The Nation Newspaper

Tag: infrastructure

  • ‘Bua Group committed to infrastructure growth’

    ‘Bua Group committed to infrastructure growth’

    Demand for cement will henceforth be driven by massive building of infrastructure and commercial or residential housing development, Group Executive Director for BUA Group, Kabiru Rabiu has said. For him, cement price will remain stable in the short term and gradually drop in the medium term.

    Speaking at an investor conference recently, Rabiu said although BUA Group started as a trading company, importing rice, cement and flour, it later turned to a major integrated manufacturer of these products locally thereby creating thousands of jobs for Nigerians.

    “The company started as a trading entity importing rice, edible oil, cement as well as flour into the Nigerian market. Over the years, it began the production of what it previously imported like edible oil as well as rice and flour milling,” he said.

    By 2005, the firm established its first flour mill in Lagos, followed by another flour mill in Kano with 5.5 million tonnes milling capacity per day.

    Also, in 2008, BUA Group set up the second-largest sugar refinery in Sub-Saharan Africa, which is situated in Lagos with installed capacity of 720,000 metric tonnes.

    “At the moment, companies within the group are separate entities within different divisions. We have the Infrastructure division and then we have the foods division. In the infrastructure segment, we have cement, real estate, steel and port operations,” Rabiu said.

    He explained that massive infrastructure projects, commercial and residential housing development will drive cement demand in Nigeria. “So, this government has a plan of spending about $20 billion starting from next year on infrastructure. A lot of this money will go to construction of roads, bridges and other critical infrastructure currently lacking in the country. We are already well positioned to take advantage of the opportunities that arise within the sector,” he disclosed.

    BUA Group’s target is to increase capacity to 10 million metric tonnes per annum by 2018 while remaining a leading player in the cement industry.

    Expatiating, he said: “In 2008, again we acquired a controlling stake of a cement company, a company called Cement Company of Northern Nigeria Plc, as well as Edo Cement. And we were one of the 13 companies given licences to bring in bulk cement into the Nigerian market. The group has invested heavily in these acquired companies to upgrade infrastructure as well and introduce additional capacity.”

    Besides, BUA Group’s sugar refinery has 720,000 metric tonnes capacity, while a new plant is being set up in Port Harcourt. In the infrastructure segment of the firm’s operation is cement production, where it is the third-largest cement producers in Nigeria with a current capacity of 5.5 million metric tonnes per annum.

    “Our port operation was concessioned to us by the government and can take up to two million tonnes of cargo per annum. And we obviously established 30 kilometres of gas pipeline to power our cement plant in Edo State,” he said.

    On cement price volatility and competition, Rabiu said cement price in Nigeria will remain stable in the short term. He said certain competitors did a price reduction a few months but when demand rose speedily over the period, the price was subsequently adjusted upwards.

    “If you look at the supply and demand pattern in Nigeria, you realise that we have very low capacity of cement compared to other emerging markets or emerging economies. So, we feel in the short to medium term, there is a possibility of prices going up. When a key competitor reduced its price, we saw a bit of slow-down in the demand pattern. When demand tends to be stronger obviously then the price trends to go up,” he explained.

    Rabiu said the firm produces 3.5 million tonnes in Edo Cement which is running on natural gas. “We have Sokoto Cement that is 500,000. That one is on heavy fuel. We also have BUA Cement 1 which is a floating terminal. In terms of energy, Sokoto Cement, which is in the north-western part of Nigeria does not have natural gas infrastructure. At the moment, they are running on heavy fuel. But we are converting the plant to coal which is available for the plant,” he said.

    Rabiu said the limestone and distance to the deposit is really important in the cement business. “If you take the largest cement plant in the country for example, from where the plant is located to where the deposit is, it is about nine kilometres away. They are nine kilometres apart and obviously difficult to manage. And that is what we try to avoid. Edo Cement is sitting right on top of where the limestone is, and same with Sokoto Cement. So, our Edo Cement plant is the only cement plant in Nigeria that is in marble that supports the limestone. In terms of quality, it is also better because of the high purity of our raw material. For us that is very important especially in the competitive environment,” he said.

    The performance of BUA Group has also not gone without recognition. For instance, the BUA Cement was recently announced as the “Cement Brand of the Year 2015” at the 2015 Marketing World Awards in Lagos. The company beat other major manufacturers including Lafarge and Dangote Cement to clinch the award. BUA Cement, a wholly owned subsidiary of BUA Group.

    According to Instinct Media, organisers of the awards, the company won based on its consistency in delivering superior product offerings as well as setting the pace for cement manufacturing in the country.

  • Wanted: Investments in agric infrastructure

    Wanted: Investments in agric infrastructure

    A consultant to the World Bank, Prof Abel Ogunwale, has advised the government to invest in infrastructure and value-added production.

    Ogunwale, a lecturer in Agricultural Extension and Rural Development, Faculty of Agricultural Sciences, Ladoke Akintola University, Ogbomosho, Oyo State, noted that growth in agriculture would require an increase in infrastructural  investments.

    He said farmers expected state governments and organisations to help boost production, noting that the sector would be attractive to investors because of favourable political and legal environment, and freehold ownership, among others.

    While some investors are well-established in commodities markets, Ogunwale noted that poor infrastructure and volatility were scaring others away.

    He said investors focus on agriculture’s assets and explore opportunities in areas, such as land, grain elevators and food processing plants.

    He observed that Nigeria is lagging in agric infrastructure, citing irrigation system and other facilities which need renovation and investment.

    Ogunwale bemoaned the sector’s low capacity, urging the government to open up the industry for investments.

    He urged the government to support commercial aquaculture, breeding, monitoring and warning systems and epidemic surveillance systems.

    He implored the government to encourage free trade to unlock its agriculture capability by implementing reforms, deregulation nd easing rules for investors.

    He said improving the environment for agriculture would bring  benefits, and contribute to stronger economic growth.

    According to him, improved barge, rail and port facilities could boost food production, adding that improving infrastructure will attract capital into the agribusiness sectors.

  • Sweden, Switzerland promise support for infrastructure, others

    Governments of Sweden and Switzerland have pledged their support for the development of Nigeria’s power and infrastructure sectors. The Ambassador of Switzerland to Nigeria, Mr. Eric Mayoraz, and his Swedish counterpart, Mr. Svante Kilander, pledged the support when they accompanied the Managing Director of ABB in Nigeria, Mr. Mohammed Hosseiny, on a courtesy visit to Vice President Yemi Osinbajo.

    Amb. Kilander stated after the visit the team had a fruitful discussion with the vice president. “We assured the vice president that the Swedish and Swiss governments are fully behind the activities of ABB Power Company in their activities in Nigeria. “There is a full government support for this Swedish/Swiss company.’’

    The envoy described the relations between Nigeria and Sweden as excellent, saying: “We are happy to be able to promote not only government-to-government relations, but also the relations between Swedish and Nigerian companies. This is where development is taking place, where Nigeria is in such a dynamic stage as it is now under the leadership of President Muhammadu Buhari and the Vice President.”

    Also, Mayoraz said Switzerland would support the development initiatives of the Buhari administration. “Switzerland, like Sweden, is committed to supporting the new development policy of the new administration of President Buhari and we are supporting our companies that are willing to invest in development activities here in Nigeria,” he said.

    Mayoraz however, declined comment on the challenges facing Nigeria, saying it was the right of Nigerians to assess what the government was doing. The ambassador acknowledged that Switzerland and Sweden have excellent bi-lateral relations, saying: “If we can try to cooperate for the success of the development of Nigeria, we will be very pleased.”

    In his contribution, the Country Managing Director, ABB, Mr. Mohammed Hosseiny, said the meeting was about how the company could play a role in providing Nigeria with power for the development of infrastructure.

    He added that the discussion focused on the nature of solutions ABB had to support the development in both areas as a follow up to the visit of its Group CEO to Nigeria recently.

    The managing director said the response of the vice president was very positive. “He is aware of the company and he has stressed the need to move forward to the next steps in this power and infrastructure development,’’ he said.

  • Infrastructure, housing to drive cement demand, says BUA chief

    Demand for cement will  be driven by building of infrastructure and housing development, Executive Director, BUA Group, Kabiru Rabiu has said.

    He said the firm’s target is to increase its capacity to 10 million metric tonnes per year by 2018.

    He said the company acquired a controlling stake at the Cement Company of Northern Nigeria Plc, as well as Edo Cement.This is in addition to being one of the 13 companies given licences to bring in bulk cement into the local market.

    On how the plant is powered, he said the company established 30 kilometres of gas pipeline to power their cement plant in Edo State.

    He predicted that cement price will remain stable in the short term and gradually drop in the medium term.

    Speaking at an investor conference, Rabiu said though BUA started as a trading company, importing rice, cement and flour, it later turned to a major integrated manufacturer of these products locally thereby creating thousands of jobs for in the country.

    “The company started as a trading entity importing rice, edible oil, cement as well as flour into the Nigerian market. Over the years, it began the production of what it previously imported like edible oil as well as rice and flour milling,” he said.

    He said by 2005, the firm established its first flour mill in Lagos, followed by another in Kano with 5.5 million tonnes milling capacity per day.

    Also, in 2008, BUA Group set up the second-largest sugar refinery in sub-Saharan Africa, which is situated in Lagos with installed capacity of 720,000 metric tones, he added.

    “At the moment, companies within the group are separate entities within different divisions. We have the Infrastructure division and then we have the foods division. In the infrastructure segment, we have cement, real estate, steel and port operations,” Rabiu said.

    He explained that massive infrastructure projects, commercial and residential housing development will drive cement demand in Nigeria. The BUA boss said he learnt from informed sources that President Muhammdu Buhari’s administration planned to spend about $20 billion starting from next year on infrastructure.

  • Developing sustainable infrastructure

    Developing sustainable infrastructure

    Text of paper presented by Chairman, Bresson, Mr. Gbenga Olawepo-Hashim, titled: Nigeria: facilitating resilient and sustainable infrastructural development, during the Nigerian Students Society’s Annual Symposium at the Imperial College, London.

    I am delighted to speak to this very distinguished audience on the occasion of the fourth Annual Symposium of the Nigerian Society here at the Imperial College London, an exceptional centre of learning and research.

    We have gathered here to talk about a great country Nigeria. Nigeria is great not just because it is the seventh most populous country on the planet. It is an important nation not only on account of her oil wealth. Nigeria is significant more because of the energy of her people, whose creativity and resilient spirit of enterprise continues to assure her progress even in the face of seemingly hopeless situations.

    It is due to the hard-work and industry of the ordinary Nigerians- the nation’s greatest asset, that Nigeria attained a GDP rebased at $510 billion in 2013 exceeding that of South Africa to become the biggest African economy even in the face of her parlous infrastructure.

    The feat is the result of the toiling of small scale   entrepreneurs, who continue to create value without adequate electricity, cottage food processors, without affordable financing, farmers without the scantest of state support; artisans, bold and imaginative business men and women, dynamic financial managers, young innovators creative artistes and hardworking professionals.

    Remarkably, Price Water Cooper predicts that the country’s economy will probably grow to be the 9th largest economy in the world by 2050. The basis for this has already been laid over the past ten years with the country recording 6-7% annual growth consistently. In 2015, even with the collapse in oil price – the country’s major export – the economy still managed to grow at 2.8% compared to 1.2% of South Africa; 1.5% in the Euro Zone;  -2.6% in Brazil and 2.0 % in the US last quarter. These occurred despite more than fifty per cent collapse in oil revenue and slowdown in government business due to the inauguration of a new government.

    Growth in the Nigeria Economy is expected to be sustained as the economy has acquired a resilience beyond oil and natural resource exploitation which accounts for only 14% of GDP as long as the political and security situation remains stable.

    Nigeria has also recorded a robust expansion of her middle class, which Standard Bank reported has grown by six-folds between the year 2000 and 2010.

    The Nigerian diaspora community is an integral part of the Nigeria growth story. In 2013, foreign remittances to Nigeria was a record $21billion USD.  This forms part of the incredible contributions of Nigerians abroad, innovators, small business operators and ordinary folks eking out a living for themselves the hard-way – picking off tough jobs that a lot of people in their host communities ignore.

    Brilliant people of Nigerian decent stand up daily to be counted as part of the positive pages of the rising Nigerian story. The Imafidon twins Paula and Peter broke the world mathematic record passing the Cambridge Advanced Level Math at age eight, the youngest ever to do so. Chinedu Echeruo, founder of Hopstop.com, purchased by Apple at a price of $1billion USD is blazing the trail in the ICT world.

    Dr Victor Olalusi who scored 5.0 CGPA at the Faculty of Clinical Sciences at Russian National Medical University in 2013, arguably the first in the world to do so are among a growing list of sterling performers.

    Back home in 2012, four Nigerian teenage girls namely Duro Aina, Akindele Adeola, Faleke Oluwatoyin and Bello Eniola figured a way to generate electricity from urine to power a generator for six-hours.

    Recently, 24-year-old Oluwatobi Olasunkanmi won the William Charnley Prize for the best First Class in Law at the University of Cambridge. Right here in this hall, we have Mervin Azeta, a female Chemical Engineer, who has just completed her Master’s here at Imperial with a distinction, having achieved a first class honour in her first degree from the University of Benin, Nigeria, and I know there are similar more stories of great achievers in this gathering today.

    This is the Nigerian spirit that turns out outstanding achievers from the harshest imaginable environment. Your guesses are as good as mine, where Nigeria can be in the next ten years if her hardworking people can enjoy the infrastructure support that their peers in comparable middle income countries take for granted. I suspect this is one of the reasons why the ICNS has invited us to explore the topic: ‘’Facilitating Resilient and Sustainable Infrastructural Development‘’.

     State of Nigeria’s infrastructure

     A number of studies in the recent past have highlighted the extent of decay and decline in the Nigerian Infrastructure. A 2014 World Economic forum report ranks Nigeria 140th out of 160 countries surveyed. A 2013 AFDP publication titled: ‘’An Infrastructure Action plan for Nigeria’’ reported that the Nigeria infrastructure accounts for 20-25% of the GDP compared to 70% of the GDP in most other middle-income economies with comparable size to that of the Nigerian economy.

    To drive the story home, one only needs to compare Nigeria’s 4000 MW available electricity capacity to South Africa’s 45 000 MW to a population of 53milion. To be at the same electricity generation capacity per head, Nigeria will need to achieve an estimated 160 000 MW available capacity for her 170million population. Water supply is not any better, as only 4% of the citizens had access to pipe borne water as at 2012 compared to 16% average for Sub-Saharan Africa.

    On Transportation infrastructure, while road transport remains widely in use with the countries road network expanding from 6000 km at independence to 197,000km in 2012 only about 18% of the roads are paved. The roads and bridges are in various states of disrepair; air and water transportation are below acceptable standards and our ports and railways services are in a near state of complete abandon.

    As a matter of fact, the country has not witnessed the construction of any new green field port over the last four decades despite a rapidly expanding economy. According to the AFDP 2013 study, of all the freight that arrived Nigerian port, only 0.2% throughput travelled by rail.

    The oil refineries are in an incredibly bad shape. Nigeria, the fifth largest producer of oil has turned into a net importer of petroleum products due to the shameful state of gas and pipeline infrastructure. Hospitals and Educational facilities are in a state of decay crippled by the manacles of poor maintenance and underdevelopment.

    The reasons for the infrastructure decay are not far-fetched. They include; lack of adequate investment from both the public and the private sector, lack of adequate maintenance programme and capacity building issues.

    To upgrade the nation’s infrastructure to support the desired economic growth target and socio-economic development objectives, the AFDP forecasts Nigeria requires $350 billion USD CAPEX investment over a period of nine years. It also estimates that $100billion USD is required over the same period as OPEX investment.

    A recent McKinsey projection on the cost of upgrading Nigeria infrastructure is not too far from the AFDP assumptions.McKinsey projects that $31 billion USD is required yearly over a period of ten years. Both studies expect most of CAPEX investments to come principally from Federal Government Infrastructure Funding commitment, Public-Private Sector collaboration through the PPP and direct private sector investment. Unfortunately, the funding commitment from the Federal Government to infrastructure has been disappointing as only a meagre $3.6 billion USD commitment to Capital Expenditure was provided for in the 2014 budget. Private sector commitment has also been small and slow in coming.

     Challenges of building a resilient and sustainable infrastructure

    The task of building a resilient infrastructure that will meet the developmental needs of the country are many but I will limit myself to five critical areas as I assume that this audience will be more interested in how to scale the hurdles than an exhaustive list of the problems.

    For our purpose I have identified:

    1. Funding
    2. Administrative and Bureaucratic impediments to private sector participation in infrastructure development

    iii. Man-Power challenges

    1. Lack of industrial base to locally produce the component of infrastructural facilities
    2. Re-calibrating the Electricity Sector Reform

     Funding

    Though Nigeria has been severally referred to as a rich country whose income has been ravaged by rampant corruption accounting for its abysmal level of infrastructural development; this assumption is only half the truth. The revenue collected by the Federal Government, even when not stolen, is grossly inadequate to cater for a population of about 170 million people.

    During the season of high Oil price, the country’s total receivables from oil sales amounted to about $50 billion USD in twelve months. This revenue is comparable to the 2014 earnings of Disney World, Florida, USA which was a record $48 billion USD.

    Ancillary to the small revenue base of the country is the misapplication of the revenue collected through a consistent disproportionate allocation of about eighty per cent of revenue to recurrent expenditure leaving little or nothing for Capital Expenditure. Lack of funding for Infrastructure, Manufacturing and Industrialisation is compounded by the shallowness of the Nigerian Banking system. The existing banks have proved incapable of lending to Infrastructure and the real sector.

    Policy makers will have to examine whether it makes sense for Banks to hold licences for merely charging a premium on the economy without adding the needed value for infrastructural growth and development of manufacturing. It may be time for decision makers to examine the propriety of encouraging successful global banking brands with reputation for infrastructure financing to bring more depth to the Nigeria banking sector.

     Administrative and bureaucratic impediments to private sector participation in infrastructure development

     There is no doubt that given the size of its market, the high rate of return that investment in the economy commands compared to other emerging markets, the country should be one of the best destination for private sector investment in infrastructure. The country also has clearly defined laws and institutions that spell out the path to private sector participation in the economy. Nigeria’s electricity sector reform Act 2005 for instance, is one of the most advanced reform laws in the emerging markets. Yet, the bureaucratic civil service, which most of the economic liberalisation laws seek to keep out of the way of private sector investment, struggles everyday to return to reckoning keeping investors applications for permits and licenses unattended to for years.

    Dismantling the unnecessary administrative red tapes and multiple agencies’ interventions in administrative processes is one of the simple but crucial step Nigeria must take immediately in order to receive the desired private sector investment in her ailing infrastructure.

     Manpower challenges

    Project developers in the country frequently bemoan the lack of qualified and technically competent hands for project implementation. The cost of engaging expatriate hands with requisite skill-sets is unsustainable and also creates cost over runs. There is an urgent need to reform educational curricular with a desire to emphasise the acquisition of technical skills required for the development of infrastructure and industrialisation of the country. Particular attention must be paid to the development of middle level manpower such as welders, mechanics, builders with up to date certification in modern vocational training centres. The training of Accountants, Engineers, Lawyers with project development and management skills are also urgently required. The pool of qualified Engineers and other professionals of Nigerian decent in the diaspora are crucial to the task of building local manpower capacity for industrialisation and development.

     Lack of industrial base to locally produce the component of infrastructural facilities

     It is trite fact that most modern infrastructure, machines tools and equipment are largely- after invention and design- a product of the coupling together of metals, iron, steel, glass, aluminium and petrochemicals. The absence of sufficient local production of these items means that a nation will be forever consigned to mass importation of finished goods at prohibitive cost and condemned to the status of a primary producer.

    This particular challenge of the Nigerian economy is perhaps its most fundamental impediment to industrialisation and infrastructural growth. The quantity of steel produced in a country is a signal to its technological and industrial advancement. Nigeria produces only 2.5 million tonnes per year and imports about 17million tonnes – very low quantity produced and consumed- compared to other middle-income economies. Turkey produces 34 million tonnes per year, India 86.5million tonnes and Brazil 33.9m tonnes per year.

     Re-calibrating the electricity sector reform

     Building Sustainable Infrastructure and a new industrial economy is impossible without adequate electricity supply at the point of need. Most manufacturers, particularly small scale producers in Nigeria, have had to bear huge cost through self-generation of electricity using diesel and petrol as fuel. The self-generating energy supplier mode has a price tag of N90/kw compared to N22/kw grid price of electricity.

    Given that prevailing interest rate to assess finance in Nigeria is 22% compared to 8.5% in South Africa, 7.8% in Egypt, China 3.4% and in the US 2.33%, the Nigerian manufacturer is already not competitive. The burden of high cost of production could be lighter if electricity supply can be assessed at the grid price on a stable basis and even at a price a little higher than the current grid cost.

    The electricity sector reform inaugurated by the 2005 Electricity Sector Reform Act in Nigeria was designed to address the challenges facing the sector with a view to making private sector the driver of investment and efficient management of the power sector. The reform rests on two legs; privatisation of the existing utilities on one hand and the licensing of Private Independent Power Producers on the other.

    • To be concluded
  • $25b infrastructure fund coming

    $25b infrastructure fund coming

    The Federal Government plans to set up a $25 billion (about N4.9 trillion) infrastructure fund that will be invested in key sectors of the economy to bridge financing.

    Finance Minister  Mrs Kemi Adeosun yesterday broke the news in Lagos at the inauguration of the Capital Market Master Plan Implementation Council (CAMMIC), National Investor Protection Fund (NIPF), and Corporate Governance Scorecard for quoted companies by the Securities and Exchange Commission (SEC).

    Mrs. Adeosun said the $25 billion infrastructure fund was part of efforts to bridge the gap between government revenue and required funding for major infrastructure needed to accelerate the development of the economy.

    According to her, in the current environment of significant revenue squeeze and other budgetary constraints, the investments needed for infrastructure will clearly not come from government coffers alone.

    “We believe this is where the capital market can really make itself relevant by stepping in to close the funding gap. Government is already looking to set up a $25 billion fund wholly dedicated to infrastructure investments. A crucial assignment we have for the capital market community is to come up with other innovative ways of mobilizing the capital needed to address Nigeria’s infrastructure challenge,” Adeosun, who was represented by Permanent Secretary of Finance, said.

    She pointed out that an efficient and vibrant capital market is an indispensable feature of any modern economy as it supplies affordable medium-to-long term capital needed for growth.

    “Nigeria needs and deserves a capital market that is characterized by high levels of liquidity, depth, breadth and sophistication to enable rapid socio-economic development,” Adeosun said.

    According to her, the current 10-year capital market master plan could catalyse the development of the type of capital market that Nigeria desperately needs to tackle Nigeria’s biggest challenges of huge infrastructure deficit and unacceptable level of unemployment.

    She however expressed concern that less than three per cent of Nigerians are currently investing in the capital market and even more worrisome, that only 0.2 per cent of Nigerians invest in mutual funds.

    “Imagine the kind of savings to be mobilized, the liquidity to be injected and the sophistication to be developed if we improve these numbers by bringing millions more Nigerians to invest in the capital market.”

     

  • Lawyer seeks review of Infrastructure Commission Act

    Lawyer seeks review of Infrastructure Commission Act

    Lead Partner at the Detail Commercial Solicitors, Mr Ayuli Jemide, has called for a review of the Infrastructure Concession Regulatory Commission (ICRC) Act of 2005.

    He said the commission needs to be empowered to impose sanctions on the Act’s violators. The Act’s provisions on procurement also need to be modified, he added.

    Jemide, who spoke during his firm’s Fifth Business Series, said there is the need for sanctity of contracts so that investors can enforce their rights in record time when infringed upon.

    According to him, terminating contracts unduly can shape investments, as “money has choices as to where it goes.”

    The event had the theme: Nigeria’s infrastructure: What next? Detail Solicitors is distinct as Nigeria’s first commercial law firm to specialise exclusively in non-courtroom practice.

    Jemide thinks the ICRC Act should be amended to give the commission not just regulatory powers, but to be “a dog that can bite”.

    He said: “I think there needs to be specific provisions regarding ICRC’s powers to charge fines and penalties. I also think there is still a conflict between procurement under the ICRC Act and procurement under the 2007 procurement law.

    “A reviewed ICRC Act will have clearer statements on who is responsible for procurement in public private partnerships as opposed to procurement under the 2007 Act, which should deal with traditional procurement.”

    Jemide said Nigeria needs a development bank that will drive infrastructure financing. To him, it will be ideal to have a local development finance institution (DFI) rather than relying on multilaterals or foreign DFIs.

    “If you have your own development bank, it will help to constantly create the right framework and the right space for infrastructure financing. For instance, one of the things a development bank will do is to put seed capital to develop projects up to a point where they are bankable, before you call in investors,” he said.

    Other speakers included Olufunke Jones (Ecobank), Wale Shonibare (United Capital Plc), Hakeem Olopade (Infrastructure Bank Plc), Tony Ejiofor (First Bank Capital) and Opuiyo Oforiokuman (Arm-Harith Infrastructure Investment Limited).

    Discussions centered on other sources of infrastructure funding, such as pension funds, effective taxation, government savings, the capital market, among others.

    On which funding methods he thinks is feasible, Jemide, speaking on the sidelines, said: “I think the lowest hanging fruits will be pension funds because it’s already there. It will be inter-governmental.

    “You just need to create the right avenue for PFAs (Pension Fund Administrators) to be comfortable to put retirement money in a long-term project. One way to secure it is for government to give a guarantee and say: ‘Don’t worry, if anything happens to the project, we’ll pay.’”

    Jones believes banks need to get more involved in projects. “Banks can no longer sit on the fence,” she said.

    For Shonibare, Nigeria can imitate Japan which had long-term savings plan for infrastructure financing. He also thinks Nigeria needs a National Development Bank. To him, institutions, rather than individuals, should finance projects.

    He  suggested that ICRC, which he described as an aberration, should be merged with the Bureau of Public Enterprise (BPE). Government, he said, should not borrow to fund recurrent expenditure to avoid high interest rates and “crowing out” other borrowers.

    Olopade thinks more than one DFI is needed. “The more the merrier, as it is in the US. We need them to do infrastructure financing,” he said.

    Oforiokuman, a former executive at Lekki Concession Company, said the Lekki toll shows that PPP can work in Nigeria. He decried a situation where projects are tied to the initiating governor, saying sometimes long-term projects become short-term after a change of power.

    On why the forum was organised, Jemide said: “We think that beyond being lawyers and working on projects, you should have fora such as this that helps to synthesize thought and feedback to government.

    “If you can’t influence policy, you should have discussions that can help shape policy. At the end of the day, there’ll be a communiqué which we’ll give to people in government privately.”

     

     

  • ‘We can’t handle infrastructure financing’

    ‘We can’t handle infrastructure financing’

    In 10 years, pension assets have grown to over N5 trillion. How can the cash be maintained for the country’s benefits? Premium Pension Limited(PPL) Chairman Mr. Aliyu Dikko,in this interview with Omotola Tolu-Kusimo,says the cash can be used to stimulate the economy and  create profitable ventures. 

    At the World Pension Summit in Abuja, investment of the N5 trillion accumulated pension fund was a major issue.  Some governors are looking at how they can access the pension fund for infrastructural development when they  have not complied with the Contributory Pension Scheme (CPS).  What do you make of this?

    There were three states that attended the Governors’ Forum arranged for the summit namely, Kaduna, Akwa Ibom, and Kebbi States. Out of the three states, only Kaduna State has complied with the scheme. Kebbi State has since inception been talking of complying but has not. Akwa-Ibom has also not complied; it has just promised to join in spite of the huge revenue of the the state. They just keep postponing the date for implementation. This means that it is only Kaduna State that may be able to meet the requirement for pension asset investment. My advice to the states is that it is in their own interest to comply because once they comply, a lot of opportunities will be opened to them otherwise they may not be able to access the funds.

     Do you think there is a way forward on how the pension fund should be invested in infrastructure?

    This is really the issue and it is not limited to the summit. What we have been doing as a nation in the past is to sit down, talk and go. There are always no plan for implementation and another set will come and talk and go and it goes on like that. There will be so many reports and committees but implementation has been zero. My advice is that there has to be timeline for implementation for whatever whoever intends to do. With respect to the pension assets, yes we have about N5 trillion on the ground part of which is not liquid, but in assets. But at least 70 per cent of that is liquid asset which is available for investment. But Pension Fund Administrators (PFAs), cannot invest money in infrastructure without a proper framework where the infrastructure will clearly show the revenue they will generate to be able to retire whichever instrument is used to invest in such bond or infrastructure. There has to be capacity development because in Nigeria we have been talking about infrastructure opportunities, but to be honest, apart from the issue of financing, we don’t even have the capacity to handle infrastructure financing in this country. I think we really need to develop the capacity and this can only be done through training and collaboration with nations that have already gone far in this area because it is not just a question of fund; operators need to be able to know how to deploy it into infrastructure. I also need to know how to structure the funding so that as I fund, it will not affect my liquidity as a pension fund administrator or cause problem for me in other areas. It is not just a question of putting money into infrastructure- electricity, road, rail line, etc., but there are other areas where whatever you do, it will be affected. So we have to be able to have that capacity to be able to analyse and say that yes, based on what we have done and the capacity and training we have had for our professionals, we are ready to go into infrastructure financing.

    Pension arrears have remained a knotty issue in the industry. The Federal Government is said to be owing about N100 billion in arrears and remittances. What is your view about this bearing in mind that  the same government is trying to make Nigerians develop confidence in the pension scheme?

    I must say that what the government has done so far is commendable especially the Federal Government. This is because before the problem of the oil price crash, the Federal Government was almost 100 per cent compliant in terms of remittances with respect to Federal Government employees. The government was largely in compliance also to past service liability but unfortunately, the oil price crash regime surfaced, and that has now affected almost everything. Yes, there is an outstanding of more than N100 billion in terms of past service liability and I don’t know whether the government is clearly remitting its obligation in terms of even the current Retirement Savings Account (RSA) remittances. But in terms of past service liabilities, yes, there is a huge outstanding. However, I believe that as the government settles down with ministers given portfolio, this will get sorted out sooner than you think. I don’t think any government will play with the future of its employees because the RSA is the future of the current RSA holders and I do believe that the government will do everything possible to retain the confidence of the RSA holders. It is a temporary setback but I do believe the government will address the issue, going forward.

    Despite Nigeria’s huge working population, there are seven million subscribers under the CPS. Do you see this as a challenge? What solution would you proffer to stimulate peoples’ interest, especially those in the private and informal sectors in joining the scheme?

    Nigeria’s working population is said to be around 49 million; but so far, just about six million have registered, thus leaving a very wide gap. I think the gap has to do with the informal sector which include the unorganised or semi-organised artisans among others. I believe that the way to bring them into the scheme is through incentive. Once there is incentive and it is clearly communicated to workers in the informal sector, we will begin to see them joining the scheme. Part of this is perhaps to make their own contribution as flexible as possible. It should not be as rigid as what we have for the formal sector. There could also be some tax incentive and maybe accommodation to say if you are able to contribute so much, you are guaranteed a loan to own a house or a loan to buy more motorcycle. This kind of incentive will encourage those in the informal sector to join the scheme. This is how other countries like Mexico, Chile were able to bring in their formal sector into the schemes. PenCom is working on the guideline of the informal sector which will soon be out. We are waiting to see the content of the guideline. The sector is a huge market.

    But some stakeholders are of the view that without improvement in the living condition of the citizens, people in the informal sector will not be able to join the scheme. Do you agree?

    We believe that with improved government policies, there should be improvement in the general condition of living. It is really better to start somewhere because we cannot say because there is no improvement in the condition of the informal sector employees then we will not start.  There is no time that we can say this condition is optimum. At any given time you will see need in some other areas and then you just have to continue to address them.

     What are the challenges in the pension industry?

    The most crucial is the challenge of compliance, especially by the private sector. Other challenges include funding, non-remittance of contribution by employersand  lack of public awareness of the scheme.

    Can the Federal Government compel non complying states in the scheme  to join?

    What happened was that when the scheme started, there was supposed to be law for the Federal Government and each state was to have its own law. But later it was realised that many state were not even willing to enact the laws. So, at a meeting during former President, Olusegun Obasanjo’s administration, the council of state decided that all state comply even though it didn’t say all state should adopt the same federal law but the council just simply agreed that all state should comply. After that some states decided to comply but quite a number of states saw it as an additional cost. They were not projecting into the future but at whatever contribution they are supposed to give now. So they saw it has a cost and decided not to be interested in the scheme. But I do believe that now that most of the states have some sanity, they might be able to see it as something inevitable because if you are not doing it now, you are postponing the difficult days. In the next five, 10 years, states that have keyed into the scheme will reap the benefit- which is that they wouldn’t have to pay retirees’ benefit; but the states who refused to do it will still have to pay retirees benefit and they will realise what they have missed.

    How did  Premium Pension come to be?

    Premium Pension was licensed in 2005 to participate in the management of the new pension scheme, the Contributory Pension Scheme (CPS). We commenced operation in July 2005 and I was the pioneer chief executive officer. We were among the first set of Pension Fund Administrators (PFAs) to be licensed. Our registration commenced January and February 2006 which makes us to be among the pioneer PFAs. Premium Pension is today one of the leading PFAs with asset under management of more than N400 billion. We have a mission to be with our customers in active retirement life. Our mission also include providing first class service to our customers with best practices in whatever we do.

    What are your plans to ensure that retirees and workers whose pensions are under your management get good service delivery and are forever happy?

    As a company, our norm is customer service and care for each and every stakeholder. Our stakeholders comprise of our Retirement Savings Account (RSA) holders who are now employers in the various organisations, our retirees who are now retired and are now enjoying their pension, the community where we operate and the regulators. We are a customer centric organisation and our mission is to satisfy all our stakeholders. That is why we inculcate in all of our staff from cleaners to drivers and everybody in the company how to be customer centric. We believe that without the customers, we cannot not exist.

     

    How have you been able to generate the N380 billion pension fund you claim to be under your company’s management?

    I mentioned earlier that we have N400 billion pension asset because N380 billion was based on the audited account, but I believe we have now crossed more than N400 billion. We have been able to achieve this because we are customer centric and are very close to our customers. This has made us to be a preferred PFA in the pension industry. We have also dedicated a lot of resources to our staff by providing proper training, good remuneration package and created a very conducive environment for them. This has helped us a lot in achieving success. We have also been able to make profit based on our prudence. We have had a very prudent culture in the organisation right from when we started. We started on a very low cost profile. When we started, every single thing was low cost and a lot of sacrifice was made from the management to the staff and this was what resulted to where we are today.

     

    You spoke a lot about integrity. What are the structures for company in terms of integrity?

    Certainly integrity is at the centre of our core values. Whatever you do in the world, if you do not have integrity, you will not succeed. Integrity is priceless and once you have integrity people will want to do business with you without you asking. Integrity is at the core of whatever we do in Premium Pension.

  • Infrastructure upgrade at Asaba Airport

    Infrastructure upgrade at Asaba Airport

    the Delta State Government has commenced a massive reconstruction of the Asaba International Airport, in a move to restore the glory of the aviation facility and to address the concerns raised by the Nigeria Civil Aviation Authority (NCAA), which led to an embarrassing downgrade of the airport earlier in the year.

    Recall that the NCAA, on April 27, downgraded the Asaba International Airport over issues ranging from inadequate training of technical staff, lack of perimeter fencing, flooding and uneven surface of the runway and other technical issues.

    By that directive, only Dash 8 – Q 400 planes or their equivalent will continue to operate through the airport until the issues raised are resolved while all Boeing 737s and jets of similar category are barred.

    To underscore government’s commitment towards addressing the airport’s infrastructural deficits, Governor Ifeanyi Okowa had, within a week of assuming office, held a meeting with ULO Consultants Limited – the contractor handling the construction of the airport project and the fruits of that meeting are evident – all the contractors are back on site toiling to meet agreed timelines.

    Governor Okowa had, on September 11, this year sought and received approval from the state’s legislature for a loan of N5.021 billion for the reconstruction of the airport.

    Specifically, the state legislature approved the request for guaranty of a loan facility to be availed ULO Consultants Limited in respect of the accelerated rehabilitation of the Asaba Airport.

    Hitherto, the airport could only be accessed from the North-Eastern direction because a 23 meter high hill blocked access to the runway of airplanes from the South-west direction.

    The hill has been reduced with a gentle 2.5 meters gradient sloping to the runway. With the leveling of the hill, the signal posts at the Southwestern end of the runway is now visible -a situation that was patently in breach of international standards.

    The airport has two signal beacons at both ends of the runway standing approximately at 2.4 kilometers apart from the terminal building. Another grey area is the absence of a perimeter fence around the airport. But the problem is being addressed, with work having reached advanced stage.

    Project Manager, Ali Bou Ghawi who spoke with Niger Delta Report revealed that over 40 per cent of the work has been done, noting that work will further intensify with cessation of the rains.

    His words: “We have completed the major work of surveying and pegging the entire area. Clearing of the entire forest surrounding the airport has reached advanced stage. What is left is for the real fencing work to begin and with the lull in the wet season, we will start soon.”

    Ghawi noted that his company was adding a new nine-centimeter layer of asphalt which was being laid on the tarmac to reinforce the existing runway.  Also, work on another control tower to complement the operational efficiency of the existing one has reached advanced stage.

    The engineer said the tower, which has already reached the second floor, would complement the existing Control Tower in line with International Civil Aviation Organisation (ICAO) standard.

    Beside the airport control tower, international airports are required to have a second tower for the purpose of monitoring local weather as well controlling incoming flights and departures.

    Moreover, the lighting of the airport has been restructured in such a manner that the entire lighting system will be embedded into the four-kilometer runway and taxi-way. The entire perimeter fence is being lighted as well.

    A source who spoke on condition of anonymity assured that “the downgrade in status of Asaba Airport has not, in any way, affected the operation of scheduled commercial flights in and out of the airport”, saying Arik Air, Aero Contractors and Overland Air which operate scheduled flights, have continued to provide seamless services to passengers.

    His words: “We hereby assure the public that the Delta State Government is committed to ensuring the upgrade of the facilities as directed by the NCAA promptly and the status of Asaba Airport will soon be restored to accommodate bigger jets such as the Boeing 737.”

  • Firm inaugurates school infrastructure

    Nigerian Breweries has officially inaugurated the infrastructural facilities it re-constructed at Dedeke Memorial Girls’ Primary School in Surulere, Lagos State, even as Surulere Local government Area also donated stationery to the school.

    According to the Managing Director, Nigerian Breweries Plc, Mr Nicolas Vervelde, the gesture aimed at improving education infrastructure in Nigeria. He added that the company’s investment in education is not mere charity but a pragmatic action designed to create a rich pool of human capital.

    Mr Vervelde, who was represented by the Group Affairs Adviser, Mr Kufre Ekanem said the infrastructural facilities donated would not only provide an environment conducive enough to teaching and learning but would also compete among the best infrastructure in public schools. He urged the school management and students to deploy care and proper management in the use of the facility in order to sustain it for future generation.

    He said the company has, over the years, been active in supporting Nigeria’s development aspirations in line with its vision of ‘Winning with Nigeria’; be it in the market place, product offer, infrastructure development or foot prints. He said the country has a lot of benefits to derive from the initiative because as Nigeria wins, the organisation wins also.

    He further said the gesture was about contributing to infrastructural progress in the country through its innovative platform, adding that the organisation’s relationship with the state is a long journey and they will continue to make contributions to support the development of the state.

    The Executive Secretary, Surulere Local Government, Mrs Bamidele Hussain said the inauguration of the facility serves as a turning point in the efforts of the local government to partner with corporate organisations to ensure the provision of basic social services as well as infrastructural needs of her citizens.

    She noted that public schools have suffered neglect over the years, despite the roll call of achievers that have passed through them. She commended Nigerian Breweries for never shirking away from its corporate social responsibility role to the community.

    Mrs Hussain added that the local government had formally delivered to the school authority one hundred dual desks and chairs for the students and 10 tables and chairs for the teachers.

    She said each student will be entitled to school bag, note books and writing materials, all geared towards facilitating and enhancing teaching and learning processes.

    The council chief added that the local government will continue to support the school as well as other schools in its environment.

    A Director in the State Ministry of Local Government and Chieftaincy Affairs, Mr Segun Osifeko thanked Nigerian Breweries for the gesture and its continual support to the state government in every area of human endeavour.

    Mr Osifeko, who said education is the bedrock of every society, noted that with the gesture by Nigerian Breweries, the state government would be able to confront the challenge in the education sector head on.