The Nation Newspaper

Tag: Operators

  • How to develop aviation sector, by operators

    How to develop aviation sector, by operators

    A pressure group  Airline Operators of Nigeria (AON ),  has urged the government to develop a  policy for the growth of the aviation sector.

    It said the absence of such a policy to protect domestic carriers from their  foreign counterparts, accounts  for the low capacity of local airlines which are struggling to remain afloat.

    AON frowned at multiple entry points for foreign carriers, which, it said, accounted for over $5 billion in capital flight.

    Its Executive Chairman, Capt Nogie Meggison, urged the government to ensure that the policy  address how to attract foreign direct investment (FDI)  and generate  jobs.

    He said there was need to deepen participation in the sector through investment-friendly policies.

    He said creating a conducive environment for airline operations is imperative because a new administration will be ushered in on May 29.

    In his view, the government should  design  a blueprint that would determine how activities in aviation.

    The need to design a new blueprint is coming on the heels of inadequate measures designed the Minister of Aviation, Chief Osita Chidoka.

    He had proposed a stimulus package by the government to assist domestic carriers.

    Operators said they were yet to be carried along on the details of the package and its proposed impact on the challenges of running airline business in the country.

    To accelerate development of the sector, Meggison said the new policies should determine how bilateral air treaties are negotiated in favour of Nigeria, which should benefit from its routes as a hub in Africa.

    He said rather than throwing the  routes open to foreign carriers through what experts say is ‘obnoxious open skies policy’, the government should put its lucrative routes for bid for carriers that have capacity to operate them.

    Such an arrangement, he said, would give rise to joint ventures agreement between foreign carriers and indigenous carriers for the local distribution of passengers flown in by international carriers.

    Meggison said the incoming administration should also design a blueprint that would create jobs for aviation professionals as well as create a platform for private sector players to invest in the industry.

    He said: “We hope that as the incoming administration settles down in office, he will put a strong aviation policy in place; it would engage AON on how to move the strategic  and air transport sector forward to a place where we should be.

    “Once again, we congratulate the president-elect as we look forward to a successful administration that would leverage the aviation sector for national development, economic contributor and creating of jobs for our youth.”

    He said a strong policy for the sector would make the country a regional leader in Africa, which is naturally positioned as a hub for the continent.

    He said a robust policy would generate jobs for teeming aviation professionals as well put in place the right template for the setting up of a national carrier that should be private sector driven.

    He said if the right policy is put in place, it would assist to checkmate the over $10 billion that goes out of Africa as capital flight.

    He said the right policy would bring about joint venture partnerships for domestic carriers that would distribute the thousands of passengers flown in by foreign carriers.

    He said: “The  task to rebuild the aviation/airline sector must remain on course in the light of many issues that domestic operators have consistently put on the front  burner for government’s attention.

    “Against this background, the AON is drawing the government’s attention to issues agitating the minds of operators which are not limited to the need to facilitate the establishment of an aircraft maintenance hangar in the country.

    “We call on the government to re- examine the exclusion of domestic carriers from the Central Bank window to access foreign exchange.

    “The government should also address the challenge of oscillating price of aviation fuel, which constitute over 40 per cent of our operating costs.”

    Meggison said there was need to address the regime of multiple taxation  airlines are subjected to by aviation agencies, a development he said is strangulating their operation.

    He said the harmonisation of such charges, including ticket sales charge, passenger service charge, landing and parking fees, en route navigational charges, land rent, fuel surcharge, as well as value added tax further compounds the challenges of domestic airlines.

    Meggison said: ”There is need for government to re- examine these  challenges  if it wants the aviation sector to grow.

    “There should be removal of value added tax (VAT), because other modes of transportation are not levied value added tax. Why should aviation pay VAT. In other countries, air transport is not taxed.”

    He said there was need to improve on service delivery by aeronautical agencies.

    The AON chair said the government needs to rework its policy to enable domestic carriers access loans from financial institutions at single digit interest rate.

    He said: ”There is urgent need to fast track the directive already in place for the engagement of more Nigerian pilots and engineers. At the moment, there are over 500  Nigerian young pilots and aircraft engineers without jobs.”

    He said an enabling policy that would check the influx of foreign pilots and engineers by foreign carriers.

    Meggison said there are over 1,000 foreign pilots engaged by both local and foreign registered airlines flying in Nigeria.

    He said aside the foreign pilots, there are over 500 foreign aircraft engineers  employed in the country.

    He said: ”The  government should compel foreign carriers to set up a line station for aircraft maintenance in the country and employ local engineers to assist in turning around  the growth of the sector.

    “They should look into other avenues also. If policies are not put in place the challenge of unemployment of pilots and engineers may not be resolved as soon as possible. It is shameful that Nigerian  licensed pilots are now driving Kabu Kabu to make ends meet. This is totally unacceptable. Not that there’re no jobs but jobs are taken by foreigners.

    “Over the years, the aviation industry has grown. About six years ago, the number of private jets has increased from 20 to 150.

    “Even, commercial airplanes  have grown from 20 to  100, but it has not reflected in the employment of our youths, who are trained as pilots.”

    He said it was time the Federal Government implemented the local  content policies  in the aviation sector to create room for the employment of indigenous professionals, as it the practice in most parts of the world.

    Meggison cited India, Cameroon, Russia and Egypt where policies on  cockpits are a national passport holder. “For any aircraft  that is flying in such countries,whether  local or foreign registered once the  airplane has stayed in the country for more 30 days it must comply with cockpit laws,”he said.

    The Managing Director, Medview Airlines, Alhaji Muneer Bankole, said part of what the incoming government should do is to attract aircraft manufacturers to set up maintenance centre in Nigeria.

    Bankole  said: “One of the ways the government could assist local carriers is to encourage aircraft manufacturers to set up an aircraft maintenance centre in Nigeria to reduce the cost aircraft repairs for operators.

    “Another way is to consider the setting up of a national carrier to uplift the image of the country.

    One way of doing this is to pull the airtcraft in the fleet of domestic carriers.”

     

     

     

     

    the Nigerian College of Aviation Technology ( NCAT),not even one is yet to get  a job.

    “Whereas , there are over 500 foreign aircraft engineers working in Nigeria. Most of the foreign carriers are putting  flying spanners (engineers ) on board in the business class to fly to Nigeria  instead of setting up a line station .

    “There  is need for government policies to  make them  open line maintenance stations to provide hands on job training  for  Nigerians youths.

    So that they can gradually start transferring skill to our Nigerian youths

    On board any Emirates or Qatar Airways flight, there is  always other nationals from other countries who are are aviation professionals exported to other countries .

    Whereas Nigerian with her vast population is no where to be found ,on the international aviation scene. It’s time we creation of jobs for youths in the aviation sector .”, he concluded.

  • NCC set to cap transmission cable price for operators

    NCC set to cap transmission cable price for operators

    Worried by current regime of denial of access to viable routes, predatory pricing and discriminatory and arbitrary pricing in transmission cable sector of the telecoms sector, the Nigerian Communications Commission (NCC) said it will set a cap on its cost.

    It warned that it will not hesitate to sanction any operator that breaches the cap.

    Its Executive Vice Chairman/Chief Executive Officer, Dr. Eugene Juwah who spoke in Lagos at the stakeholders consultative forum on the determination of cost based transmission cable pricing, said while it is the policy of government that appropriate prices be determined by market forces, it has recognised that in the transition from monopoly to full market competition, there would be periods market forces may be inadequate to bring about efficient market conduct and prices that are close to costs.

    Represented by its Executive Commissioner, Stakeholder Management, Mr. Okechukwu  Itanyi who spoke on the sideline after the meeting, he said  after the consideration of the report of the study contracted to KPMG, it will develop “strong enforcement regulations and cap the cost price of transmission cable in the country.”

    According to NCC, KPMG was contacted two years ago to carry out the study as part of its regulatory oversight function to address competitive dynamics, pricing and related matters in cable transmission pricing among operators.

    “In the discharge of our regulatory and oversight functions, we are committed to participatory regulation and shall continue to ensure wide consultation before major decisions affecting the industry are taken,” Juwah said.

    He said the commission engaged the services of KPMG to ensure that the execution of the project is guided by current realities in the sector.

    He explained that presentation of findings from the study to stakeholders is to further prove the commission’s participatory regulation to gather opinions and inputs for best pricing regime in the sector’s cable transmission market.

    The essence of determining a cost based transmission cable pricing and development is to enable a judicious use of spectrum with minimal frequency coordination. This allows links to be deployed close to one another without interference.

    KPMG’s Partner, Management Consulting, Mr. Joseph Tegbe, explained that the primary objective of the project is to develop a cost based option for regulating the pricing of transmission cable in the telecoms industry.

    According to him, the greatest challenge encountered in the project was access to data as it took a year before accessing data from the operators.

    He said having followed international best practices in carrying out with the study, information given by the telecoms operators was used as benchmark in the proposed pricing regime, adding that it took cognisance of the falling value of the naira and interest rate which kept going up.

  • SEC, operators discuss new capital requirements’ implementation

    SEC, operators discuss new capital requirements’ implementation

    Securities and Exchange Commission (SEC) and capital market operators have started discussion towards ensuring that the new minimum capital requirements for capital market operators set by the regulator are implemented in a less disruptive and more effective ways.

    The Nation gatherd at the weekend that the Commission and market operators have formed a joint implementation committee and are working on the key details of the new capital requirements.

    The joint committee, according to sources, included executives of the apex capital market regulator, stockbroking chiefs and dealers under the auspices of Association of Stockbroking Houses of Nigeria (ASHON), Nigerian Stock Exchange (NSE), Chartered Institute of Stockbrokers (CIS), which regulates the stockbroking practice and other key stakeholders.

    Sources said the committee is expected to deliberate on key implementation details including valuation methodology, the proportion and definition of liquid to illiquid assets, the status of stockbrokers’ equities in the proposed demutualisation of the NSE, the timeline for implementation of key compliance points, compliance evaluation methodology and possible incentives for operators among others.

    The committee’s deliberations are expected to form major part of the minimum capital status review that the market regulator has scheduled for June.

    SEC had extended the deadline for compliance with the new minimum capital requirements for various capital market functions from December 31, last year to September 30, this year. Before the extension, 262 capital market operators had met their various capital requirements.

    However, the larger segment of the market operators had called for a review of the minimum capital base arguing that it violated the principles of risk-based approach that should govern the capitalisation of multi-operators market.

    SEC had in 2013 announced major increases in minimum capital requirements for capital market functions under a new minimum capital structure that was initially scheduled to take off by January 1, this year.

    Minimum capital base for broker/dealer was increased by 329 per cent from the existing N70 million to N300 million. Broker, which operates with capital base of N40 million, will now be required to have N200 million, representing an increase of 400 per cent. Minimum capital base for dealer increased by 233 per cent from N30 million to N100 million.

    Also, issuing houses, which facilitate new issues in the primary market, will now be required to have minimum capital base of N200 million as against the current capital base of N150 million. The capital requirement for underwriter also doubled from N100 million to N200 million. Trustees, rating agencies and portfolio and fund managers had their minimum capital base increased by 650 per cent each from N40 million, N20 million and N20 million to N300 million, N150 million and N150 million respectively. A  Registrar will now have a minimum capital base of N150 million as against the current requirement of N50 million. While the minimum capital base for corporate investment adviser remained unchanged at N5 million, individual investment advisers will have to increase their capital base by 300 per cent from N500,000 to N2 million.

    As part of its own stakeholders’ engagement process and positioning, ASHON this weekend held a one-day workshop for stockbroking firms on the minimum capital requirements. The workshop also discussed the minimum operating standards (MOS) being implemented by the Nigerian Stock Exchange (NSE).

    According to a source, the workshop collated stockbroking firms for onward engagement with the Corporate Affairs Commission

  • Operators fault planned recapitalisation for domestic carriers

    Plans by the Federal Government to raise the capital base of domestic carriers has received knocks from experts who described the proposal as  an inappropriate measure in addressing the challenges of airlines .The chairman of Air Peace,  Allen Onyema, said recapitalisation by airlines is not sufficient evidence that the carriers are in sound financial health. He said pegging a fixed amount for any airline is insufficient evidence that the carrier has the technical wherewithal to operate safe flights .

    :”’ I am in support of any policy by government that would make the aviation sector stable . Any policy that would make airlines operate very safely. I have  not heard anybody in government talking about anything about recapitalisation of airlines . But we are hearing rumours that they are proposing about N5 billion recapitalisation for domestic airlines . It is strange to me that figures are being thrown about. The airline sector is not like the banking sector. It is strange to hear this in Nigeria, it is unusual in other parts of the world to propose this.

    “Airlines are not banks that had to recapitalise because they need to give out depositors money daily  The reason is that banks need more money as back-up to give out . The same model cannot be said of airlines. Banks need solid financial base because they daily have to give money to people to trade with . Airlines do not trade with money , so the whole idea of requesting them to have a N5billion recapitalisation base is not ideal,” he argued.

    He said when government is proposing recapitalisation in aviation, the model for the banking sector should not be applied to aviation.

    “What I think government should do is to put In place policies that would assist airlines to source cheaper access to funds, ease the problem of aviation fuel , by reducing the taxes , the new airlines should be given four years tax holiday,” he said, stating that  there is no gain In the airline business.

    He said what should be paramount is to ensure that airlines are categorised  to operate according to the number of aircraft they have. For instance, airlines should be restricted to operate limited routes according to the number of aircraft in their fleet . To me this is the best form of recapitalisation .Airlines  operations should be restricted to the  number of aircraft they have . Not to set N5billion by the side, he said.

    Onyema warned that If government’s plan is to forge mergers in the industry, this proposal will not materialise, saying that mergers are not forced. He called for the creation of a conducive environment that would encourage collaboration among the carriers. He said partnership among airlines is the way to go, as against the recapitalisation that is being proposed.

    On his part, an Aviation analyst and the Director, Zenith Travels,. Olumide Ohunayo argued that the planned recapitalisation of domestic airlines is not a solution to the several challenges facing local operators.

    He said, instead of embarking on another round of recapitalisation, he said the Federal Government through the NCAA, should strengthen its regulatory functions regarding the issuance of Air Operator’s Certificates (AOCs), to local carriers.

    Also speaking, an Aircraft Engineer and Executive Director, Centre for Aviation Research and Safety, Sheri Kyari, said the recapitalisation will lead to the death of some of the airlines that are currently struggling to survive due to several challenges confronting them. He said this is not the time to recapitalise as it may not lead the industry anywhere, adding that this may be a ploy by the authorities to force the domestic airlines to merge.

    On the minimum capital base he thinks the Federal Government is looking at, Kyari said that government may be thinking of raising it from N500 million to N5billion.

    In April 2007 , after the spate of air crashes in 2005 / 2006, the Federal Government raised capital base of airlines  flying domestic routes to  N500 million, while regional operators were required to have N1 billion, and those on international routes were required to recapilise with   N2 billion.

     

     

     

     

    Kyari stated that the committee does not understand the dynamics of the aviation sector, arguing that the recapitalisation in the banking sector is not the same with that in the aviation industry. He said any re-capitalisation attempt at this time would be perceived as a step by the government to kill the indigenous carriers in favor of the planned national carrier.

    He argued that it would be better for the authority to carry out an economic audit on the domestic airlines, as the rate at which domestic operators are going under is alarming .He said besides asking airlines to recapitalise, the Federal Government itself must provide conducive atmosphere for domestic airlines to operate, by granting them waivers, as it is applicable with the importation of aircraft spares.

    According to him, “Recapitalisation I will say it is good, but any move again this time to introduce such to the airline, I think will be suspect. A lot of people are likely to think that any recapitalisation is to kill more airlines and allow the Government to achieve their national carrier objective. Government has to be extremely sensitive about this and then, you are looking at recapitalising, those who cannot recapitalise only to find themselves outside, and will lose their investments in the industry. I think the Government must do this thing at least sensibly and while they are doing this, they must work out what I would call incentives for these other ones to recapitalise.

    He continued, “Government is doing all this and not creating market for the airlines. They will want to say it is still private sector arrangement, but Government should also do one or two things to alleviate the sufferings of the airlines. “

  • Operators oppose 30% cut in project costs

    Oilfield technical services operators have kicked against the move to cut down on project costs  by operators of the exploration and production (E&P) companies.

    They said  slashing project costs by 30 per cent is not right, and is anti-progress and capable of compounding their problems.

    Already, members of Petroleum Technology Association of Nigeria (PETAN) have received letters from operators of Nigeria’s Exploration and Production (E&P) companies asking them to discuss price cut due to the fall in the crude oil price.  However, the association is saying no to the request.

    Its President, Emeka Ene, said the body would resist any attempt to slash the cost because the idea is going to have negative effects on their operation. He said the issue of downward review of costs of projects should not arise because of the glut in the global oil market.

    Ene said many members got the nod to implement projects when there was a boom in the oil market occasioned by the rise in prices of crude oil to over $100 per barrel, adding that they have invested in equipment with which they would execute the projects.

    He said telling such operators to cut down project cost is an indirect way of sending them out of business because they are going to lose more money. He stated that any attempt to slash the cost of projects would further dip the revenues of the service providers as well as hinder their capacity to stay in business.

    Ene explained that the falling crude oil price is affecting stakeholders across the value chain, adding that those engaged in project implementation are badly hit. He said: “Many operators got the contracts when the price of crude oil was $115 per barrel. Now prices have dropped to between $40 and $50 per barrel, and we are being told to adjust the contract fees by 30 per cent. They have forgotten that a lot of money has gone into procurement of technologies for such projects vis-a-vis other spending. The questions begging for answers are: How are the operators going to make up for the loss they have suffered if they agree to slash the cost of projects?  How are they going to mitigate the cost of production, in the event that crude oil prices plummet further?

    “Cutting down the project costs is not the issue. We (operators) want to sit down at the table to address the issue of downward review of the cost of projects. The E&P companies can only sack us (operators) from the business by forcing us to agree to their cost-cutting measures.”

    Ene said that Nigerian companies need more jobs to do for growth, adding that they should not be discouraged through reduction of the project costs.

    Also, the Chief Executive Officer, Mansfield Energy, Dr. Dapo Oshinusi, said each company will look inwards and see where to reduce cost and where to maintain operations  in readiness for more work that will take off in the industry soon.

  • CBN’s policy ‘ll increase cost, say operators

    CBN’s policy ‘ll increase cost, say operators

    The Central Bank of Nigeria (CBN) policy on funding of imported telecommunation and allied gadgets through the interbank foreign exchange (Forex) market has drawn the ire of the some operators.

    Accourding to MTN’s Customers Service Executive Akinwale Goodluck, the policy would hurt operators.

    Goodluck who is also  the Vice Chairman of Association of Licensed Telecoms Operators of Nigeria (ALTON), argued that going through the interbank foreign exchange (forex) market will add between six and seven per cent to costs. He spoke during a public forum organised by the Nigerian Communications Commission (NCC) in L:agos.

    About 80 per cent of the Global System of Mobile Telecommunication (GSM) cell sites across the country are being powered by generators as major source of power while power from the national grid is stand by. Generators, IT equipment and telecoms equipment are among the items the CBN prohibited their direct importation except via interbank forex market.

    In a circular the apex bank issued to all authorised dealers last December, CBN Director, Trade & Exchange Department, O.I. Gbadamosi, informed stakeholders that the policy was to maintain the existing stability in the forex market and strengthen the various policy measures already initiated by the CBN.

    “The importation of electronics, finished products, information technology, generators, telecommunication equipment, and invisible transactions importations shall henceforth be limited to the interbank market only,” he said.

    According to the NCC, there are about 29,000 base transmission stations (BTS) across the country, but the regulator said the nation would require between 70,000 and 80,000 BTS to facilitate seamless telephony in the country.

    This implies that the telcos would continue to build BTS, which would inevitably run on generators because the privatisation of the power sector has not brought any appreciable succour to the country as most 80 per cent of the BTS are still run on diesel.

  • Subscribers at operators’ mercy

    Subscribers at operators’ mercy

    Christmas is here and with it, mobile telephone subscribers experience on virtually all the networks is bad. Subscribers are complaining that it appears the networks have collapsed, LUCAS AJANAKU reports.

    He dialled his wife’s number and his service provider told him: “The number you have dialled is incorrect, please check the number and dial again.” Unsatisfied, he cross-checked and tried again and he got the same response. At the third attempt, he shouted: “These people have gone mad again. How can they tell me the number I bought for my wife at the cost of N12,000  about 11 years ago is no longer correct. This country is a complete fraud and you say there is government in place,” a secondary school teacher at Prudent Comprehensive College at Abule Odu, near Idimu, a Lagos suburb, lamented.

    Another subscriber, Iya Ibeji who wanted to speak to her daughter, an undergraduate of the University of Ado Ekiti got a shock as her service provider quipped “This number is not assigned to any customer.” Frustrated, she tried her alternate number to see if a net call could do the magic for her but she was told: “The number you have dialled is not available at the moment, please try again.”

    It has become popular even among the uneducated to hear phrases such as “network palaver”, “network wahala” and such bitter comments when they make fruitless efforts to make calls.

    The quality of service (QoS) has remained a pain in the neck of subscribers. Minister of Communications Technology, Mrs  Omobola Johnson and the Nigerian Communications Commission (NCC) appear not to be on the same page on the matter. NCC Executive Vice Chairman/CEO Dr. Eugene Juwah said of all sectors, only telecoms has offered seamless service 24/7 to Nigerians. According to him, telecoms services can neither be compared with that of power nor banking sector.

     

    Futile attempts

     

    Attempts at ensuring quality service made NCC and operators to agree on key performance indicators (KPIs) on which the operators were measured. These were Call Set-up Success Rate (CSSR), Call Completion Rate (CCR), Stand-alone Dedicated Controlled Channel Congestion (SDCCC), Hand-over Success Rate (HSR) and Traffic Channel Congestion (TCC).

    Breach of these KPIs led NCC to impose fines on the operators. But sector analysts say the impact of the fines is hardly felt by the operators whose financial war chests are huge. But Juwah disagrees. He said: “Don’t think that they pay fines so easily. The last time we sanctioned them, they paid about $2.5 million each and they are forced to publish it in their annual reports. For some of them that are listed in stock exchanges like Johannesburg; it affects them more seriously than people think.”

    Two years ago, the regulator imposed a fine of N360 million each on MTN and Etisalat on the one hand while. Airtel was required to pay N270 million and Globacom was fined N180 million on the other, all failing to meet the KPIs set by the regulatory agency. CSSR denotes the fraction of the attempts to make a call which result in a connection to the called number. For a number of reasons, all call attempts do not always result in a connection. CSSR therefore measures the success rate against the attempts.

    CCR denotes the total number of successfully completed inbound or outbound calls versus the total number of calls that were placed or received. On this parametre, NCC set a minimum of 96 per cent.

    CDR refers to the fraction of the calls which were cut off before any of the speaking parties terminated the call. On this, NCC set a maximum of two per cent. Of course, the lower the percentage of dropped calls, the better.

    Juwah had said after the fine, operators had prevailed upon the regulator to lower the KPIs which it did, adding that while the operators have been passing the test conducted on the network, end-user experience has been nothing to write home about. He argued that the operators’ business model was not helping matters

    He said: “Some of them may have decided that because of their own plan, they will continue to increase their subscriber base. By this they are ready to pay fine that they incur from quality of service infraction. They will also be making investment until the investment will catch up with the needed capacity.”

    As a way of enthroning good QoS, Juwah had promised that both the operator and regulator will revert to the status quo ante on KPIs. “Come January we will tighten the KPIs that we have now according to the agreement we have with them. Any one that has decided to continue loading their network without minding the quality of service will continue to pay heavy penalties. Those that have decided to restrict their subscriber base to their capacity will not pay. It is a business decision that rest squarely on operators.”

    Mrs Johnson regretted that despite the fact that her ministry had been working hard to provide an enabling environment for the deployment of ICT infrastructure poor quality of service had remained a recurring decimal in the industry.

    She said: “We are concerned that the poor quality issues still abound.I have been inundated with complaints about quality of service and the seemingly uncaring attitude of our telecoms operators to resolve these issues on a regular basis. We will continue, through the industry regulator, to apply sanctions when operators fail to meet the required standards in terms of service quality breaches.

    “However, consumers cannot continue to bear the burden of poor service delivery. Though we are mindful that the operators are facing issues in deploying or maintaining infrastructure, we believe that the operators can do better in delivering acceptable quality of service, which they are clearly not doing now.”

    Johnson also emphasised the efforts being made by government and its agencies to address the challenges of operators should result in better quality of service.

     

    Operators’ position

     

    President, Association of Licensed Telecoms Operators of Nigeria (ALTON), Gbnega Adebayo said since the operators do not operate in a vacuum and since they do not operate in isolation, the fundamental environmental challenges affecting the country have to be addressed by the government. He said he had to stop and caution a contractor working who ignorantly vandalised OFC, adding that there must be synergy to stop such incidence in the future.

    Such challenges are the bureaucracy around the grant of right of way (RoW), multiple taxation/regulation, premeditated vandalism of OFC and BTS, theft of fuel at BTS and crushing cost of running the networks on fuel. Others resort to shutting down of BTS by officials of government ministries, department and agencies (MDAs) and lack of incentives to drive service penetration to the remote and rural areas.

    From operators’ perspective, poor quality of service impedes the capacity to make money. According to them, environmental challenges often beyond their control affect the services they offer.

    The challenges include inadequate grid power, multiple regulation and taxation; illegal access denials and site shut-outs; lack of incentives to drive service penetration to remote and rural areas; rent seeking charges for permits and approvals necessary for deployment; and insecurity.

    These challenges notwithstanding, it is time for operators to step up work with industry regulator to bring about the kind of services subscribers pray and pay.

  • ‘Most SME operators not competent’

    ‘Most SME operators not competent’

    The Registrar/Chief Executive Officer (CEO), Institute of Business Development (IBD), Mr. Paul Ikele, says Nigeria is yet to leverage on her resource endowment and population to become globally competitive. He regrets the focus on politics at the detriment of the economy. Most operators of Small and Medium Enterprises (SMEs), which should help put the economy on the path of sustainable growth, he argues, are weighed down by lack of business development plan and dearth of critical infrastructure. In this interview with Chikodi Okereocha, Ikele says the nation’s dream of being one of the top 20 economies in the world by 2025 is, however, achievable “if we are focused.” Excerpts:

    How would you assess the pace of Nigeria’s economic development? Is the economy on course?

    Nigeria, like any other emerging economy, is bound to have some hiccups here and there. But, if we are focused we will identify the key areas we need to work on like provision of infrastructure, which will assist the economy to bounce back. And of course, you know Nigeria is operating a mixed economic system, which means we are mixing command economy and market economy. And in the mixed economy of course, price will keep rising depending on the cost of production and to that extent the supply may not meet up with the demand because of the scarce resources. For example, in a mixed economy, for you to be able to put up a particular product you need some infrastructure to be able to produce, like power.

    A lot of organisations need to power their industries to enable them continue to produce and the electricity is not there. You must operate with a generator and must buy fuel, and these also increase your cost of production. At the end of the day, you have to calculate your cost of production to determine the price you want to sell your products. Because you are not sure of who will buy at the price you have fixed, so you limit your production until you have identified those who will buy at that price you want to sell to enable you cover your cost of production. There is also the political dispensation.

    Considering the factors, would you say Nigeria’s dream of emerging as one of the top 20 economies by 2025 is achievable?

    Yes, of course!  Although, most of them that are there had a long term plan and they worked towards it. But there are lots of issues-political, tribal and things like that. By the grace of God we will achieve it. Recently, I was in a programme in the United Kingdom (UK) where it was actually mentioned that Nigeria can attain the position of one of the top 20 economies by 2025 and can favourably compete with Japan and other developed economies. One, because of our resources, our population, and the opportunities that Nigeria has.

    Is Nigeria taking the advantage of her population and resource endowment to achieve that goal?

    Yes, we are. Its only that the political situation is not helping matters. Right now, the economy is drifting. The focus is now on politics. It shouldn’t have been like that. In fact, politics should not change the economy by 10 or 20 per cent, but right now politics is almost taking 50 per cent and because of that we are losing focus. Nigeria has almost stopped production waiting for the result of the coming elections. That is wrong. We should differentiate between economic system and politics; let politics be solely on administration and then the economy should drive itself based on the activities and the factors that promote that economy.

    Of course, 2025 is by the corner, about six years now, a lot of things can still happen if we are focused. Even if its not achieved, at least, we can make 50-60 per cent progress. It is achievable all things being equal.

    Much has been said on the need to attract more investments. Would you say enough  efforts are being made to that effect?

    When I was in the UK, some groups from India and China were asking some key questions about investments in Nigeria because they saw that there are a lot of resources Nigeria has, which their country does not have. Of course, the investments are coming, both local and foreign, because Nigeria operates an open system. There are also lots of Nigerian investors like Dangote, who is investing in Kenya’s oil industry. Again, because of global issues, people are being attracted to do business with Nigeria no matter the security and other challenges we have.

    Why is the economy not globally competitive? What are the major challenges?

    Nigeria is a growing economy. If you see the ratio of our development, let’s say between the rich and the poor, there is still a gap; we don’t have a middle class unlike the developed countries. Go to countries like the United States (US) and the UK there is a middle class. The middle class has people that are focused, they don’t even want to be rich. These are people, who even when they marry, do not even want to have children, they just want to work. They are people, who after going to school want to travel out with other things entirely on their minds. But in our situation if you are not up there you must be down there. So, because of that the economy is not moving at the speed that is expected. It has made some people to be gullible and greedy. It has even turned some people into criminals because they want to make it at all cost. Some get involved in advanced fee fraud, otherwise known as ‘419’,  whereas they would have walked the ladder and get there.

    So, the problem is that the middle class is difficult to sustain. For the middle class to be sustained there has to be a standard arrangement so that people will stop day-dreaming. For instance, in Nigeria you see all kinds of cars. Nigeria is like a dumping ground for all kinds of cars, there are no controls. Our tax system should have been used to control the influx of some of these goods and services. Our tax should have been the focus of government. As at today, a lot of funds are being wasted. In fact, the waste in Nigeria is huge. It is part of the hindrance to our economic development.

    What is responsible for the sudden disappearance of the middle class? 

    Because of the economic values Nigeria has, which is, if you are not rich nobody cares for you. The government has not really done much to encourage the middle class. I don’t know how many people in Nigeria are satisfied with what they are getting. When you want to be satisfied, you face problems either from security issues or from religion, or from government, or from where you are coming from. That is why some people, who were at the middle class, before you knew it they came down to zero class; looking for a way to even survive, which is wrong.

    The government should have worked so hard to encourage the middle class. You must have a plan and a focus of what you want to do and how you want to do it. And when you fail, you should do an evaluation to find out why you didn’t get there, what caused it and analyse those causes. Failing is not the issue, rising is. But in most cases people cannot even rise because they don’t know why they failed. If plans are put in place, the middle class will return. All hands must be on deck to achieve it because it is at the middle class that you have the three basic things-food, shelter and clothing.

    How can the Small and Medium Enterprise (SME) sector be supported to grow?    

    The SME sector is very important. In fact, China started when they closed the wall. Chinese said they want to determine whether they want to survive or not. They call it ‘sachet businesses’ or ‘sachet marketing’. They live in cottage system where they can buy and use what they can afford. And again, its better to start business small and grow big. Identify your core market requirements within your environment, provide those needs, provide the products and services and ensure that people within that area are able to buy them.

    An SME does not require large capital, it operates within a short-term plan, not a long-term plan. But in our own scenario, most of them are opportunists because they want to catch up and use the money for long-term planning. That is why most of them have no direction. Like I keep saying, SMEs need to come up with business development plans. Before a company is incorporated, that company will come out with a business development plan. Before you open an account for a limited liability company you should submit a business development plan, and government will key into it and follow it up. If at any point that business does not achieve that objective,  it is quietly withdrawn. By so doing, government will be able to identify those people that are performing and those that are not performing.

    You see, most people move into the SME sector because they don’t have any other alternative. SMEs of course, can assist in turning around the economy, because I can assure you that if you are in SME you know exactly what you are producing and already have grown a market share in that particular business. You will be able to identify your key customers and only focus on servicing them. Before you start a business you should be able to identify the business needs, who your key customers are and satisfy them. Some of the SMEs will convince the banks dubiously or otherwise, and once they have the money, like N2 million, they disappear. They will use the money to import one big car, or go and take a title or  marry more wives. This is why the Institute is insisting that every organisation should come out with a business development plan.

    In other words, the problem of SMEs is not so much about the lack of access to funds, but the lack of bankable business development plan?

    The first problem is that people, who are interested in SMEs, are not competent in that business. They don’t have real intentions in that business; their intention is to use the money for other objectives. Two, who are the professionals that draw the business plans? First of all, you do an environmental scanning because businesses that thrive in the south may not thrive in the north, but most of them will just go and copy a business plan thinking if you are selling pure water in Lagos, for instance, you can sell it in the north, after all north has a hot weather.

    So, before you do a business plan, you must do an environmental scanning. SME is one of the best businesses to get involved in. Every family can get involved in SMEs. Families can get involved in bakeries, for instance. A group or an organisation can do it. Most SME operators are incompetent people, who just want to use it to do other things and because they know how to get funds they get the money and before you know it they channel it to other areas. If it is properly directed SME is a very good business. It has helped other economies to survive.

    How do we solve some of the problems you mentioned with regards to SMEs?  

    All the players like the banks and government agencies involved in it must identify and do a thorough investigation of who needs these SMEs and for what purpose. There must be a proper business plan, which must be approved or authenticated by a standard professional organisation like the Institute of Business Development (IBD). Another thing about the Institute is that we have a code of conduct that if you err your certificate will be withdrawn and we are independent. If the right things are done, the result will come over sometime. But Nigerians are rather in a haste, you want to start business today and  make profit tomorrow. No, lay a good foundation.

    What about infrastructure, which operators complain about?

    What is infrastructure? Infrastructure is equipment, roads, electricity, etc. That was why I told you that the cost of production in Nigeria is on the high side. This is because individuals are providing electricity by themselves and the cost of maintenance will definitely affect the price because it will increase their cost. For a good business you should be able to cover your cost and determine your profit. Some people who get involved in SMEs do not do a social plan. But people don’t do that. They say I am the director, I don’t even earn salary, but any money made they will just withdraw and use it as if its their own. At the end of the day the money disappears and the business suffers. So, to get round it like you said, a good plan should be made, competent hands should be sought and you must do your environmental scanning to know whether the business can survive in that environment. Its not because A is doing business and he is surviving that B must survive because A is different from B. So, you must find out that business you think you have the competence in.

    The price of Nigeria’s crude in the international market has been dropping in recent times. Is this a cause for worry?

    No. Why should we be worried? What about the global warming? What about the ozone layer that is cracking? You see nothing is static.  For example, Nigeria had palm kernel, cocoa, groundnut pyramids why did they disappear? Is it not because of global changes when they discovered that oil can give more than what you get from those agro-allied businesses. The moment oil came everybody keyed into it and technology changed and with time or at a stage in the circle, that oil could move into another thing. All you needed is that the time you had oil, just like the dream Joseph had in the Bible when he told Egypt that it will have seven years of bumper harvest and seven years of famine, we should have been intelligent enough to use that oil to provide sustainable development. And then look at our core areas like agro-allied business, because as long as we live we need to survive, there is no human being who doesn’t eat food. So, if we had used that oil money to improve our palm oil, cocoa, groundnut and so many other resources, even if there is no oil again we will still plan and work like any other developed economy.

    The United States (US) has a large storage of oil because it planned. The same for Germany and the United Kingdom (UK). In fact, I went to a place in the UK, they have an advanced farming system which  looks at how the production of that farm for the next 20 years will be sustainable. But here we don’t have such plan. Let me give you another scenario. During the Tsunami in Thailand do you know that they discovered that rice production will drop in the nest five years. And what did they do? They came out with zero interest rate, encouraging farmers to go into core rice production. And Nigeria knows that rice is one of our major importations. What did we do? Here the contractors were waiting and planning how they could siphon money from the government. You see, we should key into a global thing. We should be very committed to communication. When others are planning we should equally plan. Not when others are planning we will be sleeping. When China, Indonesia and others knew that because of global crisis there was going to be a shortage in food production they started planning and then cut us off and then our rice skyrocketed. Look at how Nigeria treated the Ebola issue. Didn’t we survive it? We did. If we waited until America will come up with a particular vaccine, which we can use people would have been dying. Why can’t we look inward? This oil & gas that we are still flaring can’t we domestic it in Nigeria? How many Nigerian homes are using gas to cook? How many industries are using electricity? Nigeria has almost 200 million population, if Nigeria can sustain this by providing goods and services things will be better. We should stop looking outside; let us look inward. That was what China did. Today China’s economy is out-growing America’s economy. So we should be asking what can we use our oil to do? What can we use our gas to do? We have a large span of land, we have human resources, we have engineers, we have professionals across boards. Can’t we begin to look inward? Can we use that oil and sustain our own industries and use it and create our own economic value, that will increase the naira value so that naira can equitably compete with the dollar? But rather we are looking outside where we want to export our crude oil, they process it and send back to us at a very high margin thereby making our naira to be zero. Nigerians are gullible. These people are not interested in the development of our economy because we have the resources to turn around our economy by ourselves.

    The institute is organising a business development week. Why the summit at this time?

    Our Institute believes that business development is a key need of any economic development. Seeing what happens globally we thought that there is need for the Institute to come out with a business development week where we can look inward to review the business development segment of our economic system and review what impacts they made. The idea came up at the time I was at the ‘UK Week’ where a paper was presented and Nigeria was seriously criticised, that nothing good comes out of Nigeria. So, we think we should discuss our problems here in Nigeria so, we invited people who have developed to come and participate with us, support us, give us their ideas, not discussing it outside Nigeria. That is the essence of the business development week and it is an annual event, we want to be running it every year. Again, business development cuts across all economic systems. Business development is in all kinds of businesses whether profit making or no one-profit making so people should key into it and be focused in their business segment and business plan to be able to use the competent hands in driving it and then the result will come.

    What should participants expect?

    We have a lot of themes. The Business Development Week is going to run for three days starting from 12th to 14th November 2014. The theme of course, is ‘Business Development in Africa: Emerging issues for Strategic Action’ and the papers are going to look at the new Africa, the new frontiers, the new opportunities that we can get in Africa. As I have told you, Africa is highly endowed, Nigeria is endowed, Ghana is endowed, but let’s look at those opportunities. So, we are going to look at those opportunities. We are going to look at regional integration as a tool for Africa’s business development.

  • Quoted firms, capital market operators get deadlines on complaints’ resolution

    Quoted companies and capital market operators must compulsorily set up complaint resolution framework and address complaints from investors and other parties within a specified timeline, according to  new rules being considered by the Securities and Exchange Commission (SEC).

    A draft of the new rules on complaints management in the capital market obtained by The Nation mandates all capital market institutions including SEC, Nigerian Stock Exchange (NSE), quoted companies, Chartered Institute of Stockbrokers (CIS), capital market trade groups, stockbrokers and 1other operators to establish complaints management policies for the handling of various complaints.

    A source at SEC said the new rules were part of efforts to protect investors and enhance market’s integrity.

    The source noted that the new rules would complement other initiatives such as the Investors’ Protection Fund and ensure that the Nigerian market operates on the global best practices.

    According to the draft, all capital market operators and listed public companies shall be required to establish a clearly defined complaints management policy to handle and resolve complaints including complaints against operators by clients or other operators, shareholders and public companies and shareholders or investors.

    All capital market operators must resolve complaints against them within 10 working days from the date that the complaint was received while they have two working days to notify the relevant authority of the resolution of the complaint.

    Also, all the operators and quoted companies would have two working days to acknowledge receipt of complaints received by email and five working days to respond to complaints received by post.

    Where the complaint is not resolved within the given timeframe, the complainant or company will refer the complaint to the relevant competent authority within two working days with the letter of referral detailing proceedings of events leading to the referral and copies of relevant supporting documents.

    Also, all complaints lodged at first instance with the relevant competent authority would be resolved within 20 working days while the outcome of all complaints that are not resolved shall be referred to SEC 20 working days.

    The new rules make it mandatory for complaint policy by each quoted company and operator, which shall be defined and endorsed by the company’s senior management.

    According to the rules, the management of the companies would be held responsible for its implementation and for monitoring compliance.

    Besides, all capital market operators and quoted companies are required to have a complaint register, which will include details of all complaints. The companies are expected to provide the summary of the complaint register including the number of complaints to SEC.

    The new rules also empowered SEC to refer all prima facie case of criminal market abuses to the appropriate criminal agency for prosecution.

    However, companies and operators are exempted from addressing any complaints bordering on allegations without supporting documents, suggestions or seeking guidance or explanation, explanation for non-trading of shares or illiquidity of shares, trading price of the shares of the companies, non-listing of shares of private offers of securities by private companies and disputes arising out of private agreement with companies or intermediaries.

  • War against Akwa Ibom ‘baby factory’ operators

    After winning the war against branding of children as witches and wizards,  Akwa Ibom State has turned the heat on “baby factory” operators, writes Kazeem Ibrahym

    The battle used to be against pastors, parents and others who branded children witches and wizards. That era, the state earned so much bad press, especially overseas. Akwa Ibom State Governor Godswill Akpabio had no choice but to pass the Child Rights Bill into law in 2008. The events leading to the passage of the law are still fresh in the memories of many. A report on the British Broadcasting Corporation (BBC) detailed the inhuman  treatment meted to suspected child-witches by their parents and communities. In the report that went viral, a self-styled cleric, Bishop Sunday William, declared that 2.3 million witches and wizards existed in the state – most of them, according to him, were children.

    Williams also claimed that he helped parents kill about 110 “child-witches” for as much as N400,000 per ‘witch’. The BBC documentary on the activities of his church went viral. It angered Akpabio that a ‘Bishop’ would declare that 2.3 million of the 4 million people in the state are witches and wizards.

    As the problem of branding children “witches” and “wizards” is going down in the state, criminals have devised another means of making quick money. They abduct children either from school or church and sell them. Some of them also operate ‘’baby factory’’, using boys between 18 and 25 to impregnate young girls.

    In the last three months, the police in Akwa Ibom State have arrested many suspects allegedly involved in “baby factory” business.

    In May, a traditional doctor and four others were arrested by the police for the stealing of a three-year-old baby. Commissioner of Police Umar Gwadabe listed the names of the accused persons as Miss. Imaobong Udoh, mother of the baby, Mrs. Regina James, buyer and Mr. Mfon James, her husband.

    Others, according to the police boss, are: Mrs. Comfort Henry, the traditional birth attendant who delivered the baby and Mr. Emmanuel Okon, a homeopathic doctor. The police boss explained that Mrs. James paid N150, 000, to the mother of the baby and N110, 000 to the homeopathic doctor for his transaction.

    His words: “On March 3, 2014, a case of child stealing was reported by Mr. Eteobong James, of No. 33 to the police where a three day old baby girl was sold for N260, 000. Based on the report, the suspects were arrested. Mr. Emmanuel Etim Okon,is the one who arranged the infamous deal and personally conveyed the baby from point of delivery at Nna-Enin in Urhan Local Government Area to the buyers at No. 37 Church Road, Uyo.”

    Gwadabe, who warned criminals, especially those involved in stealing of children, to desist from it as the state would not be conducive for their illicit trade.

    To fight this, the wife of the Governor, Mrs. Ekaette Unoma Akpabio, has taken the violence against the children’s campaign to some churches in the rural areas of the state as a way of sensitising the parents on the dangers in giving their children out to either friends or relatives for training.

    Mrs. Akpabio, who is the Chairperson of the Family Life Enhancement Initiative (FLEI), told the parents during her visit to worship at Christ Faith Church, Utu in Etim Ekpo Local Government Area, that they should take advantage of the free and compulsory education policy and stop giving their children out for any pecuniary motives.

    Mrs. Akpabio described children as the greatest assets of any nation, saying when a child is protected; the future of a nation is also protected.

    She said: “On my way to Ukanafun, I noticed that some small children were walking on the streets and that is not good enough. I want to tell you that they have started kidnapping our young children. I don’t want you to take your children to church and leave them outside while you are inside the church. Sometimes they come into the church to kidnap our children. After the kidnap they sell the children. Don’t give your children out to anybody for training. Take advantage of the state’s government free and compulsory education policy and send your children to school.

    “When they kidnap your male child, they sell him between N400, 000 and N450, 000 while the female child goes for N250, 000. Know that our children are worth more that many tubers of yam they will promise you. If you are suffering, let your children suffer with you. Be careful where you send your child to. Tell the people that your child is not for sale.”

    Mrs. Akpabio, who also frowned at the issue of “baby factory business”, said the government would eradicate it.

    She said: “They are using the female children for prostitution business. They get them pregnant and sell the babies. Let any child that is not up to 18 years stay with you. Don’t allow anybody to useless your child. Don’t truncate your child’s education. It is only education that will make your child great.”

    The governor’s wife, who later gave out some gift items and cash to widows in the church, also donated N2million for the completion of the church project.

    In the entourage of the governor’s wife were Commissioner for Women Affairs and Social Welfare, Dr. Glory Edet; Information and Communications Commissioner Mr. Aniekan Umanah; wife of the State Secretary to Government, Martha Emmanuel; and wives of other commissioners.

    From Christ Faith Church, she took her campaign to two other churches, Qua Iboe Church of Nigeria in Ikpe Atai, Etim Ekpo Local Government Area and The Apostolic Church, Nigeria, Ikot Akpa Nkuk Area Headquarters, in Ukanafun Local Government Area.

    At both churches, Mrs. Akpabio’s messages to the parents were not different. She warned them to resist any attempt by anybody to truncate the future of their children as a result of an instant gratification. She gave a cash donation of N500, 000 and N1million to the two churches.

    Mrs Emmanuel commended Akpabio for his holistic approach to the protection of children in Akwa Ibom State, by signing the Child Rights bill into Law.