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Tag: Industrial

  • Job losses sweep across sectors as industrial disputes loom

    Job losses sweep across sectors as industrial disputes loom

    The chicken  has come home to roost. The prevailing macro-economic indicators, particularly the plunge in oil prices, which ultimately put the value of the naira on a downward slide, have pushed up prices of basic raw materials for production. This has forced companies across the sectors to resort to laying off hundreds of workers to cut cost. Chikodi Okereocha, Okwy Iroegbu-Chikezie and Toba Agboola report that this has put the  organised labour on the offensive, as various labour unions warm up for a showdown with government and private employees.

    It  is a crisis foretold. Since June last year when oil price started crashing, forcing sharp drops in accruals to foreign exchange reserves and, ultimately, devaluation of the naira, economic and finance experts had predicted the worse for the economy in 2015. What was probably not expected was that the crisis would hit the nation so early in the year and at the most vulnerable point: labour. Workers in the Food & Beverage sector are first hit by mass sack, as companies struggle to stay afloat in the face of skyrocketing cost of wheat, induced by the sliding value of the naira, which is inching to an all-time low of above N200 to the dollar.

    For instance, over 100 Nigerians in the employ of Nigerian Bottling Company Plc (NBC), part of the Coca-Cola Hellenic Bottling company (CCHBC), have been slated for retrenchment by the beverage manufacturer. A highly placed source in NBC told The Nation that some staff members had already received their sack letters. The source, who did not want to be named, said the affected workers cut across all sections of the establishment. Other workers who constitute the company’s workforce of about 6, 000 are now losing sleep, as about 1, 800 workers of Coca-Cola worldwide have been lined up to join the labour market when the company finalises its restructuring.

    The 1, 800 workers would be the largest to lose their jobs since 2000 when Coca-Cola laid off as many as 5, 200 workers. The company, which employs about 130,600 people around the world, including a group of about 13, 000 corporate employees who are primarily located in Atlanta, its headquarters, said employees had  already been notified about the job cut, which as  seen as a move to cut cost. The layoffs, it was learnt, have been on the drawing board, as the beverage manufacturer reported a 14 per cent fall in earnings for the July to September quarter last year and a dismal revenue growth.

    Flour Mills Nigeria Plc workers are also jittery over possible loss of jobs, as no fewer than two million direct and indirect jobs in the sector are said to be on the line because of increase in the price of wheat and Value Added Tax (VAT).

    Group Managing Director/ CEO Paul Gbededo raised the alarm that because of the current high price of wheat and the government’s plans to increase VAT from five per cent to 10 per cent, the jobs of over 125,000 direct employees and 1,800,000 indirect jobs in the sector were on the line.

    Gbededo, who doubles as President, Association of Food, Beverage and Tobacco Employers (AFBTE), reckoned that the government does not wish to create jobs in the primary sector (agriculture) and lose the jobs that have been created in the secondary sector (manufacturing), adding that new investments in the food industry have boosted the economy.

    He said the national food security and nutritional wellbeing of  consumers could be negatively impacted if nothing is done to stem the tide. “The consequences of this are that prices of even basic processed food would likely go out of the reach of the common man and compromise his nutritional status,” he said.

    He said food and beverage products, such as biscuits, confectioneries, water and carbonated drinks, which are basic food items, may not be within the reach of the masses. Food and beverages, according to him, are considered to be easy sources of immediate energy and are nutritiously enriched with quick source of vitamin for the teeming population and should be readily affordable.

    He pointed out that the sector accounts for 40 per cent of the Nigeria’s manufacturing output of the estimated N3.5 trillion, contributing almost N40 billion in taxes and VAT annually.

    Gbededo said though the manufacturing sector contributed a little less than five per cent to GDP, the food and beverage sub-sector accounts for about 40 per cent of that figure. He said market capitalisation of top 10 listed companies in the food industry comes to N2.8 trillion, while the major companies in the industry are the stabilising factors in the Nigerian Stock Exchange, even during the financial crisis.

    However, things are  not looking good for the sector. FMN’s performance has been less than sterling due to increases in the price of wheat at the international market. The food giant’s recent gross profit stood at N22.3 billion, representing 8.4 per cent down from the N24.4 billion.

    This is a far cry from the N43.7 billion as at December 2013.  According to the company’s reports, the significant contraction in gross margin was driven by the over 10 per cent rise in wheat prices through January, as well as the eight per cent devaluation of the naira.

    Also, the company’s Profit Before Tax (PBT) decreased from N8.4 billion to N3.7 billion, representing a decrease of 55.7 per cent.

    This is despite paying lower tax of N0.4billion compared to N2.4 billion paid in 2013.  Its Profit After Tax (PAT) of N3.3 billion represented a 44.5 per cent decrease from N9 billion in 2013. All these, according to the report, is as a result of high cost of wheat.

    The oil sector is no exception. The Nation learnt that since mid year 2014 when the crisis started, the blood pressure of workers in the Nigerian oil & gas industry has been on the rise for fear of possible retrenchment. Such fears are not without justification particularly in view of earlier warning by the Director, Advisory, Oil and Gas, PriceWater House Limited. Mr. Ritch Wingo that oil companies may lay off workers due to the drop in oil price in the global market.

    Wingo, who spoke on the sidelines at the recent Offshore West Africa Conference in Lagos, said falling oil price has adversely affected the sector. “Right now, a lot of companies are trying to lay off workers due to falling oil price. It is going to be pretty rough in a couple of months to come. The best thing to do now is to go back to the banks to talk to them on how to restructure our finances so that people will not default. If oil price continues to fall, investors are not going to invest again,” he said.

    Winco was right. The situation has already forced American multinational oil service firm Schlumberger Limited to line up approximately 9, 000 workers from its global operations for sack due to lower oil prices and the expected cutbacks in exploration and production spending this year.

    The company expects to record a $296 million charge associated with the layoffs, according to the firm’s  fourth quarter 2014 earnings report. “In this uncertain environment, we continue to focus on what we can control,” Schlumberger said.

    While global oil demand continues to rise, available supply is significantly higher, depressing oil prices and prompting exploration and production companies to cut spending. The company has already taken a number of steps to restructure and resize the company, leading to a record number of charges in the fourth quarter. “We are convinced that performance must now be driven by an accelerated change in the way we work through our transformation program,” the company said.

    This program includes the delivery of new technology that improves the performance of customers’ reservoirs; increases in efficiency and reliability that reduce overall finding, development and production costs; and opportunities to grow from more integration – all are significant drivers of our own and customers’ performance. A recent survey also found that oil and gas managers are planning to scale back their hiring plans this year due to declining oil prices and an uncertain economic environment.

    Labour saw it coming and possible confrontation is imminent . The on-going sack did not come as a surprise to labour, operators and stakeholders across the sectors.

    The Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN), is among groups that first raised the alarm, warning however, that it would not tolerate indiscriminate sack of its members under the guise of falling oil prices in the international market. Its President, Comrade Olabode Johnson said the union would jealously guard the rights of workers in the sector in the face of the current realities.

    The association earlier raised the alarm that companies, especially petroleum companies,  plan to retrench staff. PENGASSAN through its Media Officer,  Babatunde Oke,  said that non-core employees of oil firms in the country may be asked to quit their jobs, if the fall in oil prices persists. “The effect might be severe if it continues because some employers are already complaining that they may need to shed weight, if the situation persists. Of course, it will affect contract staff, if the slump persists,” he said.

    The National Union of Beverage and Tobacco Employee (NUFBTE)  is also kicking. NUFBTE said plans by food and beverage manufacturing companies to reduce their workforce because of high of cost wheat, a major raw material, is in bad taste. The Union warned the companies to desist or face their wrought.

    NUFBTE President Comrade Lateef Oyelekan said it is not fair for companies to lay off their workers because of high exchange rate. He argued that the situation is not peculiar to the food & beverage sector alone but affects all the sectors of the economy

    “It’s true that price of wheat, which is the major raw material, has gone up, but it is very wrong for the manufacturing companies to use this as justification to lay off their workers. The issue of high interest rate affects the whole economy,” he said, urging the companies to be patient.

    “Let them finish the national election first before taking such decision. We believe that everything will come back to normal. So, they should be patient.” Comrade Oyelekan also noted that unemployment is a scourge that must be tackled by all, adding that employers ought to be supporting government, as labour issue should be treated as a matter that affects all.

    The Trade Union Congress (TUC) may have also been warming up for a showdown. It’s President-General,  Bobboi Kaigama, said the TUC would resist any attempt to retrench workers. “TUC would resist any attempt to retrench workers; all the definitions of resistance put together would be done, including protests and strikes.

    “Let’s fight corruption, let’s fight oil theft, let’s improve our Internally Generated Revenue, (IGR), let’s be prudent in our expenditure, develop our infrastructure and tourism potential; those are the things that would give us money, not sacking workers,” he said.

    TUC is not alone in the threat of confrontation. While directing its threat to the government over any possible sack of workers in the public sector, the Association of Senior Civil Servants of Nigeria (ASCSN), warned of dire consequences if the Federal Government decides to retrench workers under the guise of austerity measures announced last year. ASCSN’s National President, Comrade Bobboi Bala Kaigama, made the declaration at a recent interactive session with newsmen in Lagos on the dangers of planned sack of workers as a result of austerity measures

    “Any attempt by the Government to sack workers or reduce their salaries in the name of austerity measures will amount to a declaration of war on Nigerian workers and would be resisted by the Labour movement,” he stated. He added that the association’s warning is  clear because when the economy boomed, the political office holders were freeloading as if there was no tomorrow while most Nigerian workers lived below $2 per day. “While workers called for better pay package in the past, they were rebuffed by the ruling elites, especially those in government, the helpless workers roasted as if they were not stakeholders in the system,” he lamented.

    Noting that the meagre N18,000 monthly minimum wage approved in 2011 by the Federal Government has not been fully implemented by some state governments, he said it will be the height of insensitivity for any government to contemplate sacking civil servants or reducing their pay in the name of austerity measures.

    “Our Union advised the Federal Government to reduce the whopping pay packets and mouth-watering allowances of political office holders and check other leakages that encourage corruption in the system, but the wise counsel fell on deaf ears,” he recalled.

    The Nigeria Labour Congress (NLC) is also threatening fire and brimstone should workers be sacked. NLC out-going President, Comrade Abdulwaheed Omar, warned the Federal Government to take sustainable, viable and proactive steps to address the consequences of the falling crude oil prices instead of punitive measures against ordinary Nigerians especially workers. He advised against consideration for rationalisation of staff, adding that labour will support government initiatives to tax the rich through luxury taxes.

    However, such warnings appear not to have hit the right chord.

    Although the mass sack for now affects workers in the private sector, the fear is that it’s only a matter of time before it gets to the public sector. Already, some state governments hit by dwindling allocation from the federation account are said to be owing their workers several arrears of salaries and are therefore, contemplating reducing their workforce. Reliable sources informed  that some of the affected state governments are only holding back because of the general elections. The state governments are said to be treading carefully to avoid a backlash, as any sack might make them incur election loses.

    What this means is that the labour movement might be reviewing their strategies for a possible confrontation starting from the private sector.

     

    Operators react

     

    Managing Director, Spectra Foods Limited, Mr. Duro Kuteyi, makers of Suco brand of cocoa drinks and food products, confirmed that some companies are laying off their staff. As he explained, companies are set up to make profit and when the purpose is not realised, promoters of such businesses take decisions that will enable them continuously stay in business.

    Mr. Kuteyi predicted that with the daily slide of the value of the naira more companies will shed weight especially those whose primary raw material is wheat and other related inputs. He said that although, his company has not yet sacked any worker, he assured that there is no immediate reason to do so as most of its raw materials are sourced locally. He said he uses maize in place of wheat and believes the will weather the storm until the economy stabilise.

    Kuteyi however disclosed that high cost of wheat is not the only factor forcing companies in the sector to downsize. He said, for instance, that the stock market has become bearish as investors are taking their monies out of the country. Besides, election expenses by politicians have spiralled out of control with far-reaching implications on the economy, especially on inflation.

    While noting that news of the mass sack of workers is still speculative, the Director-General, Nigeria Employers’ Consultative Association (NECA), Mr. Segun Oshinowo said it is not impossible. He explained that if high exchange rate leads to high cost of raw materials such that manufacturers can no longer meet up with their capacity utilization, then it will lead to layoff of workers. He said this is because it will reduce the companies’ cash inflows.

    “If the cost of production of these companies increase, the companies will have no choice than to reduce their staff,” he said, pointing out however, that this will be too bad for the economy.

    Indeed, because of the profound nature of the revenue shocks arising from the slump in oil price, many companies are taking measures to mitigate the effects on their businesses. They are therefore, reviewing and focussing on key areas such as spending priorities and deepening revenue profile. The situation is made worse by the sliding value of the naira against other major foreign currencies especially the dollar.

    Unbridled raw materials import is the issue, the President, Lagos Chamber of Commerce and industry (LCCI), Alhaji Remi Bello, said, confirming that some companies are down-sizing their operations  and laying off  their staff to stay afloat. He was however, quick to observe that the crisis is more prevalent with companies that are mainly in the food and beverage sector because of the high level of wheat importation.

    Going by his analysis, it means  the  failure to reverse the current trend where as much as 80 to 90 per cent of raw materials used by local industries are sourced abroad despite the abundance of raw materials locally, have started to manifest.

    The situation, described as the ‘import syndrome’ where manufacturers rely heavily on imports rather than source their raw materials locally, is said to have created a hollow in the purse of the Federal Government to as much as N1 trillion annually. Renowned Economist and Finance Analyst, Dr. Alaba Olusemore, explained how the import syndrome  has contributed in triggering the current sack gale across the sectors.

    According to him, most manufacturers depend on foreign inputs, and with exchange rate now going up the roof, cost of inputs will go up.

    Olusemore, who is also Managing Consultant, Nesbet Consulting, a Lagos-based firm of management and finance consultancy, said the challenge to manufacturers is two-fold: “First, when they borrow to import raw materials, it will be at higher interest rates. Secondly, with the naira devalued, they will have to pay more naira for each unit of goods they import,” he said. While emphasising that many manufacturers may not be able to finance their imports, he said those who will, are likely going to have shrinking margins of profit, and that Small and Medium Enterprises (SMEs) will suffer more.

    Olusemore added that high cost will obviously lead to high prices of consumer goods, and depending on the price elasticity of demand for each manufacturer’s products, aggregate demand may shrink in the short run, as there could be consumer resistance. Those likely to be affected the most are consumers on fixed income, who will be left with lower disposable income thus, becoming poorer in relative terms. Companies that cannot stand the heat would be left with no option than to throw some of their workers into the labour market.

    Indeed, not a few manufacturers have been agonising over the persistent high cost of production arising from the prevailing high cost of imported raw materials due to the high exchange rate. The skyrocketing cost of production is said to be responsible for the high cost of goods produced locally compared to imported ones. The cheaper price of imported goods is blamed for the penchant of Nigerians to patronise imported goods at the detriment of locally produced goods.

     

    This is why many local industries that could not cope with the competition in the same market with imported goods are either fast disappearing from the industrial landscape or adopting cost-cutting measures including sacking their workers.

    The belief is that all the basic raw materials to feed the industries are available locally, but are not available in sufficient quantities and quality. According to manufacturers, most of the available local raw materials are in unusable form, requiring value addition before they can be used by industries. The value addition is done mostly by small and medium scale enterprises (SMEs) because they take the materials from the unusable form to the next intermediate stage. It is the intermediate raw material that industries require.

    However, because of the low capacity of the SMEs to add value to available local raw materials, coupled with lack of access to capital to set up processing facilities, process technology and techniques, and spare parts, among others, they have not been able to fill the gap. Other challenges impeding the effective utilisation of local raw materials, include multiple taxation by various levels of government, poor infrastructure, unbridled importation, labour cost, fiscal policies, non-sustainability of policies, high cost of funds, technical infrastructure, and gaps in diffusion of technology.

    Unemployment may worsen Despite being Africa’s largest economy, Nigeria, Africa’s most populous country, has 24 per cent unemployment rate, with youth unemployment estimated at over 54 per cent. The figure could be higher considering the pausity of reliable data in the country. Some experts argue that given Nigeria’s penchant for poor record keeping, the figure could be as high as 37.7 per cent.

    For instance, an estimated one million graduates are churned out annually by no fewer than 300 universities, polytechnics and colleges of education in Nigeria. Although, some people have expressed fears that the country’s economy is not robust enough to absorb even 20 per cent of the products of the institutions, the current economic crisis added a scary dimension to the problem.

    With companies, in a bid to cut cost, now downsizing their workforce thus sending thousands of their employees back to the labour market, the consequences is unimaginable. Rising unemployment is largely responsible for the spate of kidnapping, advance fee fraud, otherwise called 419, armed robbery, prostitution, cultism, drug and child trafficking, among other social vices, which have become daily occurrences.

    Today, many Nigerians particularly those in the North East region hardly sleep with two eyes closed since the upsurge in violent campaigns by terrorist groups Boko Haram added a new and scary dimension to these social ills.  Many Nigerian youths, for lack of paid employments, have become ready recruits into terrorist organisations, a development that confirms fears that the country is indeed, seating on a keg of gunpowder.

    The increasing rate of unemployment in the country is seen by experts as confirmation that Nigeria’s widely reported rapid economic growth has evidently failed to translate into job creation.

    LCCI recently raised the alarm that worsening unemployment in the country, especially among youths, put at 54 per cent, poses great dangers to the economic, social and political stability of the country. According to Bello, there is a correlation among unemployment, poverty and insecurity. The Chamber, therefore, called for the adoption of appropriate policies to fix the unemployment problem, especially through the creation of an enabling environment for the private sector, especially the small and scale medium enterprises (SMEs) to retain jobs and create new ones.

    The Council expressed concern that the productivity and competitiveness of enterprises in the economy have been trending downwards, thus affecting the capacity to create jobs.

    Failed assurances No one envy Minister of Finance/Coordinating Minister for the Economy, Dr. Ngozi Okonjo-Iweala. Since June last year when the crisis started, she has been in the eye of the storm. It couldn’t have been otherwise.

    The Minister, despite overwhelming negative macro-economic indicators that the economy was in for unprecedented turbulence, assured Nigerians that there was no cause for alarm.

    The Minister said, for instance, that government had put in place strategies to deal with the situation, part of which was the development of scenario-based approaches to cushion the unfavourable effects of falling oil prices. Such approaches, the Minister added, was comprehensive and supported by extensive consultations with global analysts such as the International Monetary Fund. Besides, she said short to medium term strategies mainly targeted at the poor and vulnerable had been developed.

    But it is doubtful if any Nigerian was swayed by Okonjo-Iweala’s assurances.

    Backward integration might do the magic The consensus of experts is that if the National Industrial Revolution Plan (NIPR) is to make the anticipated impact on manufacturing, deepening the utilisation of local raw materials must be accorded high priority.

    “For us at Raw Material Research and Development Council (RMRDC), we are committed to addressing the lingering issue of capital flight experienced in the country through import of raw materials by Nigerian manufacturers as against the patronage of local materials,” says RMRDC Director-General, Mr. Ibrahim Hussain Doko.

    Doko, who spoke on the sideline of a stakeholders meeting to announce the 2nd edition of the Nigerian   Raw Materials Exposition (NIRAM Expo), which held in October last year, stressed the need to promote efficient synergy among stakeholders for the purpose of ensuring sustainable sourcing of raw material value chain. He frowned at the exportation of raw materials, which is imported back as finished products with the addition of certain additives at great cost. Doko identified the need for stakeholders to encourage the local supply of raw materials to halt the billions of naira spent on raw material importation when it can be sourced locally.

    For Director General, Nigeria Association of Chamber of Commerce, Industry, Mines & Agriculture (NACCIMA), Mr. John Esemede, there is no reason why the current import dependent raw materials economy should persist when Nigeria parades over 100 universities and 80 departments of agriculture, as well as 20 research institutes.

    His counterpart at Manufacturers Association of Nigeria (MAN), Mr. Remi Ogunmefun, agrees with him. He called on the agency to work hard to encourage local substitutes for the manufacturing sector to conserve the nation’s foreign exchange reserves.

    To mitigate the crisis The LCCI while acknowledging the various initiatives of the government, such as the Youth Enterprise for Innovation (YouWin) programme to create jobs, said it believes that given the magnitude of the problem, a more fundamental and sustainable strategy is necessary.

    It proposed, among other policy options, support for SMEs to retain existing jobs and create new ones.

    Critical areas of support include funding and capacity building; the government should accord higher priority to investments in infrastructure to reduce the high infrastructure deficit and moderate the cost of doing business in the economy. The Council noted that quality infrastructure would improve private sector productivity and competiveness, which in turn, will boost the capacity to create new jobs. “Council also called for a concentrated and sustained effort to increase the foreign reserves to enable a downward review of the tight monetary policy to boost credit availability and reduce interest rates, Bello said.

    While affirming that the stimulation of economic growth is more paramount now to create jobs, LCCI proposed that the educational curriculum in the nation’s tertiary institutions should align with contemporary demands of enterprises in the economy. “There should be a good fit between the curriculum and industry requirements. Council stressed the need to promote sectoral linkages to create the desired multiplier that would translate to the creation of more jobs. There should be stronger linkages between the agricultural sector and the industrial sector. Policies of backward integration in all sectors should be accelerated,” Bello said.

    Can the present administration fashion out urgent, more pro-active, comprehensive and honest approach to halt the on-going mass sack of workers? That is the big question, What is clear however, is that failure to do so would not only worsen the rising unemployment scourge, but also confirm fears that it is only a matter of time before Nigeria erupts into a serious crisis.

     

  • Bacita: Kwara’s forgotten industrial town

    Bacita: Kwara’s forgotten industrial town

    The mention of Bacita immediately evokes memories of the now comatose Nigeria Sugar Company. The image of the defunct firm still lies in the town which used to be a commercial hub in Kwara State.

    But today, the town is a shadow of itself, with the once-known industrial town lacking in development.

    The absence of good roads may have contributed to the deplorable nature of the town. The collapse of the sugar company and Nigeria Yeast and Alcohol Manufacturing Company has made life in the town unattractive.

    Located in Edu Local Government Area of Kwara State, Bacita used to be the envy of Nigeria because of the presence of the Nigerian Sugar Company and others.

    But the situation has changed drastically as the town can no longer boast of any development. For example, because of the status of the Nigeria Sugar Company, the staff school, which residents said, used to be the joy of students and parents has become an eyesore.

    The buildings and classrooms are in a deplorable condition. As evidence of the decay of the school, the signpost no longer bears the name of the school as years of neglect seem to have taken toll on it. The name has been erased and replaced with an inscription which reads: “No King as God”, written in a handwriting that depicts that of an idle child trying to master the craft of handwriting.

    A few meters from the gate stood a huge book-like sculpture with the inscription, “Education is the bedrock of any development, allow your children to be educated”, an indication of why the school was set up.

    Our correspondent gathered that apart from the overgrown grasses, there was nothing to suggest that this was a place that was once a centre of academic excellence. The classrooms had been converted to some kind of store by farmers and other people who see some industrious use of the classrooms.

    They dry their shear butter seeds, cassava and other farm produce. Result sheets, text books and receipt booklets were seen scattered in what used to be the headmaster’s office and other offices.

    Ironically, the condition of the school can be likened to the state of the community whose growth has stunted over the years. Many people have, however, relocated from the community and many more are said to be on their way out due to lack of development.

    They have, however, cried out; alleging that the government, both at the federal and state levels, has abandoned them. Some of the residents of the community expressed sadness that government has decided not to remember them.

    Our correspondent also discovered that out of the two roads leading to the community, visitors prefer to use the Old Jebba Road known to many as the Tsaragi/Share Road because of the deplorable condition of the major road, the Mokwa/Jebba Road.

    It was further gathered that visitors to Bacita have abandoned the 18-kilometre road because, instead of spending about 20 minutes to get to the community, travellers spend almost one hour because of its bad nature. The alternative route which is the Share/Tsaragi Road, which most people prefer is peculiar with the plain landscape.

    The road is tarred, which explains the preference. Some of the villages on the road are Patidzuru, Kpankorogi, Manfu, Emigbadzi, Mamu and Emiworogi. Heaps of firewood, which might never be sold are displayed in most of the villages. With about one kilometre separating the villages, our correspondent observed that villages, which appear to be smaller than Bacita enjoy good road network and constant power supply, even though they lack schools, markets, banks and hospitals. In view of that, they have to travel always to Bacita to access these facilities.

    Ironically, the good road enjoyed by smaller villages on the way to Bacita are not present in Bacita as the roads in Bacita still maintain that natural state, with erosion eating into parts of them.

    Motorcycles appear to be the major means of transport in the community where roadblocks and bumps are made with firewood. Unfortunately, the usual bustling that characterised the once-popular industrial town in the Old Kwara State is gone. Walking round the town, it was discovered that most people just move around with little activities going on. Tattered attires of farmers returning from farm also speak about life in the community, with only a few of them with the opportunity to own old bicycles and motorcycles that are better placed off the road. Residents are not happy about the seeming pathetic situation in Bacita. Even with the state of lack of development, worship places adorn the town with only one functioning hospital, few private schools and thick green grasses.

    A view from afar gives you hope because of the company structure which stands out, but on approaching, the hope is dashed as the structure stands among bushes. The community has one government secondary school and one mini-fuel station called Green Space Nigeria Limited.

    Investigation revealed that the major source of water in the community is well water while their major occupations remain farming and petty trades because of the collapse of the companies.

    Dominated by the Nupe, the women have mastered the art of using the abundant groundnuts in the community for commercial purpose. With the groundnut, they make and sell ‘kuli-kuli,’ a local snack and also extract oil which they sell to those who like organic food.

    Residents told our correspondent that “Bacita used to be tourism and excursion centre for students and visitors who came to the state. It really assisted the economy of the country then because of the Sugar firm and NIYAMCO  that were functioning. But now, the moribund nature of the companies has led to the collapse of most activities in the community.”

    Some of them regretted that the “government has forgotten us completely but we will not be surprised if we start hearing that they will come to pay us a visit soon just the way they usually do when general elections approach.

    As election period draws near, they will find their way into the town with blaring siren and party flags for campaign. They act very honest and promise heaven on earth but after the election, they completely turn their backs on us. That is why the community remains the same or worse than what it used to be.”

    A resident, who lives in an estate popularly called Housing Estate,  said: “If the politicians don’t remember us by putting something significant such as good road, potable water and probably help restore what is dying in this village, I doubt if this town will exist for long.’.

     

  • The silent industrial revolution

    The silent industrial revolution

    In an interview published in the August 30, 2014 edition of some national newspapers, Senator Ibikunle Amosun, Governor of Ogun State, spoke about the danger that the growing army of unemployed youths pose to the country. The Governor should know. While superintending over a state like Ogun with 22 public and private tertiary institutions, and many more still under construction, Senator Amosun estimated that there must be about half a million unemployed graduates presently living in the state.

    The natural follow-up question is what the Governor is doing in the area of job creation. While the Amosun administration has directly and indirectly created over 50,000 jobs through employment in the public service, helping small scale entrepreneurs with soft loans to develop, sponsoring skill acquisition programme for youths, empowering traders to gain access to cheap funds and creating opportunities in agriculture for young graduates, it has also pursued with vigour one of its five cardinal programmes, which is Increased Agricultural Production leading to Industrialisation.

    In achieving the objective behind the industrialization programme, the Amosun administration deliberately set out to profit from the state’s contiguity to Lagos, the commercial capital of the country and the border it shares with Republic of Benin, which by inference made it a gateway to the over 300 million-population in the West African sub-region. The strategy therefore is to attract multi-national industries, both those already existing in the country but have expansion plans and those that are just coming into the country afresh. The state has abundant land resources, 16,432 square kilometers, available for industrial, commercial, agricultural and property development. This is a key factor that an investor will actually consider in deciding on a location for his new industry. More than that, the state government has equally liberalized the process of acquiring land, particularly for industrial, commercial and agricultural purposes.

    Add this to the fact that though industries located in Ogun State have easy access to the air and sea ports in Lagos, the state also boasts of having 84 percent of the strategic Lagos-Ibadan Expressway which is a link between Lagos and the rest of Nigeria, located within its territory.

    The numerous tertiary institutions in the state also provide a ready pool of skilled workers to industrialists. All these advantages have been harnessed by the Amosun Administration to create a bi-annual Investors’ Forum through which it shifts the focus of investors from across the world to investment potentials in the state and the benefits the state government offer.

    In addition, the state government has invested heavily in upgrading the infrastructure in the state. The emerging road network in Ogun State is comparable to the ones in many developed countries. The security system is so good that it is reassuring that one’s investment is secured in this environment, despite the challenge that its multi-border nature ought to pose.

    The result is that in the last three years, the state has become the industrial hub of Nigeria. The popular question in the investment community about Nigeria now is not ‘who is in Ogun State’ but ‘who is not in Ogun State’. With 47 multi-national industries having opened shop in the state in the last three years, Ogun State is now the industrial capital of Nigeria. According to Otunba Abimbola Ashiru, who handles the Commerce and Industry portfolio in the state, the new industries have altogether invested in excess of $8 billion in the state.

    The new manufacturing plants that have commenced production in Ogun State belong to the biggest industrial concerns in the world. These include May & Baker, Lafarge Wapco, Nestle, Procter and Gamble, Dangote Cement, among others. In the next few weeks, ten new industries, including Olams and Apple & Pears, will also join the train, as they are set to commission their industries. In fact, in the last three years, President Goodluck Jonathan had visited Ogun State three times to commission big industries. Today, Ogun state is the cement capital of Africa. With an annual total of 13 million metric tons of cement produced by Lafarge Wapco and Dangote Cement from their plants located in the state, (same as the total national production figure for South Africa), the state can rightly claim that appellation.

    While commissioning the Procter & Gamble Industry in Agbara, the largest American investment in Nigeria outside the oil sector, President Jonathan declared Ogun State as the most industrialized state in the country. Also, while commissioning the WEMPCO Steel Company Limited in Ibafo, the President praised the Amosun administration for creating the enabling atmosphere for industries to be trooping into the state. He added that in the nearest future, there will not be a single person who is willing to work but cannot get a job in Ogun State.

    The President’s testimony brings us back to the plan of the Amosun administration to systematically tackle the problem of unemployment among the youths, thereby laying a solid foundation for the socio-economic development of the state.

    •Olaniyonu is Commissioner for Information and Strategy, Ogun State

  • ‘Nigeria needs industrial revolution’

    A lecturer at the University of Nigeria, Nsukka (UNN), Prof Daniel Nnamdi Obikwelu, has described as counter-productive Nigeria’s methods for acquiring technology.

    Speaking while delivering the 79th inaugural lecture at the institution, Obikwelu, said government should learn from the industrial revolution of the Great Britain.

    He said: “Drafting from the stone to modern age where man’s activities were technologically-driven, industrial revolution is a phase in human history when the predominant agrarian rural societies in Great Britain, Europe and America became industrial and civilised.”

    Obikwelu, who spoke on the theme: Metallic materials: challenges in the 21st century Nigeria and didactic lessons from the 18th century industrial revolution, said metallic material especially steel, stood out as man’s major resource that fostered industrialisation in the 18th century industrial revolution.

    He added that metallic material played vital role in the life of man and every technologically-driven nation, explaining that metallic materials have become invaluable resources for improving the standard of living and developing indigenous technologies.

    He noted that growth in the nation’s industrial sector was hampered by foreign assistance without proper development of available resource.

    He noted: “Nigeria doesn’t have the wherewithal to develop her resources, the resources can only be carried overseas and developed and sold back to us.”

    He added that some regions of the country were backward in industrial revolution because of high level of negligence of their natural resources.

    He called for partnership approach among the government, private sector and research institutes to develop indigenous technologies for sustainable development. “Nigeria governments are urged to learn the lessons of the industrial revolution of the 18th century in Great Britain by providing conducive political and industrial atmosphere to promote the avalanche of industrial inventions that would eventually lead to the much needed revolution in Nigeria’s industrial sector,” he stated.

    A participant, Chris Egwuatu, said the Federal Government should implement the recommendations of the lecture and revitalise the state of industries in the country. Obetta Emmanuel, 300-Level Metallurgical Engineering, said steel was the king of all material and government should understand the importance of the nation’s resource base and utilise them to achieve development.

    The Vice-Chancellor, Prof Benjamin Ozumba, who was represented by the VC (Academics), Prof Polycarp Chigbu, thanked participants for turning out en masse for the lecture.

    Highlight of the event was the presentation of award of excellence to Prof Obikwelu by the National Association of Metallurgical and Materials Engineering Students (NAMMES), UNN chapter.

  • Fashola promises to redevelop industrial estate

    Lagos State Governor Mr. Babatunde Fashola has promised to redevelop the Yaba Industrial Estate to conform with modern trend and compete with others.

    The industrial estate, established in 1954 by the Federal Government to promote small scale enterprises, is not functioning to full capacity.

    Governor Fashola, who visited the estate yesterday with the Commissioner for Commerce and Industry, Mrs. Sola Oworu and Special Adviser on Commerce, Mr. Seye Oladejo, reiterated government’s commitment to redevelop it.

    He said some businesses in the area have outgrown the space they are operating in, hence the need for government to move in and intervene.

    Fashola added that the redevelopment would include solution to power outage, which he said was one of the major challenges of the industrial estate.

    His words: “This place was created around 1954. It has quite a long history, chequered history in some cases, success stories here and there. We’ve just come out of court after a fire and an attempt to redevelop. So we can work together here.

    “It’s possible to create steady power supply here, which is the main problem of most of the manufacturers we talked to. They are doing business, they are producing, but they could do with cheaper power.”

    Governor Fashola said government might subscribe to the model of the Isolo Industrial Estate, where a central unit provided power to the industries, thereby saving cost for the manufacturers.

     

  • Industrial sector still in doldrums

    In the past, the industrial sector, especially the textile industry, was one of the highest employers of labour. The story has since changed as most industrial estates have been turned into worship and event centres. Despite government’s consistent pledge to revamp the sector, the operating environment remains unfriendly, reports TOBA AGBOOLA.

     

    IN the past few years, Nigeria’s development has been private sector-led.

    There is no doubt that the industrial sector is still underdeveloped, despite various reforms being implemented by the Federal Government, especially in the manufacturing sector.

    The unconducive environment, especially lack of infrastructure, such as power, is the biggest challenge to industrial growth.

    According to the data recently published by the National Bureau of Statistics (NBS), the industrial sector of the economy, which comprises petroleum and natural gas, solid minerals and manufacturing, contributed an average of 40 per cent to the Gross Domestic Product (GDP) between 2007 and 2012. Sadly, manufacturing sector, which should be the bedrock of industrialisation contributed less than five per cent to the pool, while oil and gas contributed 95 per cent.

    Similarly, 2011 GDP statistics of countries published by the International Monetary Fund (IMF) show that, while the industrial sector of emerging economies, such as China and India contributed about $3.4 trillion and $482 billion, to their GDP, the Nigerian industrial sector contributed a mere $122 billion, of which 95 per cent was from oil sector.

    It is an indication that the industrial sector is still grossly underdeveloped.

    The manufacturing segment remains a fundamental pillar upon which enduring economic growth and development are hinged.

    However, manufacturers find it difficult to operate at optimal capacity due to many economic and environmental challenges that have continued to hamper productivity.

    Operational difficulties include epileptic power supply; decreasing credit facilities from banks and other financial institutions; importation of fake and substandard products, as well as inconsistent and unfavourable government’s economic policies, among other issues adversely affecting the sector.

    All these impediments have prevented the sector from contributing substantially to the overall economic advancement of Nigeria.

    Also, a recent survey by the Lagos Chamber of Commerce and Industry (LCCI) through its Business Confidence Index (BCI) for the second quarter, showed that unless the Federal Government addressed some of its unfriendly business policies, the nation’s goal of reviving its industrial sector as well as enhancing bilateral trades remains a dream.

    Though the report showed a modest improvement of 16.5 per cent from the 10.5 per cent in the first quarter of 2013, the BCI scores for the two periods remain far below the 50 per cent global confidence threshold.

    According to the LCCI, some of the factors responsible for the slow-paced growth are that investors and business leaders are still wary because the state of the economy and the unfriendly business environment.

    Specifically, the BCI, which assessed the peculiar factors that impact domestic business outcomes in Nigeria in 14 sectors and 37 sub-sectors, showed a gloomy outlook for 2013, noting that the real sector growth is largely constrained by rising socioeconomic uncertainties.

    According to the research, the factors that weakened the index score include: poor access to credit, inhibitive tendencies of monitoring and regulatory agencies, sustained insecurity situation across the country, dwindling public power supply and budget approval/implementation crisis.

    The President, LCCI, Goodie Ibru, reiterated the need for the government to give due consideration to economic diversification, noting that recent developments in the global economy underscore such urgent need, as the risks of oil prices volatility are real.

    He said: “We are concerned about the weak impact of the growth performance on private sector and the welfare of the Nigerian people. Virtually all business segments lamented the harsh operating environment. The power situation deteriorated as we now have a relapse into a chronic power failure. The refineries are still underperforming; unemployment level is still high and cost of fund is still high.

    “The credit situation is still a major problem for investors in the economy. As in the previous quarters, lending rates were well above 20 per cent. Many small and medium scale enterprises still have serious challenge in accessing credit even at this high rate. The tight credit situation is a major inhibiting factor to the capacity of domestic enterprises to take advantage of the robust Nigerian market.

    “We reiterate our call for both fiscal and monetary authorities to work together to ease the credit conditions, especially for the small and medium scale enterprises and more importantly domestic businesses. This is critical as well to stem the gradual crowding out of domestic entrepreneurs by foreign investors.”

    He urged the government to create a conducive operating environment for investors, considering the involvement in economic transformation, inclusiveness of nationals in the growth process, job creation and general improvement in the welfare of Nigerians.

    At the Fourth Manufacturers Consultative Forum in Ikeja recently, the Chairman, MAN), Ikeja branch, Rev. Isaac Agoye, said the manufacturing sector was on the throes of death and would witness total collapse if the government continued to deny it the enabling environment.

    The chairman said many manufacturing industries have closed shop, adding that most of the company premises have been turned to worship centres while others have become event centres.

    He said the ever-busy industrial estates have become shadows of their past glories, lamenting that what the government at all levels keep saying indirectly is that they need more funds and the manufacturing sector must provide it without a commensurate provision of an enabling environment.

    “Our universities are churning out thousands of graduates without the hope of gainful employment. The level of abject poverty in the land has deepened, the degree of insecurity has become unprecedented simply because we have failed to bring the manufacturing sector out of the woods,” he said.

    He said a possible solution to the many questions about the country is for the manufacturing sector to be given the opportunity to thrive and live up to its bidding as a catalyst for employment generation.

    He further said there was the need for the government to urgently act in ways that would make the country attractive for investors.

    Agoye also criticised the Central Bank of Nigeria (CBN) over its practice of substituting naira for dollar–derived revenue, adding that this is responsible for the ever declining rate of the naira, as this framework translates to too much naira chasing relatively modest sums of dollars auctioned by the CBN every week.

    “We observe that the villain militating against our economic growth is the payment system in which the CBN captures national export dollar revenue and substitutes hundreds of billion of naira as monthly allocations to the three tiers of government.

    “We note the ever-present scourge of excess liquidity caused by CBN’s frontloading of naira in substitution for dollar revenue is also responsible for government’s accumulation of an unnecessary debt burden that attracts huge interest payments annually to predominantly the same bank that are the prime beneficiaries of the largesse of deposits of huge naira allocations every month,” he said.

    The President, Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture, (NACCIMA), Dr. Herber AJayi, canvassed an enabling environment for their operations, especially in power generation and security challenges to bolster the attainment of government’s development objectives.

    He urged the Federal Government to implement policies that would ease the business environment, especially policies that affect the Micro, Small and Medium Enterprises (MSMEs).

    The Director-General, Nigeria Employers Consultative Association (NECA), Dr Segun Oshinowo, also blamed dearth of infrastructure as one of the reasons for the poor business development in the country.

    He noted that the poor performance of business was as a result of the inability to access funds by members of the Organised Private Sector (OPS).

    According to him, another factor that negatively affected business is insecurity, which works against the private sector and the government’s goal of bringing more foreign investors into the country.

    “The security situation in the country affected both the local and discouraged many foreign investors from coming into the country, especially the northern part of the country. Federal Government must take drastic steps to arrest insecurity in the country and provide the necessary conducive business atmosphere.

    “There was no significant transformation in business environment in year 2012 because business and economic environment was typically characterised by upsides and downsides,” he said.

    Oshinowo said though last year and the first quarter of this year offered huge opportunities to investors, especially indigenous entrepreneurs, they were constrained by some challenges, which greatly affected the sector.

    He called on the Federal Government to create a conducive business environment.

    On a positive note, however, the country seems to be making modest achievements, especially in the manufacturing sector.

    For instance, the MAN reported that most of the variables for measuring the performance of the real sector have been on the upward swing.

    The report stated that the capacity utilisation of the sector was about 49 per cent compared to the 47.5 per cent average in 2011/2012, indicating that more companies are putting more resources to use in their factories than they did in previous years.

    It says the value of industrial production has also increased, though marginally, from N130 billion to almost N350 billion at the end of last year. New investments entered the sector and the firms like Dangote Group, Lafarge Cement WAPCO, De United Foods, Procter and Gamble as well as Guinness plc added more to their production lines, as well as built new factories, thereby creating additional industrial jobs.

    In his contribution, LCCI Director- General, Muda Yusuf, noted that the business and economic environment was typically characterised by upsides and downsides, but the latter seemed to have outweighed the former.