Low-income earners can’t afford govt housing units – Experts


Stakeholders at a seminar organised by the Ogun State chapter of the Nigerian Institute of Quantity Surveyors have chided the federal and state governments for constructing housing units only for the rich.

The seminar held in Abeokuta and had as its theme: ‘Effective housing delivery in a developing economy.’

The President, NIQS, Obafemi Onashile, noted that there was the need for the government to evolve an effective housing policy, which would guarantee more affordable houses to the low-income earners and the masses.

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Onashile, who was represented by the Vice-President of the institute, Mr Olayemi Sonubi, said Nigeria, with a growing economy, needed more affordable housing units.

He noted that the government’s housing policy had failed because there was no systematic plan to build houses, adding, however, that it was not enough to build houses that the low-income earners might not afford.

He called on the government to bring the interest rates on mortgage loans to one digit, because according to him, a two-digit mortgage loan regime would take a long time to pay back.

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Onashile added, “Mortgage loans should not attract more than five or six per cent interest, having such loans at 19 per cent is quite high.

“There is the need for the government at the state and federal levels to build affordable housing units that low-income earners can afford.”

In his keynote address, a former General Manager, Ogun State Broadcasting Corporation, TundeAwolana, an engineer, said not many low-income earners could afford the housing units being built by the government and private developers.

He stated, “Housing corporations are building prohibitive housing units, which can only be afforded by criminally-minded people.

“They are supposed to build housing units for low and medium-income earners. Some wealthy Nigerians are also building big houses their children may not like to inherit.”

Awolana called on professional in the built environment to rise up to the occasion in tackling the challenge of housing deficit in the country.

The Ogun State Chairman, NIQS, Mr Kayode Dipeolu, said the workshop was aimed at examining the effective delivery of housing units in the country.


Samuel Awoyinfa, Abeokuta

Trump’s tariffs threaten China’s economy

American and Chinese officials have made headlines in recent months for their confident predictions of trade war victory, but many longtime China watchers say the most important drivers and trends affecting Asia’s largest economy go well beyond tariffs. As the trade war escalates, it will not be easy for the Chinese government to use public spending to boost investments due to its mounting debt.

As the trade war between Washington and Beijing ramps up, analysts are divided over just how tariffs will impact China’s economy.

Some economists say the tariff battle between the world’s two largest economies — which advanced with a new round of tit-for-tat taxes on Monday — could land a significant hit on the East Asian giant, while others contend that China will manage around the White House’s offensive.

That argument may, however, miss the point about the future of the communist country.

American and Chinese officials have made headlines in recent months for their confident predictions of trade war victory, but many longtime China watchers say the most important drivers and trends affecting Asia’s largest economy go well beyond tariffs.
Slowing investment, mounting debt

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China has long relied on infrastructure investments to drive its economic growth.

Investments contributed to 44 percent of China’s nominal GDP in December 2017, compared to about 20 to 25 percent for countries like the United States, Japan and Germany, according to figures compiled by economic data provider CEIC.

China’s fixed asset investment is slowing, however, with investment growth falling to a record low in August. Economists including Nicholas Lardy from the Peterson Institute for International Economics, however, warn against paying too much attention to the historically low figure as China is currently revising the way it measures fixed asset investment.

Still, as the trade war escalates, it will not be easy for the Chinese government to use public spending to boost investments due to its mounting debt.

The world’s second-largest economy had a relatively stable level of debt until the financial crisis in 2008 when it spent a whopping 12.5 percent of its GDP to stimulate the economy.

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The country had encouraged loans to boost economic growth, with Chinese banks extending a record 12.65 trillion yuan ($1.88 trillion) in loans in 2016. That credit explosion stoked worries about financial risks, so authorities in 2017 pledged to contain the rapid build up in debt.

Since then, Chinese debt-to-GDP has steadily grown to about 250 percent — or about $28 trillion, according to DBS and CEIC.

However, the Institute of International Finance has put China’s debt at more than 300 percent of its GDP.

The International Monetary Fund issued a strong warning about the country’s economy in 2017, warning that debt-fueled growth is an unsustainable long-term solution.

Chinese authorities had been trying to rein in the country’s rising debt, with China’s state-owned banks told in April to stop lending to local governments. But as the trade war drags on, China appears to be using investments to boost the economy again.

The National Development and Reform Commission, a top Chinese economic regulator, announced earlier this month that it aimed to promote infrastructure investment.
Aging population, betting on consumption

While China is trying to improve productivity through automation and robotics, the effects of its aging population are taking a toll on the economy.

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“Demographic trends could subtract 0.5 to 1 percentage point from annual GDP growth over the next three decades in post-dividend countries such as China and Japan,” the IMF said in a 2017 report.

China’s one-child policy ended in 2016. Couples are now limited to two children, but there has been speculation that officials are mulling scrapping birth restrictions altogether.

But decades of limiting couples to having only a single child have led to plunging birthrates. That, along with a corresponding aging population and shrinking labor force, has implications for the country’s consumption trends.

China has been trying to move toward economic growth that’s led by consumers, but data on consumption has been mixed. Monthly retail sales have been slowing, but quarterly spending, which includes education and travel, is on the rise.

China’s online retail giants, meanwhile, reflect a nuanced picture of consumption. In the second quarter of 2018, Alibaba saw sales rise by more than 60 percent from last year, even though rival JD.com faced slower sales.

Xin En Lee

OPIC’s 80% local inputs sourcing raises hope for low-cost housing


Nigeria is today the second most expensive housing market in Africa, after Angola, and one of the reasons frequently cited for the high house price in the country is the cost of building materials which are largely (about 60 percent) imported.

It is estimated that building material constitutes 20-30 percent of total construction cost, making the new initiative by the Ogun State Property and Investment Corporation (OPIC) on sourcing building materials locally not only attractive, but also a source of hope for low cost housing.

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OPIC is now offering prospective buyers houses constructed with 80 percent locally sourced inputs. Apart from its capacity to reduce house price, the initiative is also part of efforts to boost the country’s economy, creating direct and indirect job opportunities for Nigerians.

The corporation is an arm of Ogun State’s Ministries of Housing and Commerce and Industry. It is a frontline property investment and development company in Nigeria, currently making efforts to create housing hubs along the Lagos-Ibadan Expressway corridor.

The expansive New Makun City housing project at Sagamu interchange and the MTR Garden Estates at Isheri end of the expressway are testaments of the corporation’s drive towards providing affordable housing for home buyers and investors.

According to Jide Odusolu, managing director of OPIC, 256 housing units will be completed in the first phase and delivered to prospective allottees in the second quarter of this year. This is in addition to constructing several kilometres of link roads from Lagos-Ibadan expressway to the new estates.

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OPIC has earmarked N4.5 billion for capital projects to cover the development of housing units and link roads to both New Makun City and MTR Garden Estates; rehabilitate roads, repair and upgrade housing units in both Agbara Residential Estates in Agbara and Alamala Estates in Abeokuta.

There is high expectation that with this drive to open up local communities with good roads network coupled with the local sourcing of building inputs, access to housing will be a lot easier for a good number of people, especially the low income earners.

Building materials prices in Nigeria are way out of the reach of many would-be builders. There was however, a significant drop in the prices of these materials in the first half of this year (H1 2018).

BusinessDay had, in an earlier report, disclosed that in the material prices was a good reason for builders who had abandoned their projects at the peak of economic recession to return to site and those wishing to start new projects to move to site.

Michael Jideofor, a building technologist, notes that the twin evils of high inflation and exchange rates escalated commodity prices, including those of building materials, leading to meteoric and unsustainable rise in construction cost and stalling of many building projects.

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Depending on the brand, the price of cement, a major building component, has dropped to between N2,550 and N2,600 in H1,2018, down from between N2,700 and N2,900 in corresponding period in 2017, representing about 8 percent drop in price.

This means where a builder would have spent close to N300, 000 to buy 100 bags of cement in H1,2017, he would now spend about N260,000, gaining close to N40,000 which is enough for him to buy a tipper load of gravel.

But while the price of sandcrete (9inch) block has dropped to 210 in H1 2018 and to N170 at the moment, down from N220 in H1 2017, the price of aluminum roofing sheets (0.55mm) has gone up 7 percent to N2,700 in H1 2018, up from N2,500 in H1,2017.

The price of cables (6mm/coil) has also come down to N35,000 in H1 2018, down from N38,000 in H1 2017, representing -9 percent drop. Similarly, the price of paving stone 60mm (local), which is very much in vogue for builders, has dropped from N2,100 in H1 2017 to N1,800, representing -17 percent drop in price.


70% of Abuja’s residents live in slumps – Senatorial aspirant


According to a senatorial aspirant Mr. Olanrewaju Lawrence, about 70% of the Federal Capital Territory (FCT) citizens are living in the slumps.
Mr. Lawrence, who is contesting on the platform of Abundant Nigeria Renewal Party (ANRP) for a Senatorial seat in FCT in the 2019 general elections, said the situation was caused by past leaders who refused to plan well for the people.
The aspirant who made this know during the ANRP-FCT chapter primaries in Abuja, added that the capital needed a pragmatic shift in leadership in order to bring about the desired development.
“FCT is over 35 years and those elected has not brought the desired development”, he lamented.
“FCT ought to be having more than 10 million tourists as a revenue generating area for the government and creating jobs for the citizens duelling in the capital but look around, you will see infrastructure that are not well conceived”, he added.
Mr. Olanrewaju lamented that money politics was responsible for poor leadership in the capital city.
While noting that Abuja was created to be the proud black capital of the world, he called on the Abuja residents to vote wisely during the 2019 elections.


Economy may slip back into recession, CBN warns

…to discuss with MTN, banks over N8.1bn fine

The Monetary Policy Committee of the Central Bank of Nigeria on Tuesday warned that weak economic fundamentals currently being shown by the economy were putting the country’s exit from recession under threat.

The Nigerian economy exited recession in 2017 after suffering contraction for five consecutive quarters.

Addressing journalists shortly after the two-day meeting of the MPC members held at the headquarters of the apex bank, the CBN Governor, Mr Godwin Emefiele, said the economy had started showing signs of weakness.

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For instance, he said the committee was concerned that there was a fresh threat of recession as the economy recorded growth rate of 1.95 per cent and 1.5 per cent during the first and the second quarters of this year, respectively.

He noted that the slowdown emanated from the oil sector, with strong linkages to employment and growth.

For instance, the apex bank boss said the late implementation of the 2018 budget, weakening demand and consumer spending, rising contractor debts, and low minimum wage were some of the risks to output growth.

Others, according to him, are the impact of flooding on agricultural output, continued security challenges in the North-East and North-Central zones, and growing level of sovereign debts.

Emefiele stated, “The MPC observed that despite the underperformance of key monetary aggregates, headline inflation inched up to 11.23 per cent in August 2018 from 11.14 per cent in July 2018.

“The near time upside risks to inflation remain the dissipation of the base effect expected from 2019 election related spending, continued herdsmen attacks on farmers and episode of flooding, which destroyed farmlands and affected food supply ultimately.

“In this regard, the committee urges the fiscal authorities to sustain implementation of the 2018 budget to relieve the supply side growth constraints so that they can address the flooding, which has become perennial on a permanent basis.

“Relative stability has returned to the foreign exchange market buoyed by the robust external reserves, with inflation trending downward for the 18th consecutive month.”

He added, “The gains so far achieved appeared to be under threat following the new data, which provides evidence of weakening fundamentals. The committee identified rise in inflation and pressure on the external reserves created by the capital flows reversals as the current challenges to growth.

“It noted that the underlying pressures have started rebuilding and capital flows reversals have intensified as shown by the bearish trend in the equities’ market even though the exchange rate remains very stable.

“The committee was concerned that the exit from recession may be under threat as the economy slid to 1.95 per cent and 1.5 per cent during the first and the second quarters of 2018, respectively.

“The committee noted that the slowdown emanated from the oil sector with strong linkages to employment and growth.”

On what could be done to stimulate economic activities, the CBN governor said that though growth remained weak, the effective implementation of the 2018 Federal Government budget and policies that would encourage credit delivery to the real sector of the economy might boost aggregate demand, stimulate economic activity and reduce unemployment in the country.

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The CBN governor said the committee urged government to take advantage of the current rising trend in oil prices to rebuild fiscal buffers, strengthen government finances in the medium term and reverse the current trend of decline in output growth.

The MPC, according to him, also called on the fiscal authority to intensify the implementation of the Economic Recovery and Growth Plan to stimulate economic activities, bridge the output gap and create employment.

The apex bank boss said the MPC expressed concern over the potential impact of liquidity injection from election-related spending and increase in federal allocations, which are rising in tandem with increase in oil receipts.

Emefiele added that the committee was concerned with the rising level of non-performing loans in the banking system, and urged the banks to closely monitor and address the situation.

He also expressed concern over the weak intermediation by Deposit Money Banks and its adverse impact on credit expansion as well as investment growth by the private sector.

While revealing the outcome of the meeting, Emefiele explained that seven out of the 10 members of the committee agreed to maintain the current monetary policy stance, while three voted to increase the rates.

According to him, the MPC decided to leave the Monetary Policy Rate unchanged at 14 per cent.

Apart from the MPR, which was retained at 14 per cent, the committee also retained the Cash Reserves Ratio at 22.5 per cent.

Also retained were the Liquidity Ratio which was left at 30 per cent; and the Asymmetric Window, which was left at +200 and -500 basis points around the MPR.

Explaining the rationale for the decision, the CBN governor said, “Tightening will tame inflationary pressure, tame the reversal of portfolio capital, improve the external reserves, and maintain stability in the foreign exchange market.

“Conversely, the committee also noted that raising rate would further weaken growth, as credit would become more expensive, non-performing loan would increase further, leading to a deceleration in output.

“In the committee opinion, the upward adjustment would not only signal the bank’s commitment to price stability, but also its desire to maintain all policy interest rates.”

He added, “A decision to hold all policy parameters will sustain natural improvement in output growth.

“There is need to maintain the current policy stand and await a clearer understanding of the quantum and timing of liquidity injection into the economy before deciding on possible adjustment.”

When asked about the state of the Nigerian banking system following the withdrawal of the licence of the defunct Skye Bank Plc, the governor insisted that the Nigerian banking system remained “sound and healthy.”

He said, “In every chain, there will always be strong points and weak points in a chain, but what we will continue to do is to make sure that that chain remains strong in all aspects of it. Notwithstanding that, as we see areas where there are weaknesses, we will do everything possible to make sure that we keep the chain linked together, and that is what we did with Skye Bank.

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“As I have said before, I will love to see a situation where banks are not liquidated, that we have to think outside the box to see how much we can ensure that we have more banks in the country than have less number of banks in the country, and that is what we are doing.

“The situation with Skye Bank, as you well know, is that as at two years ago when the news broke that the bank had slide into negative capital as a result of Non-Performing Loan, at that time, we compelled the entire board and executives to resign and they did.”

Emefiele added, “After that, before we conducted an internal audit, the hole (financial gap) was about N370bn. After the forensic audit, it came to the level it is today, which is almost about N800bn

“So what we did was to say that having established a hole at this level, taxpayers’ money will be invested in this bank as a loan. So, we decided that there is a need to let shareholders know, particularly those that have lost their investments; we will try to make sure that small investors remain protected.

“It is for this reason that the name had to be changed for legal reasons. Having got to the point where the Central Bank of Nigeria has invested close to N800bn in this bank, at some point it must be seen to be owned by the CBN until we find investors that can pay a fair price for the bank.”

He gave an assurance that depositors’ funds in the bridge institution, Polaris Bank, remained safe, adding that the apex bank would ensure that it would not throw the over 5,000 workers of the bank into the labour market.

On the MTN controversy, he said that the N8.1bn, which the CBN asked the company to pay, was the dollar equivalent of the naira generated from its profit.

He said what the CBN sought by asking MTN to return the money was that it wanted a reversal of that transaction because it was not finally authorised by the apex bank.

The governor stated that since the funds moved through four banks, the quantum of dollars that passed through the banks was what the CBN asked the lenders to remit.

Emefiele stated, “It is important to note that this was an investigation that started about two years ago. I feel vindicated that in the history of the banking sector, I at least gave a chance where the regulator, the governor sitting in the meeting, the Director of Banking Supervision with over 20 examiners sitting in a hall with the company and the banks, asking them to resolve the issue, because we agreed that MTN is an important telecom company in Nigeria.

“After that meeting that we held on May 25, 2018, the discussion was inconclusive. We gave MTN and the banks one week to send relevant documents, but it was not done. But realising the importance of this company, we gave extra two weeks for them to provide relevant documentation to the examiners.

“Unfortunately, this didn’t happen and we felt that we couldn’t wait indefinitely and that is the reason why we released the investigative reports. Right now, they have responded and provided documents, which I have sent to the examiners to review.”

He added that the CBN would again invite the banks and MTN to prove their cases.

“It is normal that we should allow them to clear themselves and that is what we are doing. I believe that in due course, we should make a final call on this subject,” he noted.

Ifeanyi Onuba

London’s affordable homes in expensive locations, a lesson for Nigeria

The London borough of Kensington and Chelsea, like the Banana Island in Lagos and Maitama District in Abuja, Nigeria, has some of the most expensive properties in the UK, but a new development of affordable homes has been approved for that location.

In the Nigerian highbrow locations, especially Banana Island, property values are such that the houses built on that island are targeted at a particular class of people. Any other person is a total stranger who is expected to leave immediately after his visit because he does not belong here.

But the story is different elsewhere. The Mayor of London, Sadiq Khan, has taken over the Notting Hill Gate scheme and doubled the amount of affordable housing being built to 35 percent, up from 17 percent. Under the new plans, about two thirds of new affordable homes will be available at social rent levels, others capped below the London Living Rent level.

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The application to redevelop Newcombe House in Kensington and Chelsea was turned down by the local council in March, before the Mayor took over the application later that month. The borough has consistently failed to meet targets for new and affordable homes.

Khan pointed out that last year no affordable homes were given planning permission by the council. But through his takeover, the Mayor has secured amendments to the plans that increase the level of affordable housing from 17 to 35 percent.

This is a big lesson for government’s at all levels in Nigeria. The mayor in London who is influencing the redevelopment of affordable homes in expensive areas is an equivalent of a local government chairman in Nigeria.

This underscores the importance the government attaches to housing the citizens but in Africa’s largest economy, housing is a luxury. The expensive locations in the country are exclusive for only the rich and high net-worth individuals who have chosen to live in such locations for a number of reasons including affordability, class, taste, and above all exclusivity of that location where only men of means are found which widens the inequality gap in society.

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For the London borough of Kensington and Chelsea to have chosen to develop more affordable homes in the expensive locations means there is a deliberate attempt to close the inequality gap in the society.

The development will include a medical centre, step-free access to the nearby Notting Hill Gate, underground station and a new public square with permanent pedestrian and cycle access.
“Since taking office, I’ve been clear I will use all the levers at my disposal to increase the supply of council, social rented, and other genuinely affordable homes that Londoners need across the capital,” said Khan.

Continuing, he explained, “having considered all the evidence available to me, and following hardwork by my planning team to increase the level of affordable housing, I have decided to grant permission for this development”.

This is a huge lesson for Nigeria where affordable homes for low income earners is not part of the concerns of government. Majority of private sector operators don’t factor affordable housing into their calculations and those who do usually go to the hinterland to develop. Demand here is not strong because many people would rather rent at the city centre than own a home in the ‘bush’.

The proposed development in London will also include important new step-free access to Notting Hill Gate station, a major improvement benefitting local residents and visitors coming to enjoy this vibrant and exciting part of the capital. This is unimaginable in a location like Banana Island where such a development will not be permitted because it will impact negatively on the exclusivity of the location.

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London has housing crisis like Nigeria, but unlike Nigeria, the government at various levels are addressing the crisis. Nigeria has a deficit estimated at 17 million units that requires an annual housing delivery of about 700,000.

But, Chudi Ubosi, an estate surveyor and valuer, says aggregate output at the moment is not up to 100,000 units.

Khan believes that ‘London’s housing crisis won’t be solved overnight, but hopes “this will send a clear message that I expect developments to include more genuinely affordable housing and other benefits for local people,’ he added.


Experts advocate strategic innovations to boost estate agency practice, kick against foreign competitors


Against the backdrop of the unhealthy competition from foreign players in the country’s estate agency practice, members of the Nigerian Institution of Estate Surveyors and Valuers, NIESV, have advocated strategic innovations as a way of remaining relevant in business and to boost the sub-sector of the economy.

This was the outcome of the one-day seminar on Prospects and Challenges of International Competition in the Business of Real Estate, organised by the Estate Agency and Marketing Business Division of NIESV in Lagos last week.

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Leading the discussion, Mr. Bode Adediji, Chairman, Bode Adediji Partners, and past President, NIESV, noted that the sector is presently faced with so many challenges among which are the impact of recession, ignorance and complacency and lack of capital for investment and marginalisation as well as international competition among others. And surviving in a situation like this according to him, would require practitioners to make clients have greater degree of trust in the services rendered to them, just as there must be expertise and confidence in the services rendered to customers.

The former NIESV boss who said it has become obvious that the most crucial and disruptive aspect of the international competition is particularly reflected in the premium and eyebrow segment of the real estate market, added: “Domestic practitioners must, as of necessity, understudy the composition and modus-operandi of international competition so that the required change in the conventional attitudes, practice and emphasis can be effected pragmatically and not merely symbolically as is prevalent now. “Recapitalisation, innovation, technology among others, are sacrosanct, if the local firms hope to survive the audacity and the scourge of the foreign competitors in Nigeria.”

Mr. Gboyega Fatimilehin of Diya Fatimilehin & Co, a firm of estate surveyors and valuers, who spoke on The Need to Raise the Bar in Line with Best Practice, attributed the incursion of foreign players in the industry to the nation’s increase in Gross Domestic Product, technology disruptions and the observed investment opportunities in the country.

Advising NIESV to consolidate for growth by putting in place continuous training and workshops for members to build competence as well as confidence in their operations, Fatimilehin stated that for the Nigerian real estate industry to be competitive and attract investment, real estate practice must have higher standards, stressing that this will remove constraints in the market and allow local practitioners to compete with the global real estate firms that have entered Nigerian market.

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NIESV’s President, Mr. Rowland Agbonta, in his remark, said the recent pronouncement by the court that lawyers have no business in property transaction has brought a new ray of hope to practitioners, stressing that it is high time that quacks in the profession were fished out and punished. According to him: “Agency practice has become an important area of real estate business and so everything that needs to be done to protect that arm of the profession must be put in place.”

In his remark, the Chairman, Faculty of Estate Agency and Marketing, NIESV, Sam Eboigbe, said the seminar was to draw attention of estate agency practitioners nationwide to the professional embarrassments of surrendering the larger chunk of its cake to foreign competitors. “The battle for the soul of estate agency has been largely local in nature and the faculty some years ago, championed the establishment and the approval of a body called Association of Estate Agency of Nigeria. This became necessary as a result of the poor public perception and image of estate agents, which has negatively impacted the profession and institution.

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The question now on the lips of concerned colleagues is, will there be another association that would be dedicated to foreign competition? he asked. Earlier, while speaking, Mr. Joe Idudu, a former president of NIESV expressed worries that the industry has become an all-comers affair for those who ordinarily don’t have business in the sector because of its lucrativeness.

He posited that the incursion of foreign players in Nigerian real estate has worsened the ability of local players to survive in the country. In a lecture titled: A well structured partnership, a case study of a flourishing firm of estate surveyors and valuers, Idudu challenged members to be innovative in structuring their firms, imbibe the culture of honesty and sincerity of purpose in dealing with clients and colleagues in the profession.

Kingsley Adegboye


Nigeria’s Infrastructure Development Matters to Japan – Yutaka Kikuta


The new Ambassador Extraordinary and Plenipotentiary of Japan to Nigeria, Yutaka Kikuta, arrived in Nigeria recently to assume duty. In this interview, he speaks about the importance of the up-coming Tokoyo International Conference on African Development holding in Tokyo, between October 6 and 7; the trade relations between Nigeria and Japan among other other bilateral trade issues. Iyobosa Uwugiaren provides the excerpt:

Can you tell us more about the Tokyo International Conference on African Development (TICAD)?
The TICAD is not one of the donor-conference being organised by Japan for African countries; it is a high level summit/international conference on African development initiated by Japan in 1993, which is being co-hosted by Japan, UN, UNDP, World Bank, and African Union Commission (AUC). It is held every five-year till TICAD V (2013) and every three-year since TICAD VI (2016) and this year TICAD VII will be held in Yokohama, Japan. It is a kind of African-ownership discussion by African leaders with international partners and organised by Japan and other international organisations. TICAD is a process of engagement among African leaders and other international organisations on how to implement series of TICAD’s meetings, ministerial meeting to review and plan how to implement the decisions of previous TICAD and prepare for the coming meeting.

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Tell us the uniqueness and importance of TICAD?
It is unique in true sense of the world. It is a strong long-term commitment by Japanese government to fostering peace and stability in Africa through collaborative partnership. It started in 1993 and stresses the importance of Africa’s ownership of its development, as well as the partnership between Africa and the international community for African development. Let me also stress the openness and transparency of the meeting over the years in the exchange of views amongst the conference delegates, by all international partners involved, not only African countries but also international organisations, private sector, partner countries, including Asian countries like China; and civil society organisations. But the ownership is on the African leadership side; how African countries can develop in future and how international partners, including Japan can assist.

What role is the Nigerian government playing in this international meeting?
I need to draw attention to the importance of the TICAD. Nigeria is playing an important role. President Muhammadu Buhari attended the previous one that was held in Nairobi, Kenya in 2016. Japan is part of the process to see how we can develop Africa as a whole. However, the role of Nigeria is its decision, how it can be part of the conversation and implementation plans for the future development of Nigeria.

Was Nigerian government invited for the TICAD?
Of course; we have sent invitation to the government through the Minister of Foreign Affairs and we have received a kind of positive signal from the government that it will send a very high-ranking political officials for the meeting, and we are very much encouraged.

What are the expectations from the meeting?
Like I said earlier, the Ministerial Meeting is a kind of review meeting concerning what was committed in the previous meeting, in Nairobi, Kenya; and also, to discuss the agenda for the next year TICAD. It is a very important meeting in the TICAD’s process. The involvement of Nigeria in the process is very important, and it is for the future development of the country.

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Share with us your areas of engagement with the Nigerian government since you arrived the country?

This is my fourth month since my arrival. I arrived Nigeria on May 24, 2018 to take up this position. My engagement has been on three pillars: the first is economic; the second pillar is development and the third is enhancing the people to people exchange. In terms of development, we are supporting Nigeria in infrastructure development such as water, electricity, transportation, information communication technology, software development and others. I strongly believe that helping Japanese companies in Nigeria to develop is in the best interest of Nigerians. They can create many jobs; they can enhance and transfer technology development to Nigeria. The philosophy of Japanese government is that we work for the receipting country. In the development, there are many commitments that have been made by TICAD’s process.

In that process, we have our economic, development and skills acquisition cooperation/plans for each African country. In case of plans for Nigeria, we have mainly three pillars in our assistance towards Nigeria. One is infrastructure, the second is health and the third is a kind of emergency human-career aide through a long-term sustainable aid to the people. So, based on their philosophy and their discussion in the TICAD’s process, we develop our assistance plan for each country. The second pillar is the people to people exchange. Before I came here, I heard a lot about Nigeria by Japanese people. But my perception about Nigeria has since changed after my arrival. We should make effort to convey the real image of Nigeria to the Japanese people.

The information about Nigeria as economic and political powerhouse in Africa, its rich culture, music, movies and other are very scarce in Japan. It is only negative things like Boko Haram activities, crimes and other bad things that are available there. But after my arrival here, I found out that though Nigeria has its own challenges; I don’t deny it: Nigeria has a lot of challenges; Japan also has its own challenges, but Nigeria is charming and has great human resources, talented people, and young creative people. I will like to convey all these beautiful things to the Japanese people. I will also like to convey to Nigeria, the beauty of the Japanese people.

We need to develop a mechanism for information sharing between the two countries. With population of approximately 200 million people and its abundant natural resources, Nigeria is a great country. For us, Nigeria is an extremely important country to promote our diplomacy towards the African region. In this regard, it was my honour to come to such a great country and serve as an Ambassador representing the Government of Japan. If I look at its cultural aspects, Nigeria is a prominent cultural giant in the areas of literature, music and film, while it is also an information hub. It is famous for influential authors such as Prof. Wole Soyinka who is the first African writer awarded the Nobel Prize in Literature, talented music artists with Nigeria being the origin of Afrobeat, and its film industry known as Nollywood, which is often compared with Hollywood or Bollywood. Therefore, it is my pleasure to be able to work in such a culturally rich country and strengthen the bilateral relationship through cultural exchange.

What is the trade relationship between Nigeria and Japan like?
We attach great importance to the relationship between us and Nigeria because Nigeria is a very important country to Japan strategically as well as economically because as you well know, Nigeria is the biggest economy in Africa. 70 per cent of the GDP of the African continent is shared by Nigeria, and the population as you well know. Now Nigeria is allocated number seven in the world, and in the future, it will be India, China and Nigeria. Everybody knows that. Relationship including trade relationship or investment is important for Japan and Nigeria. Nigeria is a unique country to Japan; many people think that Japan sends a lot to Nigeria or any part of the world; but, we import a lot from Nigeria. Japan imports a lot more than we export to Nigeria; so, the trade balance is in favour of Nigeria. Every year, this trend is continuing in favour of Nigeria. And one of the greatest commodities we import from Nigeria is natural gas.

I am from Fukushima; seven years ago, we had a massive earthquake, tsunami and even the nuclear power plant explosion and Japanese energy resources need to sustain economic growth. Here comes Nigeria, we import a lot of natural gas from Nigeria, especially after the great East Japan earthquake, the amount increased, and we see it every year. Each country Nigeria sells its natural, it is Japan; you take your natural gas to other countries like Spain, but Japan is the highest. I think very few Nigerian people know this–that Nigeria currently supports the energy resources of Japan for the sustainable economic development of Japan, so we are very grateful to Nigeria.

How do you think Nigeria and Japan can sustain this relationship?
That is where we are working very much on. One possible area is continuation of this kind of trade. Now, a number of Japanese companies that are interested to have their businesses in natural gas resources from Nigeria are discussing contracts. Other areas that Japanese companies like you see here are Yamaha; automobile makers like Honda, and big names are coming to Nigeria. This shows the number of Japanese companies operating in Nigeria has being on the rise for many years. In late 1980s and 1990s, there were lots of Japanese companies operating here, the number reduced for sometimes but since 2009, it is on the rise again. And here as you know, these two years, Nigeria’s economy was on minus growth ratio. So, naturally the number has not increased; however, after the recession of Nigeria the numbers are picking up, and if you see those companies – Sony and Yamaha, are big names, and we have the records that the numbers are even on the rise again, and many other big names are looking at how to start their business in Nigeria. Before I came here, I had a lot of interviews in Japan.

I met with the leaders of the big Japanese companies and I felt that they are interested to start their business in Nigeria. They have not yet decided to come into Nigeria, but they have the great interest on how to explore the actuality on ground. Even commerce or trading companies or even start-up companies are quite interested to have their businesses start up in Nigeria. I recently visited Lagos and met with companies, and I felt very good with the attitudes of Japanese companies. I felt that if we handle those obstacles or barriers correctly, Nigeria and Japan have a brighter future in terms of trade relationship.

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You know very well that political stability in Nigeria also determines economic progress. Is there anything the Japanese government is doing to assist the democratic process in Nigeria, especially as we approach the 2019 general elections?
We will be happy to assist in whatever way we can; but basically, I will like to say that ensuring that there is free, fair, transparent, and peaceful process is the responsibility of the Nigerian leaders and the people. It is not the kind of aide that we can give.

It is not the responsibility of Japan to ensure peaceful election in Nigeria. I will like to say that Nigerian people have their stake to democratic election. But, if there is anything we can help, for example, sending election observer team, we will be happy to do that. Basically, Japan will join the international community to keep a close eye on the process, and if there is any need, we will issue a kind of message to the leadership of Nigeria. But, I will like to say, basically, it is Nigeria’s job.

What do you think is the future of Nigeria?
Many ambassadors I met here explain to me how to see the glass: glass half full of water or glass half empty. But, I take the view that Nigeria has good potential for the future. Of course, you have many challenges, but you have great human and natural resources. You have the potential for the future and Japan is very happy to assist in any way. We are trying to help those who try their efforts at self-help, and that is Japanese philosophy; we just don’t give fish, we teach people how to catch the fish.

Since you came to Nigeria, is there anything you find strange?
No; actually, my previous post was New Delhi in India; so, I didn’t find any problem adapting myself to the life here. Rather, I find it enjoyable, especially for the people. Nigerian people have smiles and very good sense of humour. When I throw any jokes, I got great response from the people. I think the human resource is the asset you have for the future, and at the same time, increase in population in the future will cause great challenge — on how to feed those young generations; how you can keep the jobs for those young generations; that is a very important challenge to Nigeria. If it doesn’t go well, it could lead to social instability, crimes and unfortunately serious terrorist activities. So, I do hope, and I have the confidence that Nigerian people together with the assistance of the international community, will face those problems and find a solution. That is my view.

Iyobosa Uwugiaren

Ghana Gets World Bank USD $30 Million Support


The World Bank has approved a $30 million International Development Association (IDA) credit to support the Government of Ghana strengthen its financial sector stability.

The support is also to improve inclusiveness for users of formal financial services and the financially excluded, particularly women, rural communities and farmers.

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Commenting on the gesture, the World Bank Country Director for Ghana, Henry Kerali said,

“This project will support Government’s plan to undertake reforms to deepen financial markets, promote inclusion, enhance the supervision and regulation of specialized deposit-taking financial institutions in line with Ghana’s National Financial Inclusion and Development Strategy.”

A statement from the World Bank to Citi Business News said: “The Ghana Financial Sector Development Project, is a key component of the World Bank Group’s comprehensive portfolio supporting financial stability, financial inclusion and private sector competitiveness.”

It added, “It is expected to help regulators strengthen their oversight of the financial sector for a sound and stable sector. This will enable ordinary Ghanaians develop trust in the sector and benefit from access to savings and financing for investments. It will also support the education of consumers on their rights and equip them with skills and knowledge to make informed choices in the use of financial services.”

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Meanwhile the project will also promote financial inclusiveness by mainly supporting rural and community banks to expand financial services to rural areas and the underserved segments of Ghanaians.

For his part, World Bank Practice Manager for Finance & Markets, Douglas Pearce remarked,

“The increase in access to financial services is expected to create economic opportunities and contribute towards ending extreme poverty and promoting shared prosperity.”

The World Bank’s International Development Association (IDA), established in 1960, helps the world’s poorest countries by providing grants and low to zero-interest loans for projects and programs that boost economic growth, reduce poverty, and improve poor people’s lives.

IDA is one of the largest sources of assistance for the world’s 75 poorest countries, 39 of which are in Africa.

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Resources from IDA bring positive change to the 1.5 billion people who live in IDA countries. Since 1960, IDA has supported development work in 113 countries.

Annual commitments have averaged about $18 billion over the last three years, with about 54 percent going to Africa.

World Bank Ghana

China’s Belt And Road Initiative Opens Up Unprecedented Opportunities


It was the best of times, it was the worst of times. A tale of two world leaders, U.S. president Donald Trump and China president Xi Jinping—both of whose countries have among the world’s best economies right now. But whereas Xi is playing Santa Claus to the rest of the world, doling out loans to finance-starved countries, Trump is playing Scrooge, waging an economic war with Canada, the European Union, China and others.

Respected economist Art Laffer, whom I’ve written about before, has always supported leaders who ignite global trade rather than close off its borders. A full-blown trade war, Laffer said recently, would be a “curse” on the U.S. economy.

Post-World War II, it was the U.S. that led global trade and infrastructure build-out—the Marshall Plan in Europe, the Interstate Highway System domestically. Both projects required massive amounts of commodities and raw materials, and employed hundreds of thousands of people.

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Today, of the two leaders mentioned above, it’s Xi who has a clear foreign policy when it comes to trade and infrastructure.

U.S. Fund Flows Into Africa Are Slowing

Case in point: This week, Beijing will host the Forum on China-Africa Cooperation (FOCAC). The summit, which takes place once every three years and is attended by representatives from 52 African countries, touches on areas as diverse as technology, trade, infrastructure, diplomacy, culture and agriculture.

During the last forum, in 2015, China pledged as much as $60 billion toward Africa’s development in interest-free loans. The Asian country, in fact, has increased its investments in the continent around 520 percent over the last 15 years, according to Global Trade Magazine.

As just one example, Kenya agreed to let China finance and build a standard gauge railway (SGR) connecting two major cities at a cost of $3.8 billion. Contracted by China Road and Bridge, the Mombasa-Nairobi SGR is Kenya’s largest infrastructure project since it declared independence from the U.K. in 1963.

Meanwhile, U.S. fund flows to Africa have been receding, and they’re expected to slow even more during Trump’s administration.


Xi isn’t doing this out of the goodness of his heart, of course. China, having been Africa’s largest trading partner for nine consecutive years now, likely expects its investments to pay diplomatic and economic dividends for many decades to come.

Even Trump’s own commerce secretary, Wilbur Ross, acknowledges that the U.S. must do more in Africa. “By pouring money into Africa,” Ross wrote on CNBC in August, “China has seen an opportunity to both gain political influence and to reap future rewards in a continent whose economies are predicted to boom in the coming decades,” due mainly to a younger demographic.

The Belt and Road Initiative Will Affect 60 Percent of the World’s Population

The most well-known among China’s projects is the Belt and Road Initiative (BRI), one of the most ambitious undertakings in human history. The biblical-size trade and infrastructure endeavor—a sort of 21st century Silk Road—could cost 12 times as much as what the U.S. spent on the Marshall Plan to rebuild Europe following World War II. The BRI has the participation of 76 countries from Asia, Africa and Europe, and is poised not only to reshape globe trade but also raise the living standards for more than half of the world’s population.

According to the International Monetary Fund (IMF), the “BRI has great potential for China and participating countries. It could fill large and long-standing infrastructure gaps in partner countries, boosting their growth prospects, strengthening supply chains and trade and increasing employment.”

The BRI, which turns five years old this fall, announced in 2013, will have a strong presence in Eastern Europe, also a prime destination for China FDI, as the countries there offer a wealth of metals, minerals and agricultural products.

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According to Stratfor, Chinese companies have invested as much as $300 billion in Eastern Europe over the past decade. Last May, China and Ukraine agreed to cooperate on joint projects valued at nearly $7 billion, and in November, it was announced that China Railway International and China Pacific Construction would build a $2 billion subway line in the Ukrainian capital, Kiev. More recently, Chinese engineers with China Harbor Engineering completed a $40 million dredging operation in Ukraine’s Yuzhny Sea Port, allowing it to receive larger ships.

Like the Marshall Plan before it, the BRI will require tremendous amounts of commodities, metals and fuel.

In 2011, members of our investment team and I had the opportunity to see one of China’s high speed trains firsthand. The train averaged 185 miles per hour during our 923-mile trip from Shanghai to Beijing. As I wrote then, “I’ve traveled to all corners of the world and have seen many things during my travels, but viewing China’s explosive growth as it flies by you is something I will never forget.”

U.S. Investors Hiked Exposure to China

In light of all this, there’s no lack of negative news on China right now. I see headline after headline on the country’s “slowing economy” and “weakening consumption,” but like most things are in the media, these proclamations are overblown.

Look at China’s purchasing manager’s index (PMI). Fresh data out last Friday showed that manufacturing expansion in August accelerated slightly faster than in the previous month. The PMI hit 51.3, up from 51.2 in July and beating analysts’ expectations of 51.0. This was the 25th straight month of economic expansion, despite what I earlier described as the Trump-Kudlow trade war with China.

Also, as the Peterson Institute for International Economics (PIIE) wrote last week, “there is no empirical evidence that consumption in China is weakening,” contrary to what “official” retail sales data show.

The PIIE’s Nicholas Lardy cited Alibaba’s recent announcement that sales rose 60 percent in the most recent quarter compared to a year ago—“a sign that Chinese retail sales data likely do not fully capture China’s burgeoning digital retail.”

“In any case,” Lardy continued, “retail sales are an increasingly less useful measure of consumption, as China’s large and still growing middle class is spending a growing share of their rising income on education, health care, travel and other services that are not captured in official data on retail sales.”

Savvy investors, I believe, get it and can see the opportunity in the world’s number one economy, as ranked by purchasing power parity (PPP). Reuters reports that, in the week ended August 22, U.S. investors poured $572 million into funds that invest in Chinese equities. That was the most for such funds since January.

Although some expect Trump to impose tariffs on $200 billion additional Chinese imports, perhaps as early as this week, “investors are expecting Beijing to continue counteracting the effects of the [trade] dispute with increasingly relaxed monetary and fiscal policies,” Reuters says.

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All opinions expressed and data provided are subject to change without notice. Some of these opinions may not be appropriate to every investor. By clicking the link(s) above, you will be directed to a third-party website(s). U.S. Global Investors does not endorse all information supplied by this/these website(s) and is not responsible for its/their content. The Purchasing Manager’s Index is an indicator of the economic health of the manufacturing sector. The PMI index is based on five major indicators: new orders, inventory levels, production, supplier deliveries and the employment environment. Gross domestic product (GDP) is the total value of goods produced and services provided in a country during one year. Purchasing power parity (PPP) is a theory which states that exchange rates between currencies are in equilibrium when their purchasing power is the same in each of the two countries. Holdings may change daily. Holdings are reported as of the most recent quarter-end. None of the securities mentioned in the article were held by any accounts managed by U.S. Global Investors as of 6/30/2018. U.S. Global Investors, Inc. is an investment adviser registered with the Securities and Exchange Commission (“SEC”). This does not mean that we are sponsored, recommended, or approved by the SEC, or that our abilities or qualifications in any respect have been passed upon by the SEC or any officer of the SEC. This commentary should not be considered a solicitation or offering of any investment product. Certain materials in this commentary may contain dated information. The information provided was current at the time of publication.

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