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  • Stimulating savings, investments

    Stimulating savings, investments

    Nigeria ranks within the lowest rung of global savings and investments. Ironically, Nigeria stands high on the global list of infrastructural deficit and financing gap. Savings and investments are at the core of Nigeria’s ambitious Economic Recovery and Growth Plan (ERGP). In this report, Capital Market Editor Taofik Salako examines the challenges and opportunities to boost the Nigerian capital formation

    The maiden offer of the Federal Government of Nigeria Savings Bond (FGNSB) made two salutary effects on the economy. The epochal offering opened up opportunities for the retail and sundry minority investors and savers to participate in sovereign issue.

    With the minimum subscription fixed at N5, 000 and a double-digit annual coupon or interest of 13.1 per cent payable quarterly on the two-year bond, it was perhaps the sweetest offer for that category. But it also brought home the low level of savings and investments in the economy.

    Despite the country’s population of about 170 million, the maiden FGNSB only received a nationwide total subscription of 2,577 bids with total size of N2.067 billion. It was a commendable start but it unearthed the underlying cause of Nigeria’s economic instability and susceptibility-paucity of savings and investments. The results aligned with other facts.

    The United States Central Intelligence Agency (CIA) estimated Nigeria’s Gross National Savings (GNS) at 13.10 per cent, 131st position among 180 countries tracked by the US agency. Nigeria occupied the lowest rank within the emerging countries bloc of Brazil, Russia, India, China, South Africa and Nigeria (BRICSN). China ranked atop the global chart with 46 per cent while India ranked third with 30 per cent. Brazil and South Africa had 17 per cent and 16 per cent.

    Nigeria’s Economic Recovery and Growth Plan (ERGP) also lent credence to this, with the GNS indicated at 11.29 per cent in 2016. The GNS is the difference between the Gross National Disposable Income (GNDI) and Total Consumption (C) and it serves as underlining benchmark to determining the national savings and investment culture, wealth creation and standards of living.

    GNDI aggregates the gross disposable incomes of all resident institutional sectors. The GNS comprises of personal savings, business savings and government savings with the exception of foreign savings.  The ERGP indicated GNDI at 101.73 per cent of the Gross Domestic Products (GDP) in 2016 while Total Consumption was put at 90.44 per cent. Gross National Income (GNI) was estimated at 97.48 per cent. The GNS is a vivid illustrator and it tells the stories of the economy, culture and habits. The higher the GNS, the higher the savings culture and vice versa. A relatively high and steady GNS contributes to national capital formation and development. The depth of domestic capital formation often determines the terms, access and flexibility of foreign capital.

     

    Missing links

     

    The low level of savings and investments also reflects in the nature and scope of participation in the capital market. Less than four per cent of the Nigerian population are investors in the nation’s capital market and only about six per cent of the domestic investors participate in mutual funds, otherwise known as collective investment schemes (CIS).

    These compare with an average of 15 to 20 per cent among several emerging economies. The absence of a large domestic investors’ base has been major factor in the long-running depression of the stock market. With the slowdown in foreign portfolio investments, Nigerian equities have been under intense sell pressure, forcing most companies into significant undervaluation.

    Reports on capital importation by the National Bureau of Statistics (NBS) and foreign portfolio investments (FPIs) by the Nigerian Stock Exchange (NSE) underlined the linkage and susceptibility of the capital market to the volatile fluctuations of foreign investors.

    According to NBS, Capital importation declined by 46.9 per cent to $5.12 billion in 2016 as against $9.6 billion in 2015, the lowest value since the NBS started tracking the inflow in 2007.

    FPI, which directly relates to the stock market, recorded the highest decline of 69.8 per cent while foreign direct investment (FDI) dropped by 27.8 per cent. A full-year foreign portfolio investment (FPI) report by the NSE showed that total foreign transactions decreased by 49.51 per cent from N1.03 trillion in 2015 to N517.55 billion in 2016.

    It was the lowest in six years and it was the first time that domestic transactions would outpace foreign transactions since 2011. The drag-on effect also saw domestic transactions decreasing by 28.02 per cent from N880.56 billion in 2015 to N633.82 in 2016.

    Altogether, total transactions at the stock market declined by 39.58 per cent from N1.91 trillion in 2015 to N1.15 trillion in 2016. The drag-on effect of the declining FPIs has continued to sustain a grueling depression since 2014, in spite of the near-consensus on the undervaluation of most stocks at the market. The stock market has been on a losing streak since 2014. Investors lost N1.75 trillion in 2014 and followed this with another loss of N1.63 trillion in 2015. Against the general expectation that political transition and new government would quicken a rebound, equities also closed 2016 with a net capital loss of N604 billion. Aggregate market value of all quoted equities on the NSE closed 2016 at N9.247 trillion as against N13.226 trillion recorded at the start of trading in 2014, representing a net capital loss of N3.98 trillion.

    “It has been established that there is significant relationship between savings, investments and economic growth. Savings is known in economic parlance to equal investments. Savings is also known as the amount left over when the cost of a person’s consumer expenditure is subtracted from the amount of disposable income that he or she earns in a given period of time. Savings is also the portion of disposable income not spent on consumption of consumer goods but accumulated or invested.

    Investment on the other hand is the purchase of a financial product or other items of value with an expectation of favourable returns in the anticipated future,” economist and head of research and investment advisory, SCM Capital Markets Limited, Sewa Wusu, noted.

     

    Behind the rot

     

    Most pundits said savings and investments reflect the macroeconomic environment and the deliberate policies of the government. AG Leventis (Nigeria) Plc Chairman, Mr. Ahmed Mantey, said a poor national economic performance would negatively impact savings and investments as households grapple to meet personal needs.

    “Worsening rates of unemployment and underemployment mean reduced household income and this puts a strain on disposable income to pay for goods and services,” Mantey noted on the reasons for the decline in consumer demand last year.

    Analysts at FSDH Merchant Bank also agreed on the macroeconomic influence on savings and investments. “The current high unemployment level in the country coupled with a drop in disposable income and the erosion of the purchasing power of Nigerians, have all contributed to low personal savings,” FSDH stated.

    FSDH noted that corporate wealth creation, which oils the wheels of personal savings and investments, has also been adversely affected by the harsh business environment that resulted from weak infrastructure, inadequate foreign exchange and rising cost of production, which have led to increased cost of running business in Nigeria and reduction in business profitability and retained earnings.

    Wusu stressed the importance of capital formation to national development. “Countries that had made sustained accumulation of capital investments as a result of savings have been able to achieve higher level of sustained economic growth. Nigeria has not been able to achieve that feat due to absence of laudable national savings policy. We are practically a consumption driven economy. This explains why we have failed in terms of developments in all spheres of critical infrastructure including education and health. The accumulation of fixed capital can only be possible through sufficient savings. We are constrained as a country by inadequate savings and investments,” Wusu said.

    According to him, savings create capital formation, which leads to technical innovation and progress to accelerate productivity, thereby increasing national output or economic growth.

    He added that savings would help to solve the problems of unemployment and balance of payment and eventually make the economy free from the burden of foreign debts.

    “The vicious circles of poverty in our country can be broken through sufficient savings, our slow rate of development as a country is attributed to the low levels of national savings that constraint our capacity to invest in capital formation,” Wusu pointed out.

     

    Ambitious targets

     

    The ERGP however expects Nigeria’s average savings to double within the next four years. The economic blueprint projects that GNI will rise steadily from 11.29 per cent in 2016 to 12.71 per cent in 2017 and consecutively to 15.53 per cent, 18.19 per cent and 21.31 per cent in 2018, 2019 and 2020.

    This projection also runs alongside that the economic growth would more than triple over the period. Real GDP growth is expected to recover from a contraction of -1.54 per cent in 2016 to a growth of 2.19 per cent in 2017 and subsequently to 4.80 per cent, 4.50 per cent and 7.00 per cent in 2018, 2019 and 2020.

    Private investment is also expected to grow steadily over the period. Private investment is projected to dip slightly from 10.42 per cent in 2016 to 10.20 per cent in 2017 but thereafter rise consecutively to 11.19 per cent in 2018, 12.68 per cent in 2019 and 14.58 per cent in 2020.

    Most pundits said while the targets are achievable much depend on government’s policies and coordination of the macroeconomic forces.

    “I think the government has a vital role to play in boosting private or national saving through crafting the required policies that raise people out of poverty. The level of income for the common man who is not educated is still very small to induce any savings. This explains why many people in our country are still under the poverty trap due to weak earnings capacity. So, the bulk of these people cannot save. What they think about is consumption and how to fend for their poor families. I think there is need for government to set out a national agenda or craft a policy on national savings to foster domestic savings that will help to increase the level of economic growth in this country. Our gross national savings at 11.29 per cent is too low compared to other developing countries of the world,” Wusu said.

    Securities and Exchange Commission (SEC) Director-General, Mr. Mounir Gwarzo, said the adoption of the National Savings Strategy Scheme, which is part of the Capital Market Master Plan, would boost savings and investments.  He noted the need for stakeholders in the financial system to increase campaigns for financial literacy.

    Gwarzo pointed out that SEC has been working with other stakeholders to develop early education programmes on capital market for pupils. SEC is leading efforts aimed at developing curriculum for the introduction of capital market studies in the primary and secondary schools in Nigeria in collaboration with the Nigerian Educational Research and Development Council and other stakeholders.

    Managing Director, United Capital Plc, Mrs Oluwatoyin Sanni, said lack of adequate knowledge on the workings of the financial system, especially the capital market, is one of the main reasons for loss of investment and poor investors’ confidence.

    Chartered Institute of Stockbrokers (CIS) President, Mr Oluwaseyi Abe, said the Federal Government should lead other stakeholders to develop a frontal purpose-driven domestic savings and investment policy that will encourage Nigerians to save and invest domestically as part of long-term plan for sustainable national development.

    He noted that a large domestic investors’ base would enhance the development of the nation’s capital market and reduce the extreme volatility usually driven by inflow and outflow of the dominant foreign investors by instituting policies aimed at encouraging the participation of Nigerians in the nation’s capital market.

    According to him, while the capital market would continue to depend on the interplay of foreign portfolio funds and domestic funds, it is only the presence of a large domestic investors’ base that can mitigate the volatility of the capital market.

    “At the heart of the capital market is the issue of participation of local investors. Expectedly, it is the local investors who ultimately will bring stability to the equity market. The critical issue now is that the Federal Government and other stakeholders must be prepared to address the need to encourage our local investors to return to the market,” Abe said.

    Fund Managers Association of Nigeria (FMAN) President, Dr. Ore Sofekun, said increased savings will accelerate economic growth.

    “If we really want to develop our country, we have to save for long term. In United Kingdom, average investors save their money for six to seven years. The day a child is born, parents begin to save for his or her university education as both primary and secondary school education is free,” Sokefun, who is also the Managing Director of Investment One Venture Capital, noted.

    FSDH emphasised that careful coordination and consistency of fiscal and monetary policies are important to stimulate and sustain savings and investments. According to the investment banker, to stimulate personal savings, the savers must be assured that the real value of their savings will be preserved in the medium to long-run while there must also be safe investments to attract savings by ensuring that the returns earned preserve real value for the savers.

    “An environment of high inflation rate discourages savings and promotes current consumption. To stimulate business savings, the business environment must be competitive to enable businesses operate in a profitable manner. As businesses can fund future expansion from business savings or retained earnings, it thus increases their ability to raise future savings. In addition, government and its agencies must be disciplined in creating institutions and structures that will promote government savings. This can happen through careful planning at the central and state levels,” FSDH stated. FSDH added that government can also provide fiscal incentives such as removal of taxes on certain classes of investment schemes that encourage savings.

    There is no gainsaying the importance of savings and investments to national development. A deeply entrenched savings and investment culture can also serve as antidote to the seeming obsession for immediate wealth that continue to erode national values and fuel stinking national corruption. As government begins the implementation of its economic blueprint, stakeholders are unanimous on the need to prioritise key initiatives and programmes to drive savings and investments.

  • ‘Benefits of investments in Badagry, Epe’

    For two days, stakeholders in the tourism, maritime, oil and gas sectors converged on Badagry in Lagos State to explore the investment potential in the area.
    The event was held under the auspices of Badagry Economic Summit.
    It was the first effort by the private sector and the local governments to unveil the potential of Badagry and Epe since the state’s creation 50 years ago.
    Governor Akinwunmi Ambode, who declared the event open, urged government officials to liaise with monarchs on the use of land and sea to avoid restiveness.
    He added that freight forwarding and maritime thrive more on the West Coast cities of the neighbouring countries, adding that federal and state governments should create policies to implement the Badagry Sea Port blueprint to redirect traffic to Badagry Port.
    Ambode was represented by the Special Adviser to the Governor on Community Development and Communication, Hon. Kehinde Bamigbetan.
    The summit, which has as theme Unleashing investment potential around the coastal zone of Epe and Badagry, resolved to prepare Badagry people to invest in tourism, oil and gas and maritime.
    According to a communiqué, the summit identified Badagry and Epe as viable hubs for promoting and developing tourism, oil and gas and maritime. It called on the government and stakeholders to establish vocational and skills schools to train youths of the area to make them competitive in the labour market. Other highlights were:
    •That the problem of tourism is caused by the absence of poor power supply. It urged the government to address the matter, particularly by using abundant water bodies, as well as gas.
    •That government should invest in marketing and promotion of tourism in Badagry and Epe to attract tourists and investors alike,
    •That since water transportation is part of the intermodal transport system in Lagos, the government should build modern jetties and encourage public sector initiatives in boat building and construction to create jobs and drive water based tourism,
    •That the Ministry of Science and Technology should partner organisations to impact on the use of Information Communication Technology (ICT) in tourism, oil and gas, among the youth in the area,
    •The summit advocates a sustainable growth of tourism, maritime, oil and gas. It said there is need for the government to develop a 10-year business development masterplan for the two divisions.
    •That for a safe and peaceful communal integration of Badagry and Epe, there is need for the government to increase the number of security personnel in the coastal zones to avoid restiveness.
    At the events also were monarchs, senior officials of Nigeria Custom Service (NCS), Nigerian Ports Authority (NPA), Nigeria Immigration Service (NIS), Nigerian Army, Nigeria Police, Nigeria Navy, Airforce, Department of State Services (DSS), Nigeria Security and Civil Defence Corps (NSCDC).

  • Ahmed seeks more investments in education

    Ahmed seeks more investments in education

    Kwara State Governor Abdulfatah Ahmed has called on stakeholders in the education sector to invest more on education infrastructure. Ahmed, who admitted that such intervention required an all-stakeholders’ input, called for stronger support from community associations, old students and others in revamping the country’s education sector.
    The governor spoke at the Government House in Ilorin, when he received the Old Boys of Government Secondary School, Omu-Aran, led by its President, Mr. Olusegun Adeniyi.
    A statement by Ahmed’s Chief Press Secretary, Abdulwahaab Oba, said the government would intervene in some secondary schools to make learning environments more conducive.
    The schools include Government Secondary School and Queen Elizabeth School, Ilorin; Government Secondary School, Omu-Aran and Offa Grammar School, Offa.
    According to Ahmed, the government earmarked money under the Infrastructure Development Fund to meet the needs of secondary schools, and assured the stakeholders that with an improved Internally Generated Revenue (IGR), critical development projects will be executed.
    Mr. Olusegun listed projects embarked upon by the association to turn things around in the school. He said the body had spent over N200 million on development projects.

  • ‘Amended NLNG Act barrier to investments’

    Hopes for economic and industrial growth will be dashed if laws, such as the Nigeria LNG Limited (NLNG) Fiscal Incentives, Guarantees and Assurances Act, remain, NLNG Managing Director  Tony Attah has said.

    Attah spoke at the Nigeria Oil and Gas conference in Abuja titled: Nigeria’s gas sector – the catalyst for economic and industrial growth?

    “It is time for gas. We need deliberate decisions and policies to decouple oil from gas and attract investment. We need to do that now. Investments in the gas and LNG industry are declining. It is already difficult as things stand to find Foreign Direct Investment (FDI) and growth in the gas industry has been cautious after the recent down-beat global crude oil price. In addition to this, Nigeria is ranked 167 of 189 countries in the ease of doing business index.

    “Yet, experts maintain that there is the strong likelihood of increased gas demand infuture and that is where the silver lining is. However, if we continue with the self-inflicted barriers in our gas industry, we might miss the opportunity to make this country a major player in the global energy mix,” he said.

    He said the industry has benefited the economy, diversified the country’s revenue and export base as well as channelled FDI into it. It has created jobs and contributed significantly to the local manufacturing capacity in the country. But all that would be laid waste if we continued to shift policies and renege on international agreements that put some framework into the business and generated investor confidence, he added.

    ‘’We need to be creative with incentives that will attract investments and preserve the sanctity of contracts and agreements for all of this to come together in our national interest,’’ he said.

  • MMM: dead or alive?

    MMM: dead or alive?

    Despite the claim of the operators of the popular ponzi scheme, Marvodi Mondial Movement, (MMM) that it is up and running, participants are getting frustrated by the day amid fears that they may not recover their investments.

    Their frustration has to do with the fact that the new measures to help them get their 2016  investment (mavro) is not helping based on withdrawal limits placed on all 2016 deposits.

    The scheme was suspended last December and resumed January 13.

    Following the  implementation of the  new means to resume the scheme which encourages participants to get active on their Personal Office (PO) on the platform  by providing help since this is the only way to sustain the MMM platform, many are becoming uncomfortable over their growing 2016 mavro which cannot be withdrawn.

    Some participants who have provided help recently claimed they were not able to withdraw their 2016 mavro (money) but could only withdraw the 2017 transactions they made.

    One the MMM top guider who does not want his name mention said “The challenge MMM faces today is not MMM based but participants based.  If you ask me I will rather say there is hope for MMM if only MMM participants can turn up when called upon.

    “ Lots of measures are being implemented for participants to get their 2016 mavro and one of these measures is active PHing ( providing help)  and inviting new members. And as for latest development, all 2017 mavro can be easily GHed ( Get help)  without any limit but the 2016 mavro are saved in participants various PO and they continue to grow even though their withdrawal is under limit.

    “The faster the community will progress, the higher withdrawal limits will be expanded and the present limit will  subsequently be lifted,” he said.

     

  • ‘Investments in youths are for Nigeria’s future’

    Stakeholders have said  investments in youths are investments in the future of Nigeria.

    The Legal, Public Affairs and Communications Director of Nigeria Bottling Company Limited (NBC), Mrs. Sade Morgan, stated this yesterday at the graduation of the 12 pioneer beneficiaries of the Oginigba Youth Maritime Technical Skills Training in Port Harcourt, Rivers State capital.

    She admonished other companies to find sustainable ways of giving back to their host communities.

    Mrs. Morgan said: “The future will be shaped by today’s young people, hence NBC’s special attention to supporting young person’s to realise their full potential.

    “One of the focal areas of NBC’s Corporate Social Responsibility (CSR) framework is youth empowerment, in addition to women empowerment, water and environmental stewardship.

    “The NBC-sponsored maritime skills acquisition project for Oginigba youths is an initiative designed to equip youths with skills required to secure employment in the maritime industry.

    “This will enable them compete favourably with their counterparts locally, regionally and globally, and connect them with opportunities in the Nigerian and international maritime industry, based on the skills that were acquired during the project.”

    Mrs. Morgan encouraged the beneficiaries to make the best of the opportunity and inspire others to participate in initiatives to develop their careers in their chosen fields of specialisation.

    Paramount ruler of Oginigba King Garshon Odum lauded NBC for the initiative and admonished other companies in Oginigba to emulate the firm by employing people of the host community, especially qualified youths.

    Two of the beneficiaries, Steven Amadi and Julia Echeonwu, who responded on behalf of others, described the opportunity as memorable and awesome. They said it would help them empower others.

  • Investments in green energy hit $338b

    Former Director-General, United Nations Industrial Development Organisation (UNIDO), Dr Kandeh Yumkella, said investments in green energy have grown six times to over $338billion.
    Yumkella who was a special guest at the launch of N1billion Solar Energy Fund for Micro, Small and Medium Enterprises (MSMEs) by the Bank of Industry (BoI) in Lagos at the weekend, advised the Federal Government not to miss out in ongoing green energy revolution. Government, he said, should encourage and invest heavily in renewable energy such as solar.
    The BoI intervention is to help boost productivity in that segment of the economy. Yumkella stated that the tremendous increase in investment was due to collapse in oil price.
    “In 2015, we suddenly saw the crash in oil price from over $100 per barrel to $40-45 per barrel. People thought that renewable energy will crash but that didn’t happen because in many countries, we were able to demonstrate that we can produce electricity cheaper than coal. South Africa led the way for electricity production through renewable. The same thing is happening in Dubai, Chile and China,” he added.
    Yumkella a Senegalese who was also a former United Nations Under-Secretary General and Special Representative of the UN Secretary-General for Sustainable Energy for All, has worked several years in Nigeria’s energy space.
    He was highlighting the need for Nigeria to maximally utilise the abundant renewable energy sources such as solar. He said: “Africa has missed a couple of global revolutions. We missed the agriculture revolution, and today we cannot feed ourselves and have to import so much food.
    He said: “We almost missed the digital (IT, computer) revolution. India and some Asian countries took advantage of the digital revolution. India after years of investment in basic education and computer science became a hub, companies and corporations in the United States and Europe moved their operations to India. India has programmers across the world. I praised the audacity of a company called Zinox who showed interest to assemble computers in Nigeria then because people thought it was impossible to do that in Nigeria.
    “Today, we have green energy revolution. It is new and just picking up and moving very fast, which means we have to be agile and innovative, and so having a million products is part of the innovation.”
    Yumkella recalled that when he worked as a UN representative in Nigeria, he saw companies in Kaduna, Aba and other places shut down for lack of energy. According to him, a study by UNIDO and World Bank carried out then showed energy accounts for a major part of cost of production. He cited a textile mill in Kano that each time power goes off,a line on the fabric under production becomes inferior.
    For Africa and Nigeria to optimally benefit from the green energy revolution, he said: “Time to integrate discussions on energy and industrialization because to create the expected jobs, there must be industrialization. The only avenue to create jobs and wealth is industrialisation but you cannot do it without reliable and affordable energy.
    “I fought hard in the United Nations to get SDG 7,that is my legacy within the UN. I fought for 10 years to make energy the central issue because without energy hospitals cannot run well and you cannot do proper agriculture or industrialisation.”

  • Pension Management assets hit N2trn – Stanbic IBTC

    Pension Management assets hit N2trn – Stanbic IBTC

    Stanbic IBTC Pension Managers Ltd,(SIPML) has recorded close to two trillion naira in assets in the last 10 years.

    This statement was made by Mr Eric Fajemisin, the Chief Executive Officer,at a news conference in Lagos on Friday,where he noted that the company’s shareholders funds were in excess of N14.5 billion.

    Fajemisin added that the company had emerged as the country’s largest PFA in terms of clients.

    He said that the company had generated 11 per cent interest for its clients in the last 10 years.

    “Pension assets are not for a very risky investment, we don’t take unnecessary risk. We are committed to transparency, safety and liquidity,’’ Fajemisin stated.

    He said that 80 percent of the company’s assets allocation was in the fixed income Federal Government bonds.

    Fajemisin added that the company would continue to set higher standards of service delivery and ensure that retirement savings account holders derived maximum value from their contributions.

    According to him, the company will continue to broaden and enhance its service channels to ensure efficient service delivery.

    On micro-pension scheme, Fajemisin said that the scheme was designed to cover more than 70 per cent of Nigeria’s working population in the informal sector.

    He noted that the scheme covers jobs that lacked formal employer- employee relationships.

    According to him, the scheme is a long-term voluntary financial plan for people with the irregular stream of income.

    Fajemisin said that the company would commence market sensitisation of the scheme in the first quarter of 2017 with the aim of bringing everybody on board the pension scheme, especially those with irregular income flow.

    On the Federal Government call for the use of pension funds for developmental purposes, he said that pension funds were not developmental funds.

    He stated that pension funds were for retirements and not meant for infrastructure investment.

    “The call is unfortunate as about 80 percent of the money are in government bonds and already available to the government for use,’’ Fajemisin said.

    Also speaking, Mr Oladele Sotubo, SIPML Executive Director, Investments said that about 11 percent of the company’s assets were invested in the equities owing to current market realities.

    Sotubo said that protection of assets was very critical to the company as well as the quality of stock.

    He stated that the nation’s bourse had not witnessed quality listing in the last four years, noting that the company only invests in quality stocks.

    Mr Steve Elusope, the company’s Executive Director Operations, said that there were untapped opportunities in pension funds management services.

    Elusope said that the industry could play an important role in the nation’s economy, in spite of the present recession if well developed.

    He said that poor adoption of the pension scheme in the country remained a major threat to economic growth and development.

  • Deregulation will attract more investments, says MOMAN

    Deregulation of the downstream sub-sector of the petroleum industry would attract more investments and enhance efficient operation of the industry, the Executive Secretary, Major Oil Marketers Association of Nigeria (MOMAN), Obafemi Olawore has said.

    Olawore also noted that for a quick realisation of such investments,  the National Assembly has to speed up the processes of passage of the Petroleum Industry Bill (PIB) into law, adding that a lot of investments have been diverted to other countries due to non-passage of the bill.

    He stated that Ghana, a neighbouring country, studied  Nigeria’s  PIB and copied some aspects of the bill,  adding that  Ghana has  deregulated its oil and gas industry, while Nigeria is yet to deregulate its own.

    Nigeria is still  debating the bill, years after its conception, he added.

    The MOMAN chief who spoke with The Nation in Lagos dismissed insinuations in some quarters,  that deregulation would increase the pump price of fuel.

    The removal of subsidy,  by the Federal Government, Olawore said,  has made it possible for fuel to be sold at different prices.

    He said there were fears that subsidy removal would bring about astronomical increase in fuel price, but the contrary is the case as some sell even below the officially approved price.

    Olawore maintained that deregulation would have a positive multiplier effect, adding that there would be healthy competition among marketers while also attracting more investment from wealthy individuals, which would in turn create the needed job opportunities for many Nigerians.

    The Chairman/Chief Executive Officer, Enfrasco Energy and Infrastructure Services Limited, Chukwuma Okolo, corroborated Olawore saying what Nigeria needed was a gradual series of changes where we would transit from a controlled petroleum price to a price that at least reflects the cost of production. He added that this is achievable.

    According to him, we have raised refining and petrochemical to almost a level that is not supported by business or economic reality. “We are just postponing the difficult times, in whose interest is petrol price regulated? Diesel is already deregulated, petrol is essentially for cars and smaller buses, which is mainly for city dwellers, so who are we protecting with regulation of petrol price?”

    Okolo, however, expressed hope that by the time the refineries are fully functional and Dangote refinery comes on stream, the country would be able to have over a million barrels daily refining capacity. But we don’t need to wait for that long, he said, adding the process to ensure that we fully deregulate should probably be a two or three years phase process.

  • Nigeria’s healthcare mature for long-term investments, says expert

    Nigeria’s healthcare mature for long-term investments, says expert

    Foreign investors will find Nigeria’s healthcare sector attractive, The Bridge Clinic Managing Director, Dr Richardson Ajayi, has said.

    He spoke at the fourth yearly Africa Hospital Expansion Summit in Accra, Ghana.

    Ajayi, who gave a keynote speech, told participants the sector has shown significant growth in the past five years.

    He listed the increasing prevalence of non-communicable diseases (NCDs), reduction in out-bound medical tourism because of the difficulties in obtaining foreign exchange and the increasing access to health insurance as key drivers of the sector.

    He said the sector lacked the requisite systems to support short-term investments.

    Ajayi said: “Investors expect a return on their investments, and most prefer the return sooner rather than later. Unfortunately, healthcare in our region is not mature enough for this type of investment strategy. Healthcare in our region is still at the nascent stage, and the systems, such as supporting government policies as well as the organised ecosystem, are not yet in place to create the platform for growth.”

    He called for a different approach that would ensure that investments made the required developmental impact while delivering adequate returns to the investors.

    Ajayi added: “Healthcare investments have to be considered from a developmental and long-term perspective. Investments with a focus on immediate earnings, such as earnings before interests, tax, depreciation and amortisation (EBITDA) may institute a profit-driven culture which runs in the face of providing care and the right balance must be struck. A more favourable structure will be for investors to look into making equity investments with a focus on long-term growth rather than a quick exit.”

    Ajayi highlighted the challenges hindering investments in health care to include the predominance of sole proprietorship, patients’poor medical decisions that come with a dwindling disposable income, poor customer service, and inadequate skills.

    He called on the investors to be aware of these issues, saying they actually create the  opportunities in the sector.

    He also called on the government to provide the enabling environment that would facilitate investment in the sector.

    In his words: “There is a need to influence government policies to develop a more protectionist attitude to healthcare investments with effective regulation, consumer protection and promoting the climate for effective litigation of healthcare facilities that are not providing the right level of care.”

    Ajayi said effective regulation was necessary for investments as it guaranteed patient protection and a level-playing field for service providers by ensuring that only such were allowed to compete in the market.

    He informed the participants that it was difficult to run a medical lab business in Europe, North America and South Africa without implementing some quality management systems, such as ISO 15189, to ensure that the results from the lab were accurate.

    According to him, “it costs more to run quality assured than non-quality assured tests but the non-quality player will offer his services at a lower cost and, therefore, have a market advantage over the quality-focused provider.”

    Dignitaries at the event include the Ghanaian Minister of Health, Hon Alexander Segbefia, who gave the opening address.