst others.

    Reading the comments expressed so far by the leaders of the new party, it does appear they are merely interested in kicking out the Peoples Democratic Party (PDP) from Aso Rock come 2015, not minding what happens thereafter. It will turnout the biggest political mistake the new party would make if, indeed, it is only concentrating all its resources at “grabbing” power at the centre without a corresponding action plan that will salvage the nation’s political and economic miseries. History is replete with such political blunder. This was what happened, in 2002, in Kenya when in their bid to wrestle power from the ruling Kenya African National Union (KANU) at all cost, the politicians formed a merger- National Alliance of Rainbow Coalition (NARC). But because the merger was power-grabbing driven, it was later to suffer internal bickering, few years after winning the election. In other to avoid this mistake, APC must work out a people-oriented action plan that will not just be limited at “capturing” the coveted Aso Rock seat but will add joy and smiles to the populace.

    It needs also be stated here that the new party should make internal democracy its guiding principle. Candidates should be allowed to emerge through a more open democratic process that is devoid of whims and caprices of its leadership.

    It is not in doubt that this initiative will, in the long run, deepen our “nascent” democracy (a fact the leadership of the ruling PDP has magnanimously accepted) to the benefits of the already impoverished masses, the new party must take a step further to convince Nigerians that it is not just going to be business as usual after assuming power.

     

    • Barrister Okoro Gabriel

    Lagos