The Nation Newspaper

Tag: profitable

  • ‘PenCom working to keep pension funds safe, profitable’

    The pension fund has hit N8.5 trillion and it keeps rising. What should be done with this huge cash reserve? National Pension Commission (NPC) Acting Director-General Mrs Aisha Dahir-Umar urges caution in investing the fund, as she speaks on its status, backlogs of pension payments, Retirement Savings Account and access to residential mortgage. OMOBOLA TOLU-KUSIMO met her.

    Contrary to the provisions of the Pension Reform Act 2004, retirees have not received their pensions for over five years. What caused this and what are you doing to clear the backlog?

    Section 39 (2) of the Pension Reform Act (PRA) 2014 mandates the Federal Government to pay into the Retirement Benefits Bond Redemption Fund Account, not less than five per cent of the monthly wage bill paid to employees in the Public Service of the Federation to redeem the accrued pension right of Federal Government of Nigeria (FGN) retirees. However, in the last five years, budgetary funding and releases have not been regular and adequate for the payment of outstanding accrued pension rights over this period as a result of the decline in government revenue.

    Also, in 2017, only 44.4 per cent of the total amount requested by the Commission was approved and released by the Federal Government for paying accrued pension. This shortfall has been responsible for the accumulation of several months and backlog of unpaid accrued pension rights. However, with the full release of the total amount approved in the 2018 FGN budget by the Federal Ministry of Finance, the Commission has paid Federal Government employees who retired up to last February as at January 23, 2019. We are also processing the payment of employees who retired up to last May and 1,079 employees who retired but missed the previous general enrolment. In essence, by the end of last month, retirement benefits of the Federal Government employees who retired between June 2018 and January 2019 will be outstanding due to shortfall in budgetary provisions in 2017 by the Federal Government.The Commission has been engaging the relevant authorities to ensure funding of the outstanding accrued right liabilities, especially the shortfall in 2017 budget. A submission has been made to the Federal Government during the Inter-Ministerial Committee meeting in 2017 to consider the issuance of Bond through the Debt Management Office (DMO) to fund these arrears as aa alternative to budgetary allocations.

    The commission started the Multi-Fund Structure last July. How successful is it?

    The Retirement Savings Account (RSA) Multi-Fund Structure was conceived by the commission to align with contributors’risk appetite with their investment horizon, at each stage of their life cycle. The main objectives of the RSA Multi-Fund Structure are to achieve optimum returns for contributors by aligning their pension savings with their individual risk/return profiles, provide investment portfolio choices to Contributors, and enhance safety of pension assets through adequate portfolio diversification, through increased investment in equities and alternative assets, such as infrastructure and private equity. We have recorded some successes so far. As at December 31, 2018, the RSA Fund had been successfully split into four funds, while the sensitisation of RSA contributors is still ongoing to create awareness on the features of the RSA Multi-Fund Structure. At present, RSA contributors  now have the opportunity to choose a Fund that best suits their risk-return profile. I would say the challenges so far have been low public education and awareness. There is low public awareness of the workings and benefits of the  Contributory Pension Scheme (CPS). There are also limited Investible Securities. The Bond Market is dominated by FGN Bonds, which offer relatively high yields, and thus crowding out non-government bonds.

    Similarly, there is a dearth of alternative assets, such as infrastructure funds, private equity and real estate that meet the investment requirements of pension funds. However, the RSA Multi-Fund Structure is still at the very early stage of implementation,with just six months of commencement.

    Investment of pension fund seems to be going more into FGN securities, by about 70 per cent. Why? Why has it not been  put into other projects?

    The regulation on investment of pension fund assets prescribes allowable asset classes and investment limits for pension fund assets. Accordingly, pension funds may be invested in securities, such as Quoted Ordinary Shares; FGN Securities (FGN Bonds, Treasury Bills, Agency Bonds, Sukuk Bonds, Green Bonds); State Government Securities; Corporate Debt Securities (Corporate Bonds, Corporate Infrastructure Bonds); Money Market Securities (Commercial Papers, Bank Deposit/Placements etc.); Mutual Funds (Open-Close End Funds, REITs, etc.); Private Equity Funds; and Infrastructure Funds. Meanwhile, the major objectives of pension fund investment are “safety” and “fair returns”. FGN Securities are viewed as “risk-free” securities, and over the last couple of years, the fixed income market had been dominated by FGN Securities, which offer relatively high yields. The high yields and low risks offered by FGN Securities, as well as the volatility of the stock market in recent years, influenced the “flight-to-safety” approach adopted by pension fund managers to safeguard the value of pension assets and minimise losses to contributors.

    What are the trends in the market that will make good impact in the next five years?

    The commission recently embarked on a number of initiatives, which would impact positively on the financial market and economic development in the mid- to long-term. These initiatives include the introduction of micro pension and non-interest funds and access to RSA for residential mortgage. The Commission is in the final stages of preparation for the launch of the micro pension scheme, which aims to provide pensions for Nigerians in the informal sector not covered under the CPS. Similarly, the introduction of the non-interest fund is aimed at enhancing financial inclusion by targeting pension contributors who would prefer access to non-interest financial services. These initiatives are expected to impact the workers and the economy as follows: expand the coverage of the CPS; increase financial inclusion; additional membership/contributor in the Contributory Pension Scheme; increase the pool of pension funds, available for investment and economic development; and increased financial market development, for non-interest products.

    Also, the commission is working assiduously to ensure that contributors can have access to their RSA for residential mortgage.The main objective of Section 89 (2) of the Pension Reform Act (PRA) 2014 is to facilitate access by RSA holders to residential mortgages as well as stimulate the housing and mortgage finance sector. The Commission is working with the Central Bank of Nigeria (CBN) and stakeholders in the mortgage sector to develop appropriate “Guidelines on Accessing Retirement Savings Accounts towards Payment of Equity Contribution for Residential Mortgage by Holders of Retirement Savings Accounts”. The guidelines are expected to be issued in the year.

    Many firms are not remitting pension after deducting from their employee’s salaries. What are you doing about this?

    The commission, in line with the provision of the PRA 2014, has developed a Framework for Recovery of Outstanding Pension Contributions with penalty for defaulting employers.  Based on the Framework, the commission has engaged recovery agents for continuous enrolment into the CPS and recovery of unremitted pension contributions plus penalty from defaulting employers. The recovery, which has been largely successful,has boosted the confidence of contributors and by extension encouraged non-participating employees and employers to embrace the Scheme. Through the initiative of recovery agent,  N15.31 billion representing a principal contribution of N7.85 billion and penalty of N7.46 billion have been recovered from defaulting employers. Both the principal contributions and penalty have been credited into the workers’ RSA accounts. The penalty is meant to compensate for the income that would have been earned if the contributions were remitted as and when due. The commission is also prosecuting recalcitrant employers who fail to remit their employees’ pension contributions into their RSAs.  As at today, the commission has instituted legal actions against 167 recalcitrant employers. Of that number, 78 have opted to settle out of court, 34 judgments have been obtained and 23 are at different stages in the courts.

    Meanwhile, the commission has a fully functional Complaints Monitoring and Resolution Team, which attends to complaints on non/late/under-remittance of pension contributions into employees RSAs.

    Your commission has been trying to capture the informal sector through the Micro Pension Scheme. Please give us an update on the scheme?

    The Micro Pension Plan is fallout of the Commission’s corporate strategy of inclusive and expanded coverage of the CPS. The micro pension initiative started in accordance with Section 2(3) of the PRA 2014, which provides that employees of organisations with less than three employees as well as self-employed persons shall be entitled to participate under the scheme in accordance with the guidelines issued by the commission. This gave rise to the creation of the Micro Pension Plan with the attendant formulation and development of the framework and guidelines for the plan. The guidelines have been approved by the Federal Government and issued to the operators. The guidelines have also been hosted on the commission’s website for public use. The department has been involved in reaching out to prospective stakeholders as well as collaborating with relevant institutions to create awareness about Micro Pension Plan. Enlightenment materials on the plan are being put together by the commission and both the commission and the operators are working on payment platform for flexible contributions and withdrawals on the plan. The guidelines on the investment of micro pension fund will soon be issued. Also, structures are being put in place to ensure effective monitoring and regulation of the plan. PenCom and operators are collaborating to come up with modalities for a hitch-free launch and eventual implementation of the Micro Pension Plan. It is expected that the launch of the Micro Pension plan will take place in the first quarter of the year.

    Does the commission have adequate capacity to monitor fund operators?

    The Commission has sufficient capacity to monitor the activities of all licensed pension fund operators as its key objective is to ensure that every person who worked in the public service of the federation, state government or the private sector receives his/her retirement benefits as and when due. In that regard, the commission issued a regulation for the administration of retirement and terminal benefits, which clearly specified period within which operators are to contact intending retirees and notify them on documentation needed, mode of retirement and time frame for the processing and crediting of the RSA of the beneficiaries. In addition, operators are mandated to render monthly pension payment returns to the commission as well as benefit payments made within the period, which include the details of the retiree, RSA number, date of payment and amount paid, among others. Furthermore, the commission conducts on-site routine examination of licensed operators to review the benefits administration of the PFAs, including timeliness for benefit payments. However, sometimes the delay in payment of benefits by some operators could be attributed to incomplete documentation from retirees, incorrect bank details; and delayed payments or remittance of accrued rights for employees of Treasury Funded Ministries Departments and Agencies (MDAs) of FGN prior to 2004.

    What assurances do you have for retirees awaiting their pension?

    We thank them for their patience and assure them that everything is been done to settle all arrears. The government is also putting structures in place to ensure it remains in payments moving forward. In other words, paying in arrears will soon be a thing of the past.

  • How to make oil fields profitable, by engineers

    Proper execution of a field  development plan (FDP) can boost oil production, the Society of Petroleum Engineers (SPE), Lagos Section, has said.

    In a communiqué after its technical symposium entitled: “Expediting FDP Approval: Key actions to ensure efficiency and value-added processes’’, the body noted the importance of FDP and the need for speedy approvals by relevant government agencies.

    In the communiqué signed by the SPE Lagos Section Chairman, Mr. Temitope Oshuntuyi, which was made available to The Nation, the petroleum engineers, however, noted that not every field is economic to develop and a wrong plan attracts a huge price.

    An FDP is essential for optimal and economic production of a field.

    The engineers said there was an increased need for FDP approvals as oil price was rising and companies were not willingness to develop their fields.

    Some of the reasons for delays in getting approvals or rejection of FDPs include inadequacy of plans in addressing the project’s pressing issues, lack of continuity in the quality of FDP plans received by the Department of Petroleum Resources (DPR).

    Others are partners working in isolation, lack of understanding of fiscal regimes, gas utilisation, project execution, contracting strategy and project economics as observed by the National Petroleum Investment Management Services (NAPIMS), an arm of the Nigerian National Petroleum Corporation (NNPC) to the FDP approval process.

    Early engagement of stakeholders  for discussions to promote openness and clarity of purpose contributed to the success of FDPs that were approved on time, the body observed.

    Insecurity and too many bureaucracies increase field development costs even as technological advancements, such as surveillance with downhole gauges, multi-phase flow meters, digitisation, and artificial intelligence were slowly being adopted by DPR, which sought to ensure that these technologies had been tested.

    The SPE said: “Technology is key to lower development cost and remain competitive. Early appraisals and information acquisition help speed up the FDP approval process, as experienced by an Independent operator.

    “Field Development Plan and its approval could be a rigorous process depending on the Asset size.  DPR affirmed that contrary to speculations in some quarters, staffing was not a constraint to the timely approval of FDPs.

    “Therefore, early engagements with both NAPIMs and DPR and getting an alignment on their expectations are critical to speedy and efficient FDP approval process. Cluster development and Asset risk sharing should be considered to enhance maximum technical and commercial recovery. Operators should consider sharing facilities, while developing FDPs, especially new operators with single concessions.’’

    It continued: “All companies must consider monetisation of gas in their FDPs as no new project will be sanctioned without it. Even if the gas monetisation plans cannot be immediately achieved, it must be included in the FDP to demonstrate good will.

    “All stakeholders should ensure the continuity of resource persons that handle the FDP process across all concerned disciplines for transfer of learnings from one FDP to another.

    “Regulators should standardise the FDP approval processes for both new and brown field developments, with a distinction in the requirements for either.’’

    SPE said there was the need for scalable regulation, urging operators to adopt upfront collaboration with stakeholders and regulators.

    It said: “Consideration should be given to streamline the approval process, eliminating multiplicities and too many processes; therefore, regulators need to integrate their workflow in a seamless manner.

    “DPR should champion a collaborative learning process. There should be an audit trail between when an FDP is submitted and when it is approved so that bottlenecks can be identified.

    “New technologies and processes that can be adopted by DPR and NAPIMS include easily visible and auditable database like NIPEX, Multi-Phase Flow Meters (MFPM), commingling of small pools and use of downhole gauges.

    “DPR and NAPIMS should consider adopting technology such as commercially available interactive centers where FDP teams assigned to various assets can converge virtually to scrutinise the FDPs.”

  • ‘Investment in air ambulance services profitable’

    Founder, Flying Doctors, Nigeria, Dr. Ola Brown has advocated the need for Nigeria to develop its air ambulance infrastructure to ensure that patients can assess healthcare, saying this may help the government to save billions of dollars by concentrating expert resources and reducing healthcare spending.
    She lamented the high cost of healthcare in the country, saying thegovernment does not have enough money to build centres of medical excellence in every single state.
    She said if there cannot be a centre of medical excellence in every state, then Nigeria needs to develop its air ambulance infrastructure led by companies such as the Flying Doctors Nigeria Air Ambulance service, to ensure that patients can access healthcare.
    The Flying Doctors Nigeria has developed a cost-effective, commercial air ambulance solution that allows patients to be transported by air for less than the price of a ground ambulance. This cost pales in comparison to the cost of developing multiple hospitals which would be financially impossible to staff/equip and run on their current budget.
    Brown, in interview in Lagos, said the United Kingdom National Health Service (NHS) budget spends more than $100 billion per year covering 65 million citizens, while Nigeria’s entire budget, by contrast, is about $12 billion per year, over 60 per cent of which goes to recurrent government expenses such as salaries, travel, training, and perks.
    She lamented that there is less than $1 billion for health care in a country with a population of 170 million people.
    “Putting a state of the art hospital in every state of Nigeria would cost about $30billion, more than double our entire budget. Even if we had the money, we lack the resources in terms of doctors, nurses, support staff, maintenance engineers to ensure that these hospitals could function,” she said.
    She stated that the only viable alternative is to centralise the country’s healthcare system, with just one or two state-of-the-art centres that are home to Nigeria’s finest and most experienced medical practitioners. These centres, she reiterated, would receive the bulk of healthcare investment, allowing doctors to specialise effectively.
    She said:”Majority of sick people do not need to be in hospital; they can be managed effectively through primary care systems in the community. But the sickest patients need to be managed in very specialised hospitals by multi-disciplinary teams, supported complex, expensive equipment. The centralisation of the Nigerian healthcare will allow the best use our scarce resources; doctors and money.
    “Air ambulance services increase our ability to get the correct patient to the correct medical facility within the correct time frame. This is a system that is used all over the world.”

  • ‘How to make gas more profitable’

    The Federal Government can make gas investment more profitable by providing enabling environment for operators,  Nigeria Gas Association (NGA) President, Mr Thomas Dada, has said.

    In an interview with The Nation, he listed other factors to include the provision of credit facility to operators by banks, and ensuring that local and foreign investors participated in the sector.

    Dada said the sector would be made more profitable for investors  when the right  policies are in place and operators are able to access funds for growth.

    He said when banks provide funds, there would be increase in investments.

    He praised the decision of the Federal Government to develop a new gas policy, adding that the initiative would help in galvanising the potential in the sector.

    He urged stakeholders, including the Federal Government, the Nigerian National Petroleum Corporation (NNPC) and other regulators, as well as  investors to work together to make the sector viable.

    He  said the sector has its own problems that need to be addressed urgently to achieve the desired results.

    Dada, also the Managing Director, Frontier Oil Limited, said there must be a willing buyer and a willing seller of gas, arguing that the idea would lead to competition among operators.

    The idea, Dada said, would help in unlocking the potential in the sector for growth.

    On power, Dada said operators in the electricity industry depend on one another for growth.

    “Consumers of electricity must pay their bills to their power distribution companies(DisCos) and DisCos in return would pay the power generation companies (GenCos) for the power they supplied the DisCos.

    ‘’Also, the GenCos pay the gas marketing companies for gas they supply them to generate electricity.  The sector operates like a chain; one aspect depending on the other for growth,” he said.

    He said the Nigerian Gas Association is into advocacy, adding that the body has senstised  the government and other stakeholders on how to develop the sector.

    The NGA chief urged the government to maximise the potential in the petroleum industry.

    He said the government could achieve this goal, when the country’s exports ensure refined petroleum products, instead of crude oil and also exports Liquefied Petroleum Gas (LPG) instead of natural gas it is exporting to countries in Asia and Middle East to earn revenue for the government.

  • Making profitable use of greenhouse

    Making profitable use of greenhouse

    There is a growing interest in greenhouse farming. Experts say with a little effort, one can start a greenhouse that will enhance the environment and bring in profits. DANIEL ESSIET reports.

    To manage the challenges of  rainfall, degraded land and decreasing land sizes, farmers have been urged to go for greenhouse.

    Making the call, Dizengoff Nigeria’s  Integrated Project Manager, Sustainable Livelihoods, Mr. Oscar Walumbe, said acquiring a greenhouse is a most satisfying endeavour.

    He spoke to reporters at the company’s media field day in Lagos.

    Walumbe said a greenhouse, a protected space for growing vegetables, plants and crops,  is a prime real estate, so one should choose crops  to maximise profits and produce crops that don’t do well outside .

    He said one advantage of using greenhouse is that farmers can grow vegetables and crops at any time of the year – when they can’t be grown outdoors. This is because it allows them to extend the seasons and produce  a wide range of vegetables.

    Greenhouse cultivation, he said, enables farmers to grow their crops under optimised and standardised conditions, which protects the plants from pests and bad weather.

    He advised farmers using greenhouse to grow out-of-season crops such as tomatoes, lettuce, basil, and other vegetables where they can command high prices in the market.

    In choosing what type of plants to grow for profit, Walumbe advised that one must figure out the right combination of profitable plant varieties, sizes, and quantities.

    Walumbe said:  “Our greenhouse is essentially a controlled environment limiting the devastating effects of insect pests and diseases that ravage vegetables including tomatoes. It is not rain-fedbut brain-fed, as it comes complete with a customised drip irrigation system. With little amount of land space and water, you are sure to get a yield far higher than your traditional open field production.”

    Oscar continued: “Nigeria consumes over 2.3 million tonnes of tomatoes annually, while it produces about 1.8 million tonnes locally. However, only 50 percent (0.9 million tonnes) of the produce makes it from farm to fork, thereby creating an immediate gap of 1.4 million tonnes to filled. This gap in essentially filled via importation, a scenario which puts more pressure on the demand for the already scarce US dollars. Nigerians can now leverage on the immense opportunity offered by the Dizengoff Farmers’ Kit so we can limit the foreign exchange spent on importing tomatoes annually while also providing employment for our teeming but unemployed youths”.

    Though people think greenhouse farming is too expensive, he believes  it seems  so because of the initial investment in buying the materials for the structure which could run up to N1.5 million.

    He explained, however, that the expenses are easily offset by the high yields that a farmer makes from the investment. The  Marketing Communications Manager, Dizengoff Nigeria, Humphrey Otalor, said:  “As a company, we see the huge employment opportunity the greenhouse has created for Nigerians, both directly and indirectly and we believe that with participation from both the private and public sectors, the DFK will create about 1000 jobs directly and indirectly in the next 2 years”.

    He added: “Our strategy in bridging the gap in tomatoes production is to ensure that farming is made attractive even among our youths, through modern technology with the greenhouse farming concept and access to quality inputs and technical support. We know that there are readily available markets for the quality of tomatoes produces in our greenhouses.”

  • Building a profitable business

    A  Calabar-based entrepreneur, Rosemary Orok Oyo, followed her childhood dream of doing something on her own. She started her company. She shares her experience of dealing with challenges and pursuing a long-term vision. DANIEL ESSIET reports.

    Rosemary Orok Oyo is among the most promising business women this year. She has  turned her love for popcorns into a successful business. But its tryst with entrepreneurship started at a  very young age as  family members  were fashion entrepreneurs.She later attended Federal Government Girls College, Calabar.

    She  got admission  to study  Environmental Education at  the University of Calabar . She started fashion retail business while still in the university. She later  graduated with a BSc Environmental Education, specialising  in tourism and eco-management.  After graduation in 2009, she didn’t bother  to search for a job because it was actually a family business. Three years after, she took over the business and did some renovations to attract more customers.

    In October last year, she enrolled at the Central Bank of Nigeria (CBN) Southsouth Entrepreneurship Centre, Calabar.

    There, she realised   that there is a difference between a trained and uninformed  entrepreneur.

    On graduation from the entrepreneurship programme, she  was inspired  to expand her  fashion retail business into maternity and kiddies outfit .

    Consequently, she did her business registration and changed the name of the business from Cita Exclusive Outfit to Teddies World.

    Early this year, specifically in January, she employed a new sales representative who exposed her to the untapped fortunes in popcorn business.

    She said: “I took out some time to pray about it and I had the leading to start the business with a different concept. That was how Teddies Popcorn started.  She started the popcorn business with just N80, 000 and three months after, she got a seed fund from the south south entrepreneurship center.  She has been running the fashion retail business for seven years now, but the popcorn business which is nine months old is making more waves more than the fashion retail business. Chocolate popcorn is her flagship product. Right now, the buzz is about Teddies popcorn. She began coming up with formulations. They produce up to 10 varieties of popcorn.

    On the worth of the business now, she testified: “You wouldn’t believe the worth of the business now but I’ll say it’s quite impressive and our turnover in nine months is in six zeros and still counting.”

    Her popcorn is a brand in Calabar, Cross River State. Her exposure has helped her to explore spices, nuts, cheeses and other whole ingredients that are a wonderful compliment to popcorn. But expected, new popcorn entrepreneurs are emerging, making new investments. To stand out, she is determined to create better-tasting, healthier flavoured popcorn. Consumers are happily buying them, because the love for the snack seems inexhaustible.

    One thing that has stood in her favour is the constant and unwavering support of her family,  friends and customers who believe in her  and the products.

    Between  producing popcorn, and raising kids, every day presents a new challenge. In addition to managing the brand and overseeing marketing, she spends a lot of her time raising the kids and trying to spend quality time with the family. She has now five members of  staff and will still recruit more before the end of the year.

    One of the problems she had when she started was insufficient funds to expand her business and her  second problem was human resource. She related a pathetic experience: “Last year just before the general election campaign started, the economy nosedived in Cross River State. Businesses couldn’t survive and some were struggling to stand.  I took a loan from the bank. It was the biggest mistake I made. Early this year because of the high exchange rate, prices of goods were high and customers couldn’t really shop and that really affected my business. I saw failure staring at me but despite all odds I was able to pay back that loan from our popcorn sales and both businesses are doing well today regardless of the economic situation.”I’ve learnt not to invest or take loan when there is economic crisis in the country,” she added. She is proud of what she has accomplished so far. Teddies popcorn was among the top 50 most innovative businesses by Etisalat EasyBusiness Millionaire Hunt Programme season 2.

  • Conoil remains profitable amidst headwinds

    Conoil remains profitable amidst headwinds

    Conoil Plc, one of Nigeria’s major petroleum marketing companies, recorded a pre-tax profit of N1.8 billion in the third quarter, bracing the global and national headwinds that had seen many oil companies caving in under the weights of impairments.

    Interim report and accounts of Conoil for the nine-month period ended September 30, 2015 showed that the company’s bottom-line remained positive, although key figures were below the comparable period of 2014.

    The oil and gas sector has continued to struggle with the global decline in crude oil market, the distortions in the Nigerian downstream sector and Nigeria’s foreign exchange crisis, which have forced the forex-dependent sector to take losses on the sales and profit sides.

    The report showed that the company’s assets increased from N86billion for the same period in 2014 to N96billion in 2015. Turnover stood at N60.16 billion while pre and post-tax profits stood at N1.76 billion and N1.2 billion respectively by September 2015. With these, earnings per share stood at N1.72. Conoil had recently distributed a dividend per share of N1 for the 2014 business year.

    Conoil attributed the modest performance to its focused strategy and cost control mechanisms.

    “We returned a good performance notwithstanding the difficult operating environment due primarily to the efficient product procurement process put in place in the second half of the year,” the company stated in an explanatory statement released yesterday.

    According to the company, improved efficiency translated to high profit margin on product sales, but the profit for the period would have been much better save for the high finance cost, consequent upon the long outstanding large receivable from the Petroleum Support Fund.

    Conoil had recorded a turnover of N104.22 billion, profit before tax of N2.1 billion and profit after tax of N1.4 billion in the comparable nine-month period of 2014. Earnings per share was then N2.06.

    Challenges in the downstream have been overwhelming and analysts are of informed opinion that if the government continues to prolong the payment of long overdue subsidy refunds outstanding to the marketers, their profitability will continue to dwindle and return on investments for shareholders adversely affected.

    Notwithstanding the gloomy picture, the company in its statement promised to continuously transform its business and prepare for the increasingly fierce competition.

    “We will consistently pursue initiatives that will enable our brands, processes and people drive our corporate vision and ultimately drive value for our shareholders”, the company stated.

     

  • Wanted: A blueprint for profitable cocoa farming

    The Chief Operating Officer, Centre for Cocoa Development Initiative, Mr Robo Adhuze, has called for a blueprint that will make cocoa farming profitable.

    He appealed to investors to pump funds into cocoa production and help to position the industry as a viable area for economic growth, wealth creation and employment.

    To create a robust industry, Adhuze said the industry needed nurseries, processing facilities, more training for cocoa farmers and increased extension services that the association provides to make a sustainable impact on the industry.

    He said the sector needed assistance to help attract more youths to the industry, considering that the average age of cocoa farmers is 60.

    He said young farmers need all the assistance to sustain their interest in the cultivation of the commodity, which should include access to fund, land, fertiliser and other chemicals at a highly subsidised rate.

    He said there was need for the government to pursue a transformative initiative aimed at  empowering farmers to become more productive and secure for the future of cocoa.

    He said cocoa farmers needed more support and that they should be paid a fair price.

    Given the varied issues facing farming communities, he stressed that the right strategies would  help turnaround the sector.

    He said some local cocoa farmers had abandoned their land, which they considered unproductive, following poor yields of their cocoa trees that have a life span of between 25 and 30 years, calling for assistance to enable them replace them.

  • ‘Why Nigerian football is not profitable’

    ‘Why Nigerian football is not profitable’

    Godwin Spiff Sagbama, the managing director and CEO of Hally Sports International has come a long way in television and radio sports presentation.
    From a career that began in Radio Kwara in the ancient city of Ilorin, Sagbama has gone ahead to transcend the air waves like a colossus with his velvety voice. Sagbama, who is also the originator of the Sports Media Award, breezed into the offices of The Nation/SportingLife newspapers where he responded to a deluge of questions from Ade Ojeikere, Onyewuchi Nwachukwu, Julius Okorie and Robert Egbe. EXCERPTS

    Every game the Eagles play gulps close to N44m. The NFF is always going cap in hand for funds. This isn’t how it is with football federations in other climes. Why is ours different?

    Thank you very much. This is an area I love to talk about. First of all, I think the challenge we have is that we’ve not been able to put the right structures that transit our football. What I mean by that is if you look at the quality of men we have at our FA, it speaks volumes of what results you can get with respect to standards, international structures, and every other thing that comes with it.

    First of all it is a marketing issue; if you look at the Spanish, German and Italian football, or the Argentine or Brazilian football, what they do is specifically invite all the players for the World Cup and agree on the emoluments. If we get to the first, second round, if we get to the quarter finals, semi finals or we get to the final, this is how much an individual player gets. So, it’s noted, the entire world knows about it. But all we do here is shrouded in secrecy. For instance, we’re aware that FIFA pays for business class for all the players and officials coming to the World Cup; nobody tells us that. We’re aware that FIFA also pays daily allowances; nobody tells us that. We’re equally aware that FIFA pays hotel bills; nobody tells us that. Now, all these monies are collected from government and when FIFA pays after the World Cup in bulk, the government itself does not know, so they share this money and it just goes into private pockets. So, the first thing we need to do, for me is to get our marketing right. For instance, in marketing, in sponsorship which I did study on in Frankfurt and London, what they’ll tell you is that you break down the different windows. I’ll give you an example, adidas is sponsoring our national team, we don’t know what comes into Nigeria from adidas. But adidas is not a philanthropic organization, it’s a business organization. Adidas will sit down with you to say, this is the value of your national team as at this moment, therefore, we’ll pay this value for your national team. And then we’re going to give you replica jerseys, say, for half of the price of your national team which you have to sell, and then we share the percentage in this format. But what we notice here is that the officials share these jerseys to their friends and cronies and they don’t sell the jerseys. So, by the time you come back to adidas, you’re unable to make account of the jerseys they printed for you to sell, and so nothing is coming to them, they’ll devalue your national team. Your national team value will go further down. So, these are the issues.

    And for sponsorship, if you want sponsorship for your national team to thrive, then you must open up the windows. For instance, you open up a raft of sponsorship; a main sponsor, suppliers, and other windows like first tier, secondary, primary tier sponsors and then the partners and the suppliers. You define what each of them does. But here we just carry the sponsorship and give to one client and then you shut all the windows. You’re short-changing yourself because so many things you’re supposed to do to bring to board to benefit your national team, will not come in.

    And we also see in this part of the world, football as a social service. Football is not a social service, it’s a big business thing, such that it must drive growth, it must drive production. The rest of the world, if you take Germany which is a good example of a government that cares about sports, the German government annually spends over three billion Euros on sports and this goes into all the other aspects of sports, all the facets, both the internationally known sports and their local sports. We have no business having a sports ministry in this country. What we should have is a sports agency, where the government appoints somebody who understands profit and loss to drive sports and this will drive the youth.

    Nigeria says about 67% of it’s population are youths out of which about 45% or more are actively engaged in sports, but you see what they’re doing is just sports for the fun of it. There are no ladders for these young men and women to climb to get to a platform where there are economically benefited, productively engaged and, of course, grow the economy and be part of what is going on. So, these are the challenges we are having, and that is why sports, especially football in Nigeria, is not growing. So, if we run our clubs well in this country, you know that most of our clubs are appendages of state governments, so, no private individual will like to come in there, because if you do, your money will be spent and they just see it as a PR tool. No state government has seen football clubs as a business entities in such a way that they will develop it, invest in it and then structure it so that it can drive investment. These clubs are unable to be productive, they are unable to be economically viable, they’re unable to develop, and they’re unable to grow. So we remain in a status quo on a centrifugal force where we’re not making any progress.

    From what you have said, is it economically beneficial for Nigeria to go to the World Cup?

    I’ll tell you capital NO! We have no business going to the World Cup if we look at it from an economic point of view. All the World Cups we have participated in have been huge losses. You recall the 2010 World Cup in South Africa, where the NFF hired a faulty aircraft that had only one engine to move the Super Eagles from London to South Africa until the Federal Government had to intervene and sent an Arik Air jet from Nigeria to move those players, issues of hotel reservation and all that. Now, at the end of the day what we see is that the officials are fatter than the players. The government does not know that FIFA pays for a lot of these things for the World Cup which goes to the officials. So, we need to tell this and make government understand that the World Cup is not just a festival of football, it’s a business thing that a lot of countries go to the World Cup and when they’re done, their football grows, their football develops, their football becomes economically viable, their football also drives youth employment and opens up other tournaments of endeavour, so, this is something we need to understand because those who are managing our football do not want us to move forward since they know that once these windows are opened up, they’re likely going to lose those megabucks that come into their private pockets without government knowledge. So, it’s for me very instructive that the government understands that in Nigeria, like other private wards that are into sports business, we have no business having a sports ministry.

    To correct all of these anomalies, when you look at the characters in the Glass House, do you think we can achieve some of the things you have mentioned? What do you think we can do to correct these anomalies?

    First of all,the danger is that, a man first of all needs to understand that he is limited. I think the danger is, the head of the place does not know. I think that he does not know, because for a man to make changes, he must first understand the reasons for those changes.I don’t think he knows and if he does not know, what do you do? You live with what he knows. And what he knows is what is going to drive him. So, if he’s supposed to be the head of an elephant rather than the tail of a goat, which one will you prefer, to be the head of a goat or the tail of an elephant? Now, the tail of an elephant only goes with the elephant where the elephant goes. But the head of a goat drives the body of the goat. So, I think it’s better to be the head of a goat than the tail of an elephant. What we have is a man who does not know that he knows, he does not know what to do. If you don’t know what to do to develop our football, he’s done well in the areas of trophies, if you talk about Nigeria qualifying for competitions, we can always qualify for competitions, whether there’s an FA chairman or not. We have the resources, we’re blessed with the talents, we can go for any competition. But the issue is where are the structures to drive positive things, to drive development, to drive engagement, drive production, empowerment of our youths.

    At club level we have seen the crisis between club managers, – some call them club owners or whatever – and the League Management Company, and the bottom line, for discerning people, is the control of sponsorship funds from the title sponsor. What do you think is the way forward? Some of the clubs get money from state governments, some club chairmen and officials pay signing-on fees, some don’t pay at all. The players play for some years and some move on to other clubs. We’ve seen examples of this in the past couple of weeks. How do you think our clubs should be structured? What is the way forward? Do we continue to get money from state governments? Some say for state governments, it’s a social responsibility; employ some youths, get them off the streets, get them to play football. What should be the permanent solution to this problem?

    Let’s look at some Nigerian club sides. Every season we hear that some clubs are given N100m, but at the end of it, players are not paid, signing-on fees are not paid. So,what happens to the N100m? Obviously, the money goes into private pockets from the ministry to the director. By the time it gets to the club chairman maybe what will be left will be about N20m or N25m. The club chairman also helps himself by editing something and so nothing is left to pay the players and officials. So, we have no business with state governments having clubs, if they do at all, what they should do is to invest some percentage in the community maybe 60 or 40% they hold and give the rest to the community because they need to finance it. So, that’s what you’re getting and that’s why the results cannot come out good, because no football club in Nigeria has any structure to grow, develop, create and then generate a business. Those ones that even have some form of private support, it’s just because those private people want to just identify, not because they have anything really to give back to them in terms of value, because for a private sponsor to come in, you must deliver value to him, and if he doesn’t see that value, he walks away.

    The challenge for us is how to do things right. Once we don’t get them right, nothing is going to come. It’s just like you plant apple and you’re expecting to get orange, it won’t work. We must have the orientation of doing things right so that we’ll get it right. If you look at Germany, the German league, people don’t know, is the most watched league in the world.What the Germans have done is to make sure that all the external factors that affect other leagues and make their clubs bankrupt are removed. The community owns the club and then they finance it by annual contributions from the community members and then other shareholders that have 10-15% and all that, so the club has financial muscle to be able to withstand any challenge that comes. Once you’re born in a Dortmund community, for instance, you’re automatically a Dortmund supporter. Now, these clubs have fantastic academies that produce players for them, so, you hardly see Germans going outside their areas except Bayern, because they want to be more cosmopolitan. That’s not the case here in Nigeria. You see a Nigerian club recycling certain players for 20 years. The same player, he gets to a point his age reduces again by five years, he goes to another club, his age reduces again, and he’s been recycled because the coaches want to do signing-on fees rather than bringing in players from a younger level. So, it’s going take time for us to get it right as long as government continues to own these club sides.

    I want to put you on the spot now. Do you agree that the government should hands off running of clubs? And if that happens, we may be left with only one or two clubs. Alternatively, do you agree that we should suspend our league until we get it right?

    Wow! Two difficult options. First of all, this case you’re telling me, I was invited to the senate committee on sports sometime ago, to come and air my view on sports business and this question was posed to me, if you tell me that we should suspend the league until we get it right, I’ll say you no. The reason is very simple: you’re going to put the lives of many people in danger. Some of these players have nothing else to do than this sport, so, if you suspend it, what will they do? Where do you send them to? And secondly, the private sector in Nigeria are not going to just wake up one day and come into football, they will not do that. They must see the changes and the changes have to come from the top, the leadership. Once they see that the changes are radical, positively radical and they’re ready to do things right, look, I know a blue chip company today in Nigeria that the MD confided in me that he’s ready to fund a football club if the right things are done.

    The other question was if I would want the government to stop…no, no, no, no. For now no, because if you do it now you’ll kill our football. Right now, no. But there are ways to do it. Let’s pick Rangers of Enugu, Rangers is in the Premier League, and you throw Rangers to the community to say, we want to sell 70% of the shares of Rangers International. The question is, do you think they will buy or they will not buy? Of course they would buy; because Rangers for them is a culture. Rangers, for them, is a monument. Rangers, for them, is something they love, they want to identify with, they don’t want anything to happen to their beloved Rangers. So, they will buy. And so, throw 70% of Rangers shares to the community and then the club is alive and well. And then you get men who understand the books. You see when you give a man who does not know profit and loss an organisation to run,he will kill it. That’s what happens.So,those are basically the things we need to get right and we’ll move forward.

    Statistics show that there are a lot of Nigerians who are in managerial positions abroad and they are running their organisations well. Why is it difficult for us to do the same here, I mean get competent people to manage these clubs?

    The issue is that are we interested in getting the right people? If yes, now who is the person there? I keep hammering on addressing the issue of the quality of the persons who are about to leave the office. Are they afraid that they have done something wrong and they need a surrogate to come in and help them protect the empire? Or they want the place to work well and therefore damn the consequences and look for a man who can drive the place and make things work well? Those are the issues, so, if you have a man who has skeletons to hide, he’s going to look for an idiot to come in and cover up. He’s going to look for a man who will devalue the system. He’s going to look for a man who does not have the operational understanding of the system, to come in there and make sure that the status quo remains. I think that’s what we’re experiencing in sports. We have quality men who are well trained and well schooled to hold their ground anywhere, and like you rightly pointed, outside of this country, Nigerians are doing well, they’re are in leadership positions in several cadres of leadership in different countries, even as far as the United States, in Great Britain, in Germany there are Nigerians who are leading organisations and they’re doing so well. So, now, those countries realise that what they are looking for is the best. The private sector does a little bit of that, but I think the public sector is very guilty of not allowing our best hands to take over positions of authority and in sports we are very guilty of that, we make sure that the right people who have something to offer are schemed out of the system, those who have nothing to offer come into the system . We’ve seen in this country where some persons came eighth in an interview and they were given the job, ahead of the man who came first, second, third. It’s absurd! You can’t do that in any serious organisation. So, in such a system, you can’t expect anything to progress from it.

    The annual Sports Business Media Award is in it’s third edition. What inspired the creation of this award, because some would say there have been so many awards, some are mercantile,how is this award different.

    Fantastic. You know in my office what we try to do is to ruminate ideas. We’ve had ideas; what have people done, what can we do to be different. What new things can we do. And I must confess to you that by the grace of God, before the World Cup the concept we have created, nobody has done it anywhere in the world. It’s about football, it’s coming out very soon. We have friends that are working with us very soon. You’ll be shocked that, Oh! Somebody can do something like this. Now having said that, all the awards that have been done before only addressed players, officials. Look the people who made this people, nobody addressess them. …… So we sat down and said there’s a misnomer somewhere. These are the people that do all the work, they travel, sleeping outside, not even sleeping well, to make sure that Nigerians follow their teams, follow their events. So, we said let’s focus on the events sponsors, they’re the people that are the real kingmakers in this country and if we do not honour ourselves, nobody will honour us. That was where the inspiration came from. Let us focus on ourselves. It came out well and everybody was like ‘yeah, yeah, nobody has done something like this before, this is different.’ That was how it started. We put five million of our funds in the first edition, last year we spent more. The awareness is coming up now, and you talked about some other awards being mercantile. Never will ours. I swear with the name of God, I cannot do it. All the people that won our awards so far, we’ve never met them for a dime, we’ve not approached them and said, oh Zenith bank you’re going to win, so we need you to bring one million naira. We never did that and it’ll be like that. For the media guys, everybody that has won an award, you can go interview them. We’ve never approached any one of them to give us money, it’ll never be. Rather, what we’re even doing now, we’re looking for sponsors that will sponsor all the segments so that if you’re the Photographer of the Year, as you’re picking the award as Photographer of the Year, a cheque will come with it, at least N500 000, for your Christmas, your family, have a good Christmas; that’s what we’re walking on right now. That in the Sport Business and Media Award, journalists will be well rewarded. That’s where we are now, that’s the stage we’re working on. We trust God it’ll come through by his grace. For us the Nigerian sports journalist is not well recognised, he’s not well celebrated, so we created this award to celebrate the Nigerian sports journalist. From every nook and cranny, if you’re a photographer, if you’re an editor, everbody is equal. Once you get into the award hall we’re all the same. A levelling ground. You know John Momoh told me something at the last edition. He said: ‘ I’ve seen that the award is very credible and that is why most of these private people will not come because they go to the awards where they are blackmailed because of the dirty things they do, those who blackmail them, that’s where they go, but maintain the focus, maintain the credibilty, maintain the accountability, and no other award will stand you.”

    So, for us that award is very special on our calendar, in our events and we want Nigerian sports journalists to come there, relax, enjoy themselves, and then get those who have done well properly rewarded, and for the very first time, an award in Nigeria where the nominees will see the results online on screen; right there they saw everything, they were shown the results, how people voted. So nobody doctored, nobody touched anything. Most of the voters actually confessed to me that they tried to vote twice but couldn’t. The security we put on the website was tough it actually had a camera and a software, so, once you go once and you vote, it picks your picture. So any other system you go to, your picture is already there on the file. The young man who did it, just about 24 or 25 who gave us that IT security said, ‘I’ll do this for you and nobody can break it.’ And it worked magic, so, we intend to continue with it and then give it more credibility and publicity, so that sponsors can come in and once sponsors start coming in, we’ll be able to say Sports Photographer of the Year, Sports Editor of the Year, you have a cheque you will get.

     

  • ‘Doing business in Nigeria is profitable’

    A South African, Norman Sander, is Manager, Ikeja City Mall, Lagos. In this interview with TONIA ‘DIYAN, he urges his countrymen and women to remain in Nigeria, speaks on why Woolworth left and why Shoprite is thriving, among others.

    What major challenge is the South African (SA) retailer facing in Nigeria?

    There is little brand recognition for South African retailers in Nigeria. Consumers here are more familiar with United States and European retailers. This requires a marketing strategy that goes beyond advertising store opening and extends to launching a new brand.

     Do you think other South African retailers would want to follow Woolworth out of the Nigeria?

    Woolworths canned its three-store pilot project in Nigeria, but cited a mismatch with the Nigerian consumer and climate. It, therefore, decided to quit doing business in the country.

    As a result, Broll Nigeria has assured other South African retailers that they will not be deterred from profiting in the country for any reason whatsoever. SA retailers are advised to  remain here and do their businesses. As a matter of fact, Broll expects that more South African retailers, especially value retailers, would continue to seek opportunities in the Nigerian market.

    Do you consider doing business here a challenge?

    Yes, doing business in Nigeria is a challenge. There is the issue of mismatch between SA retailers and the Nigerian consumers just like Woolworth has sited. There is also the issue of climate, among other challenges, but I believe if we can offer the middle class Nigerians the right price, product, service, quality and choice, the sky is the limit for us here.

    Which SA retailer offers all these to the Nigerian market?

    I can say categorically that South African retailer Shoprite is notching up exceptionally strong trading at Ikeja City Mall and other malls where it is situated in and outside Nigeria.

     How can other SA retailer in Nigeria meet this standard?

    They should be prepared to change their models for the Nigerian consumer. If they do so, they stand to gain a firm foothold in a marketplace and a country where consumers are brand loyal and they value good services, which is in short supply presently.

    What should the SA retailer consider before embarking on a business trip to Nigeria?

    The SA retailer should realise that the Nigerian market is vastly different from that of South Africa and its neighbouring countries. And as such, carry out some researches to understand this unique set of consumer needs and norms, before venturing into this exceptional territory.

    For retailers planning to enter the Nigerian market, I suggest that they should start with using a cash-based model initially, rather than counting on sales from accounts or cards.

     How does Broll intend to sustain the Nigerian retail market?

    Broll is increasingly being called upon for its professional property services and insights to support retailers and property owners. The company is seeking to unlock the many retail opportunities in Nigeria gradually. The market and spend needed for retail success is here and growing. Retailers wanting to crack this market need to customise their models to meet the unique consumer needs and aspirations.

    Let me say that, the call for more shopping malls is gaining the support of more and more Nigerian shoppers.

     What has changed since SA retailers started coming into Nigeria?

    Mall dwell times are increasing and foot counts are growing. Nigerians now enjoy a first-world shopping environment that is pleasant, safe, cool, unrushed and which offers a complete retail experience from shopping to relaxing at the food court.

     How is the market buying pattern of Nigerians different from South Africans?

    For fashion, there’s no seasonal shopping – Nigeria is hot, year round. Sizes are also important and different to Europe and South Africa. Some 50 per cent of men’s shoe sales are sizes larger than size 10. And, while there’s a market for luxury goods, prices that are noticeably above those of Europe won’t be tolerated by Nigerians.

     What is your secret for keeping customers at the Ikeja City Mall? There is always a large crowd here.

    Offering guarantees and sticking to them is a tremendous way of growing customer loyalty in a business. We found out that give-away events enjoy great participation at Ikeja City Mall. So, we do lots of give-away events in form of promotional offers; we give out gift vouchers, organise shows and have shoppers win prices. We come up with lots of innovations to satisfy and keep our customers. At first, journalists were genuinely surprised to find out that our offers are fair and above board.

    Who should venture into retail business in Nigeria and what are the challenges in the industry?

    Despite all the opportunity, retail in Nigeria is not for sissies. Mall rentals are high because of infrastructure and development costs which, in turn, demands high turnovers. Infrastructure is poor, red-tape is plenty and officials often interfere. The supply chain also takes far greater focus, with a host of potential obstacles to be navigated.

    Retailers will need excellent warehousing to overcome shipping issues in Nigeria, where goods don’t move as fast as they do in South Africa.

    The choice of clearing agents is important and there is often a price attached to clearing goods.

    With these challenges, Nigeria’s retail opportunities keep on growing on the back of mass urbanisation, the emerging middle class, rising retail awareness and an increasing consumer culture.

    Is social media an advantage to the retailer?

    With the mobile phone boom in Nigeria, and an increasingly tech-savvy population, digital and social media marketing are effective tools for retailers always.

    What are your final words for retailers?

    For retailers who are prepared to develop a country-specific model and invest in research to support a supply chain. They should get the right stock, provide the best price and render the best services, because there’s a bright future in Nigeria.

    Also, I notice a massive gap in the market for homeware retailers, and I advise them to come and do business in Nigeria.