The Nation Newspaper

Tag: Nigeria’s economic

  • The beginning of the end of an era

    The beginning of the end of an era

    By Oguntoye Opeyemi

    The year 2013 marked a definitive turning point in Nigeria’s economic history when the federal government made the monumental decision to end its complete ownership and control of the electricity sector. This move was not a sudden impulse but the culmination of a long-gestating policy shift aimed at reversing decades of infrastructural decay and chronic inefficiency.

    The idea had, in fact, already been conceived during the tenure of President Olusegun Obasanjo, as part of a broader liberalization agenda. However, he didn’t have the sufficient political will or capital to see it through to execution. His administration was more intensely focused on winning a contentious election and establishing new anti-corruption agencies, and he ultimately neglected the profound structural reforms required in the critically ailing electricity industry.

    However, under President Goodluck Jonathan, the landscape shifted. Despite the widespread reservations most people held against his perceived soft-heartedness and cautious leadership style, he was able to take the bull by the horn and ensure that the era of complete government ownership of the entire electricity value chain finally came to a decisive end. His administration pushed through the privatization process against significant political headwinds. It is crucial to note that he didn’t merely end the government’s complete role; he also successfully dismantled the powerful forces of the workers’ associations that had long held a stranglehold on the electricity sector, fundamentally reshaping the power dynamics within the industry.

    The Nigeria Union of Electricity Employees (NUEE) was an extremely powerful entity during the days of complete government ownership, operating as a formidable veto player against any meaningful change. Their influence was comparable to that of the National Union of Postal and Telecommunication Employees (NUPTE) during the period when the government was still in total control of the defunct and notoriously inefficient Nigerian Telecommunications Limited (NITEL).

    The blueprint for this change, however, was first tested in the telecommunications sector. It all began with NITEL during the later days of President Obasanjo’s administration when he championed the idea of allowing private investors into the sector, thereby bringing in major players like MTN, Glo, and others. These new entrants were aggressively innovative and capital-rich, enabling them to wrestle dominance away from the sluggish state-owned NITEL, which quickly became obsolete in the new competitive landscape.

    However, the most recent and dramatic incident illustrating the clash between old and new systems occurred during the first tenure of President Muhammadu Buhari. It is important to recall that the electricity privatization transaction was finalized in 2013, and after a complex transition period, the assets were officially handed over to the new private investors in November 2014. Almost immediately after the investors took over the assets, they encountered their first significant challenges, both in distribution and generation, in the form of the NUEE unions. The unions were hell-bent on ensuring that all existing staff, regardless of competency or redundancy, were not affected by the necessary organizational restructuring being implemented by the new owners. Furthermore, the new owners’ attempts to reform staff welfare policies and establish modern, merit-based recruitment modalities were fiercely challenged and obstructed by the NUEE at every turn.

    However, the primary focus of the new investors was initially on achieving rapid improvements in network stability, service reliability, and revenue collection efficiency—metrics that had been abysmally low for years. Their perspective was fundamentally different from that of the union. The investors, facing commercial pressure to perform, made the difficult decision to lay off as many NUEE members as possible whom they deemed incapable of handling the critical tasks required to deliver adequate and stable power to its customers. The skills gap was stark; some employees, who had been in the system for more than two decades, did not possess more than secondary school certificates and had not acquired a single day of additional certification or training throughout their careers. To the investors, this represented a severe case of institutional brain drain and operational redundancy. They knew fully that if they kept most of those staff, there wouldn’t be any tangible progress in their business or any hope of modernizing the grid. But it was a tough battle, and many occurrences, including protests and threats of shutdowns, made it exceptionally hard for them to swiftly do away with the NUEE’s influence.

    Today, another familiar drama is unfolding from another critical sector in the country. The Nigeria Union of Petroleum and Natural Gas Workers (NUPENG) has been the sole dominant union in charge of the country’s energy sector for decades. Because the sector, especially the downstream segment, had been mostly under government influence and monopoly through the NNPC, it granted an inordinate amount of power to the association. When one reflects on their recent actions, including the strategic blocking of fuel supply routes, one is compelled to merge them with the past atrocities committed by the NUPTE, NUEE, and others who are now largely powerless and irrelevant. The actions of most of these unions do not directly affect the government machinery but rather the ordinary citizens who bear the brunt of their selfish, ambitious, arrogant, and inconsiderable actions, facing fuel queues, blackouts, and higher costs.

    There is an ongoing and irreversible paradigm shift in Nigeria’s energy sector as new, sophisticated players are now entering the downstream sector, thereby crippling the traditional monopolistic hands of the government. Therefore, those entrenched in the old NNPC downstream system may soon fade out into obscurity as the Petroleum Industry Act (PIA) provides the legal framework for the sector to thrive in a competitive market. So, it is important to note that most of these new corporate players may not want their staff to join NUPENG, just as the new players in the electricity, telecommunication, and even banking sectors did not allow their workers to join the old, combative associations. Moreover, it is a critical point of law that there is no legislation in this country that makes it compulsory for an employee to join a union; it is a purely voluntary action.

    Read Also: Allow Dangote to provide relief to Nigerians – Okechukwu tells NUPENG, others

    NUPENG has essentially declared a war between themselves and the Nigerian people the moment they decided to blockade access to the massive Dangote Refinery. Because, when the NUEE shut down Ikeja Disco’s operations nine years ago, it was millions of innocent Nigerians that suffered for it. The same exact pattern is repeating itself with the recent actions of the NUPENG leadership in the last few days.

    The government must now ensure that they protect the visionary entrepreneur who decided to build the largest single-train refinery in Africa within his own country, investing billions of dollars. They must actively encourage other potential investors that their business is safe and secure in Nigeria and that no rogue entity would be permitted to sabotage their investments if they put their trust in our economic environment. Leaders are defined by the bold decisions they take in times of crisis, and these are signs that are never wanting in President Bola Ahmed Tinubu, who has staked his administration on economic renewal.

    Whatever the narrow motive of the NUPENG leadership might be, it cannot be allowed to override the overriding interest of the 250 million Nigerians who would be forced to start queuing again for fuel or pay double the price simply to get by. The country is just gingerly emerging from a period of severe economic instability, and with the concerted effort of Mr. President and his economic team, it would be the height of foolishness for any association to deliberately derail these positive efforts for its own parochial gains.

    As a nation, every citizen and institution ought to be working hard to ensure that this country gets back on its right feet and not actively join any association to sabotage it. The call for patriotism and collective sacrifice is resonating everywhere in the national discourse, and it would be profoundly wise for the leadership of the Nigeria Union of Petroleum and Natural Gas Workers to heed this urgent call and not allow themselves to be seen by history as the nation’s enemy in its hour of potential recovery.

    •Opeyemi, an engineer, writes from Lagos.

  • Dangote Cement eyes $600m export to Africa

    The President of Dangote Industries Limited, Aliko Dangote, has restated his Group’s commitment to Nigeria’s economic development through continuous innovation, value creation and investments.

    He said Dangote Cement’s exports to other countries are targeted to rise to $600million yearly, with the management intensifying efforts at actualising the planned increase.

    Declaring that his massive investments in Nigeria’s economy is borne out of his firm belief in her vast economic potential, Dangote said:  “By next year we will be the largest exporter of cement in sub-Saharan Africa with about $600 million worth of cement export to other African countries with limited access to limestone. In addition, we also have new terminals coming up at Onne and in Lagos and we are hopeful the congestion at Apapa will soon be behind us helping us meet our export targets.”

    Speaking at the 2018 Dangote Cement Distributors’ Award Night in Lagos, he said Dangote Group is committed to ensuring the country becomes self-sufficient in all the sectors where it operates, such as cement, agriculture, mining and petroleum.

    “Let me reiterate that our continuous efforts to innovate, create value and invest in Nigeria are borne out of our firm belief in the vast economic potential of Nigeria. This has also informed our desire to invest massively in agriculture in some states across the country. Our target is to ensure that Nigeria becomes self-sufficient in all the sectors where we play; cement, agriculture, mining and petroleum. We are leaders in all the sectors where we play, and this demands continuous improvement and partnership with you, our customers.”

    “We are front-runners in keying into the diversification of the economy by the Government. We have continued to roll out massive agricultural projects across the country. We have started in rice, while plans are underway for dairy farming. Our push for backward integration in providing our own raw materials on a massive scale has led to the planned investment of $4.6 billion over the next three years in sugar, rice and dairy production alone. That will eliminate the country’s reliance on imported food, and the foreign exchange outflow that comes with it,” he added.

     

     

  • ‘Nigeria’s economic fundamentals are strong’

    The Special Adviser to the President on Economic Matters, Office of the Vice President, Dr. Adeyemi Dipeolu, spoke at the weekend on the Federal Government’s programmes to drive the economy, among other issues. Group Business Editor, SIMEON EBULU, reports.

    The Special Adviser to the President on Economic Matters,  Office of the Vice President, Dr. Adeyemi Dipeolu, said when this Government came into office, its three priorities were to improve security, tackle rampant corruption and improve the economy, saying at the onset, the Federal Government met a lot of difficulties in 2015 and 2016.  “There was a rapidly declining exchange rate, deteriorating reserves, increasing inflation and diverging exchange rates,” saying government responded by introducing the Economic Recovery and Growth Plan which was developed in an inclusive manner with inputs from state governments, the National Assembly, the private sector, labour, the academia and development partners.

    As he put it, “it was based on several key principles notably overcoming critical supply constraints, leveraging the power of the private sector, national cohesion and social inclusion, using the market where possible and upholding national values.”

    Dipeolu said growth has resumed to around two per cent in 2018, admitting though that it is not enough, but nonetheless, “it surely shows a change from the decline experienced during the recession into a positive trajectory.” He added:  “ Inflation is coming down steadily from 18.7 per cent at its peak to around 11.3 percent today.  Similarly, there is stability in the exchange rate and foreign exchange is available. Foreign reserves at over $43billion are adequate with up to sixteen months of cover for imports, while capital inflows have increased and the trade balance is positive.” He pointed out that the Federal Government is also reducing the debt overhang in the economy by paying off debts owed to States, the electricity sector, oil marketers, exporters, and pensioners, amongst others.

    He said the government is working closely with the private sector through the Quarterly Business Forum, the Nigerian Industrial Policy and Competitiveness Advisory Council, and the MSME Clinics.   MSMEs, he noted, “are particularly important because they produce half of our national income and employ the majority of people.  They are also benefiting from federal investments in infrastructure, provision of development finance, and improvements in the regulatory environment,” stressing that the MSMEs are also direct beneficiaries of “our Government Empowerment and Enterprise Programme which provides interest free credit to table top traders, members of market associations, farmers, and artisans.”

    Dipeolu alluded to the President’s  statement  in a recent meeting with the business community in which he laid emphasis on infrastructural development, especially through the deployment of resources, are beginning to show. He said in 2016 and 2017, capital expenditure was up to N2,7 trillion, while far more than N800billion has been released in the 2018  budget cycle, saying this is being supplemented by the $650 million Presidential Infrastructure Development Fund which will focus initially on the Lagos-Ibadan expressway, the Second Niger Bridge, the Abuja-Kano  expressway, the East West Road and the Mambilla Hydropower Plant.

    Continuing, Dipeolu said the President recently signed the Roads Infrastructure Tax Credit Scheme which is a partnership with the private sector which allows companies to build roads in return for tax credits, adding that the proceeds of Sukuk bonds of  N200billion  are being deployed for constructing, repairing and maintaining federal roads across all 36 states.

    Dipeolu said, government’s commitment to infrastructure is further made clear from its investments in rail.  These visible projects, in his words, “range from the Abuja-Kaduna railway, to the Itakpe-Warri line, the Lagos-Ibadan rail and the completed portion of the Abuja light rail project.   These are being complemented by the Coastal Railway Line and the line from Port Harcourt to Maiduguri.  All rail projects are planned to pass through all the state capitals,” he stated.

    With regards to electric capacity, he said efforts are on-going to increase generation, transmission and distribution of electricity, saying innovative solutions, like the payment guarantee scheme, the willing buyer-willing seller and the meter asset provider programme, as he put it, “ will help to transform the electricity sector.  These solutions are being complemented by off-grid power solutions, such as the ‘Energising Education’ and ‘Energising Economies’ schemes.   The latter scheme will take power to 16 markets across the country in the first phase.”

    Dipeolu, also spoke on government’s several key initiatives to promote diversification of the economy, including notably, the Anchor Borrowers Programme, the Presidential Fertiliser Initiative, the Special Economic Zones, the Family Homes Fund and the Technology hubs. He said  there were over 300 participants in the Economic Recovery and Growth Plan (ERGP) Focus Labs and that up to 164 projects spread around the country were identified with a total potential investment of $22.5 billion and job creation of over 500,000 jobs by 2020.  In this context, he said, government has strengthened development banks so that they can provide greater access to finance that is cheaper than commercial lending and gives longer tenors for repayment.

    He said it is obvious that in addition to efforts to diversify the economy and providing the much needed infrastructural facilities, “we as a nation need to work hard to reduce the time, costs and processes for doing business, saying the improvement in the World Bank Ease of Doing Business rankings over the past three years, is testimony to these efforts.   He said we should expect even greater improvements in the course of this year and the years ahead because of the structured way in which the government is working on this matter, pointing out that several multinational companies have recently entered the Nigerian market while others have increased their investment in the country.

    He said in keeping with the principles and priorities of the ERGP, these efforts are underpinned by extensive social investments, saying the Home Grown Feeding Programme which continues to expand, is giving hot meals to over 9.3million children across the country and employs over 93,000 cooks.  The N-Power programme already has 500,000 young graduates on board.

    He said there are over 1.5million beneficiaries of the Government Empowerment and Enterprise Programme (GEEP) which provides interest free loans, including MarketMoni, FarmerMoni and TraderMoni to small businesses, stating that the Conditional Cash Transfer for the poorest of the poor has reached over 300,000 households.

    Dipeolu said Nigeria’s economic fundamentals are strong and moving in the right direction, saying things will continue to get better if we stay the course and deepen our efforts to diversify the economy by working with the private sector in a socially inclusive manner.

  • IMF: Nigeria’s economic recovery lifts Africa’s outlook

    The International Monetary Fund (IMF) has said that economic growth in Nigeria due to rise in commodity prices will stimulate growth in other Sub-Saharan African economies.

    The IMF World Economic Outlook update released yesterday showed that Sub-Saharan Africa has Nigeria to praise for better economic growth prospects next year. The Fund saids the region’s economy will likely expand 3.8 per cent in 2019 as against  a 3.7 per cent prediction in April.

    The upgraded forecast “reflects improved prospects for Nigeria’s economy” and an increase in commodity prices. Gross domestic product in Nigeria will rise 2.3 per cent, it said, lifting its estimate from 1.9 per cent in April.

    Nigeria’s economy is recovering from the worst contraction in 25 years in 2016, which was caused by lower oil prices and output and shortages of foreign exchange to import raw materials. The IMF held its predictions for South Africa’s economy, saying it will expand 1.5 per cent this year and 1.7 per cent the next.

    “Despite the weaker-than-expected first-quarter out-turn in South Africa, the economy is expected to recover somewhat over the remainder of 2018 and into 2019 as confidence improvements associated with the new leadership are gradually reflected in strengthening private investment,” the fund said.

    South Africa, the continent’s most-industrialized economy, hasn’t grown at more than two per cent a year since 2013. GDP shrank the most in almost a decade in the first quarter as former President Jacob Zuma handed the reins to Cyril Ramaphosa. Zuma spent close to nine years in power, during which time the nation lost its investment-grade credit rating and policy uncertainty and unemployment increased. Nigeria and South Africa’s economies account for about half of the region’s GDP.

    Further analysis of the report showed that amid rising tensions over international trade, the broad global expansion that began roughly two years ago has plateaued and become less balanced.

  • Buhari turning Nigeria’s economic fortunes around, says Enang

    Buhari turning Nigeria’s economic fortunes around, says Enang

    The Special Adviser to President Muhammadu Buhari on Legislatives Matters, Senator Ita Enang, has assured Nigerians that the administration is sincere with its plan to turn the nation’s economy around.

    Enang, who spoke at the inauguration of the Delta State office of the Council for New Nigeria, a project of the National Committee of Buhari Support Groups (NCBSG), said the administration had been tackling the hydra-headed problem of corruption as well as turning the economy around through various policies.

    The Presidential Adviser, who was in company of the Chairman of NCBSG’s Board of Trustee (BoT), Senator Abu Ibrahim, noted that the Federal Government meant well with the introduction of ranching in states.

    But he said opposition politicians kicked against the policy to derail the plan and paint the government in bad light.

    Ibrahim hailed the Council of New Nigeria for opening the office in support of the re-election of President Buhari in 2019.

    He said the Council of New Nigeria was the first among over 200 Buhari support groups under NCBSG to open an office for President Buhari’s re-election bid.

    The chairman praised NCBSG’s leadership, led by Chief Emma Aworoh, for the initiative.

    Delta State Coordinator of Council of New Nigeria Chief Emma Aworoh said the group was established to support President Buhari because of its belief in the fight against corruption, entrenching good governance and empowering the people.

    He expressed appreciation to the leadership of NCBSG and Enang.

    According to him, their presence at the event was a manifestation of their support for the group.

  • Nigeria’s economic future is in its hands

    Nigeria’s economic future is in its hands

    In a small, rural community outside Kaduna, a woman is starting her day. Her business is selling produce. Of all the tools she uses, the most important is one that fits in her pocket.

    Each day, she completes dozens of transactions using her mobile phone—buying crops from growers, selling to her customers, paying school fees and other family bills. Using her mobile phone remotely to access low-cost and secure mobile money services, she has been able to stabilise her finances, save for the future, expand her business, and invest in her family’s welfare.

    Mobile money isn’t a futurist fantasy, requiring new technologies that are generations away. If a phone can send and receive text messages, it can send and receive money. Eight out of 10 Nigerian adults already own a mobile phone with that capability. But only two out of 100 have a mobile money account—a lost opportunity to extend financial access to millions of Nigerians who are currently excluded from the financial system.

    When I last visited here five years ago in my role as the UN Secretary-General’s Special Advocate for Inclusive Finance for Development, Nigeria was launching a detailed strategy to expand financial inclusion, especially to poor and rural communities. The ultimate goal was to strengthen equitable growth and development. Today, advances have been made but half the country still does not have even a basic financial account, and so leaders are refining those plans to encourage significantly faster progress.

    Mobile money is one of the most promising and exciting tools available to transform the landscape of opportunity in Nigeria and around the world. A recent study from the Massachusetts Institute of Technology found that access to mobile money in one African country lifted ten percent of the extreme poor out of poverty—a truly inspiring result!

    So what could mobile money mean in the daily lives of Nigerians?

    • A peanut farmer in northern Nigeria could pay for his supplies in minutes using his mobile phone rather than traveling for hours to do so in person.
    • Remember our produce seller outside Kaduna? Thanks to mobile money, she can limit the risk of carrying cash or hiding it at home by depositing it electronically into her account.
    • A mechanic in Abuja could receive the credit he needs to improve his operation based on the digital history of his mobile money payments.
    • A family in Sokoto state that has never had electricity at home could purchase a few hours of light each evening using a solar system that they pay for and activate through mobile money.
    • A couple could afford to get medical help for an elderly parent in Kwara State thanks to low-cost health insurance they obtain through their mobile money provider.

    When more and more people experience benefits like these, opportunity rises, poverty erodes, and the wealth of the nation grows and grows. So how can we move quickly to speed progress on financial inclusion and build mobile money into a viable option?

    As the Secretary-General’s Special Advocate, I’ve traveled the world talking with governments, businesses, and individuals about financial inclusion—what works and what doesn’t. I’ve found rising recognition that mobile money can make an important contribution to financial inclusion and that it can be provided effectively by a range of entities, not just banks.

    Mobile network operators, for example, have deep knowledge of digital technology and a great network of access points for low income populations. Nigeria is estimated to have between 150,000 and 200,000 airtime agents throughout the country. India, Pakistan, Tanzania, and Ghana all offer compelling examples of how this can work.

    Other challenges will also need to be addressed. Anyone who has had their phone service drop out during a call can predict that problems with downtime could seriously undermine the growth of mobile money; connectivity will need to be strengthened. It will also be vital to build digital literacy among customers. And regulations must be put in place to protect them from fraud.

    But mobile money invites us to think creatively in all sorts of ways. Phones can be wallets. Small shops can be mini-bank branches. Mobile money payment histories can be used to build a track record to gain credit.  As your government sets the stage for these innovative ideas, we look to Nigeria’s banks and other businesses to bring them to life.

    There is a lot of work to do, but this is a country that knows how to succeed. I look forward to the next chapter of that success—one that includes all Nigerians.

     

    • H.M. Queen Máxima of the Netherlands has served as the UN Secretary-General’s Special Advocate for Inclusive Finance for Development (UNSGSA) since 2009. On the invitation of the President, she is visiting Nigeria from 31 Oct.–2 November to discuss the country’s progress on extending financial services to all.  As Special Advocate, she is the leading global voice advancing universal access to affordable, effective, and safe financial services. Collaborating closely with global and national partners, she raises awareness, encourages leadership, works to break down barriers, and supports action to expand financial inclusion.

     

     

  • ‘Benin Republic groans under Nigeria’s economic ill’

    ‘Benin Republic groans under Nigeria’s economic ill’

    The Benin Republic President, Patrick Talon, yesterday, said the downturn in the Nigeria’s economy was adversely affecting his country and other African countries.

    Describing Nigeria as the engine room of West Africa, Talon urged Nigeria to explore its non-oil sectors to increase its revenue profile reduced by falling oil prices in the international market.

    Talon, who is in Nigeria on a one day visit, spoke during a joint briefing with President Muhammadu Buhari at the Presidential Villa, Abuja, after a closed meeting.

    Stressing that Nigeria remained a big brother in Africa, he noted that the country relied for too long on crude oil revenue to the detriment of other sectors.

    He said discussions at the closed door bordered on security and the economy, adding that his country looked forward to reactivating the relationship between Benin and Nigeria, especially in trade, economy, energy development and education.

    According to him, his country will work with Nigeria to end the illegal trade between the two countries and ensure everything is done through legal processes.

    He said: “There is illegal trade between the two countries, which is creating difficulties between us. We looked at the possibility of re-energising the trade between us so that illegal trade is discouraged.”

    He invited President Buhari to visit Benin towards enhancing their cooperation.

    While thanking President Talon for the visit, President Buhari noted that Benin always supported efforts by the Lake Chad Basin Commission to address insurgency and transborder crimes.

    President Buhari pledged Nigeria’s commitment to making the West Africa Gas pipeline more efficient, and promised Nigeria’s support for Benin in energy development.

    He said: “I think the Republic of Benin is identifying with the Lake Chad Basin Commission, comprising Cameroon Chad Niger and Nigeria and making a professional contribution of military so that our common enemy, Boko Haram, can be effectively checked in our sub-region.

    “The Republic of Benin identifies with our effort, not feeling that they are so far way from the battlefield because Nigeria is the main battlefield’, because of the Northeast of Nigeria .

    “The economic part of it is mainly energy, making sure that the West African Gas Pipeline is made much more efficient. This government is making efforts to stabilise the situation because the resources are there, the world knows Nigeria has plenty of gas reserves. What we need do is to stabilise the environment, so the gas can be regularly pumped to the sub-region, through the infrastructure in place .

    “Also, the Nigerian LNG is not doing badly. The gas can be turned into liquid form, the technology is available to be transferred to Benin Republic to fire its power stations. The problem is the use of Benin as a transit camp to transporting to Nigeria illegally under the ECOWAS Agreement; what we have to do is to remind ourselves about our national commitments. Besides ECOWAS originated commodities, we should not allow goods into our countries. I think Nigerian industries would benefit from ECOWAS agreement,” Buhari said.