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‘Govt Should Address Forex To Give Value To Imported Building Materials’

Building materials dealers under the auspices of Coker Building Materials and Allied Products Dealers Union, (CBM&APDU) at the end of their 40th anniversary lamented the adverse impact of rising foreign exchange on their profitability.

They also called on the Federal Government to monitor the quality of imported goods entering the country saying that the influx of substandard materials is badly affecting the cost of products in use in the country. They argued that the circulation of substandard products in the market has worsened in recent times hence the need for government to fish out the bad eggs in the sector. Speaking during the anniversary, a member of the association, Chief Michael Ugokwe, also urged the gov- ernment to intervene by blacklisting those illegally bringing materials into the country.

Ugokwe also advised the government to spend more on capital projects to help the middle class and the low income investors to patronise the building materials market considering it remains the highest spender in the economy.

In his speech, the President of CBM&APDU, Mazi Justin Okpani, who raised the issue on the sidelines of the Association’s 40th anniversary in Lagos said, although the building and plumbing materials market is a lucrative business, the greatest problem encountered by the operators is low turnover resulting from Nigeria’s poor economic situation.

He said, “Some of the substandard products brought into Nigeria are from Chinese companies and they have a way of beating government agencies. So when they now bring it at a relatively cheap cost, it would fall back on those who import standard and quality products. The competition is so severe but those who value quality still patronise us.

“There are policy and rules guiding importation of fake building products however, the greatest problem is implementation. If government can step up its enforcement, it would be able to curtail inflow of substandard building materials into the country.”

He called on the government to cut the cost of clearing goods, which it observed was too high compared to what it used to be in the past while measures should be put in place to reduce the cost and the time of clearing goods at the ports. “It takes an average of a month to bring goods from the Wharf and that shouldn’t be the case. A week should be enough to bring in goods. The road to the Apapa Wharf is not really friendly and our containers are falling every time due to bad road. The government needs to reduce the tariff and give incentives to those that are bringing good into the country, especially when it has to do with agriculture, water pumps and fire-fighting equipment. The import duties on such sensitive items should be reduced.”

Okpani said operators must be made to register their goods and products with the Standard Organisation of Nigeria and NAFDAC to guard against infiltration of adulterated products into the market. “Though, you can’t beat them because what they do is that the bad goods are often off loaded outside of the market be- cause the Association’s task force department doesn’t tolerate such.”

SOURCE: SUNNEWSONLINE

Fashola Housing

Laws Against Building Collapse Not Implemented — Fashola

The Minister of Works and Housing, Babatunde Fashola, on Thursday said Nigeria had adequate laws to check the menace of building collapse as well as to prosecute offenders, but noted that many of such laws were not implemented.

Fashola, who said this in his office while playing host to a delegation from the National Building Advisory Committee, led by its Chairman, Mohammed Faworaja, also stated that any individual found culpable in a building collapse incident must be made to face the law.

The minister said, “Anytime it (building collapse) happens like that, somebody must have acted wrongly at the design, materials or any other stage. Let him be thoroughly investigated and prosecuted. At least, such action will make people sit up and do the right thing.”

He noted that the absence of a building code was not a major cause of building collapse.

SOURCE:PUNCH

CBN Debits 12 Banks N499.1bn for Missing Minimum Loan Target

The Central Bank of Nigeria (CBN) has sterilised about half a trillion naira belonging to a dozen lenders that failed to meet its minimum lending ratio directive by end of September after it set December 31, 2019 as deadline for a new target of 65 percent.

The N499.1 billion reflects 50 percent of the shortfall by the 12 lenders of a previous minimum Loan to Deposit Ratio (LDR) the CBN had set.

“This means those lenders penalised would have to pay interest on the sterilised fund but would not be receiving any,” a banking analyst told BusinessDay. “This might stress the lenders especially if they still cannot meet the new requirement.”

The banking sector index declined 4.51 percent on Wednesday at the Nigerian Stock Exchange (NSE) while the broad market closed 1.14 percent lower.

The banking regulator had in August issued guidelines for Nigerian banks to lend at least 60 percent of all customer deposits or risk a sanction by October 1.

Lenders in the country raced to meet the deadline evidenced by an expansion of banks’w loan book by 5.33 percent or N829.4 billion, to N16.39 trillion in about four months to September 26, 2019, however not all the banks were successful.

“All banks have strived to meet it, but not all did,” Ahmad Abdullahi, director of banking supervision at the Central Bank of Nigeria, said but did not say what banks.

The Central Bank however in its quest to stimulate domestic growth further raised the 60 percent lending threshold by 5 percent points subject to a quarterly review and asked banks to channel credit to the real sector especially the Small and Medium Enterprises, retail mortgage and consumer lending.

The economy has grown by an average of less than two percent since it exited the 2016 recession and slowed to 1.94 in the second quarter of 2019. Analysts say the banks have shown capacity to meet up with the new requirement although a few may still falter.

“Banks have learnt their lessons from the period of high assets quality issue most of the banks have strengthened their risk management framework; this would help them be in a better position to streamline lending to these sectors,” said Jerry Nnebue, banking analyst at Lagos-based CardinalStone.

Cordros Securities in a report said the new policy geared towards driving risk asset creation could potentially result in N860.49 billion in loans created at the top end of the range, given the new 150 percent weightings for exposures to the SMEs, Retail, Mortgages and Consumer Credit.

Meanwhile analysts at Chapel Hill Denham expressed concern that asset quality might deteriorate if banks do not lend carefully, recalling the 2016 economic downturn which made bank loans go bad.

According to the National Bureau of Statistics (NBS), lenders’ bad loans slowed in the second quarter of 2019 to the lowest level since 2016, despite a slowdown in the domestic economy in the period.

Non-performing loan (NPL) declined 14 percent to N1.44 trillion in the second quarter compared to a 6 percent drop in the first three months of the year, analysis on selected banking sector data by the National Bureau of Statistics (NBS) shows. Year-on-Year NPL fell 25.62 percent.

At current level, the NPL is some 11 percent shy of N1.29 trillion it hit in the first quarter of 2016 while NPL ratio at 10.36 percent is the least since the fourth quarter of 2015.

Source: Businessdayng

Expert Offers Insights on Why Global Funds Elude Nigerian Property Market

Though Nigeria has a large property market with huge and compelling opportunities for investors, it is not receiving the kind of investments funds it should from global investors for a number of reasons that are not clear to the investors.

Besides the frequently cited unfriendly business environment, these investors lack knowledge of how Nigerian property market works. This, according to Bill Endsley, Principal at World Citizen Consulting, is because there is lack of transparency in the market just as transactional data is non-existent.

“There are billions of global funds flowing into the property market at the moment, but not much is coming into Nigerian market; investors are unwilling to come to put their money here,” noted Endsley who spoke in an interview with BusinessDay on the sideline of a FIABCI International Real Estate Consultant (FIREC) programme hosted by FIABCI-Nigeria chapter in Lagos at the weekend.

Endsley pointed out that even though risks are always there for any investor, those risks have to be priced so that an investor that is coming will understand what exactly the risks are. He noted, however that it was difficult now to price the risks in the Nigerian property market because of what he called “unclean window”.

“We need to clean the window so that investors can see the risks,” he advised, adding that the Nigerian market also lacks transactional data for which the market should be looking at the property laws, the qualification of the professionals and the role of the banking sector in property transaction.

The stressed the need to train Nigerian professionals on international norms for real estate investing and standards so that they can attract more foreign direct real estate investors. He added that the professionals have to be brought to the level of world class consultants so that they can move Nigeria away from oil economy to the world of investment in property.

Endsley affirmed that there were opportunities in the Nigerian property market and now was the prime time to invest in the market because, as he put it, ‘the country is trying to move away from the commodity-oil economy to a new industry and property is the foundation of everything.”

For the investors, he advised that they should do proper market and financial analyses, explaining that market analysis would involve finding out what the market needs—whether it is residential or commercial property, while financial analysis would be looking at the cash flow and bank transactions.

FIREC programme, already in its second edition, is an annual event through which FIABCI trains and educates its members on current trends in the built industry. It is all about real estate and how things are done globally with reference to Nigeria.

“We need to push ahead otherwise the whole of us in the entire building industry will be far behind. In this age of digitalization, we need to keep abreast of events because things have changed drastically,” noted Adeniji Adele, President, FIABCI Nigeria chapter.

Continuing, the president said, “we need to begin to gain insightful knowledge and share same. That is the essence of this programme. It is about gaining insightful knowledge and keying into international principles and practice; we believe in the continuous education of our members and also in sharing knowledge. We also need to connect with other professionals in the outside world.”

He explained that the business world has become global and the real estate market has been internationalized, saying this has resulted in the need for professionals to transact business with investors from diverse cultures and backgrounds making it imperative for professionals to figure out how to deal with these cultural differences in their negotiations.

Source: Busineesadyng

Nigeria Losses $6t In Real Estate Investment to Dearth of Data

Nigeria may have been losing an average of $6 trillion inflow yearly as a result of dearth of data and professionals not equipped with current and globally competitive real estate skills for negotiation and relevant data gathering.

This was the position of the Principal, World Citizen Consulting, Chicago, Bill Endsley, on the sideline of the FIABCI International Real Estate Consultant (FIREC) programme held in Lagos.

He spoke to a cross section of experts including Estate Surveyors & Valuers, property financiers, developers and facility managers.

He said huge real estate investment running into billions of dollars daily may have eluded Nigeria for so long as a result of insufficient information on the market, such as interest rate, negotiation skill, policy inconsistencies of government and the ever changing monetary and fiscal policies. He said the average American investor desires to have the necessary information before putting in his money on any investment though they desire high return on investment they are deterred according to him by insufficient information that can attract them to the country.

He said: “What investors want is what is called ‘Clean Window,’ people will prefer to invest where they can see clearly and can prize the risk before investing. There must be market analysis of what the market want and how long it will take to reap on investment, most times this information is not available in Nigeria.”

Director of Operations and Finance, Micheal Consults, Thomas Cardman, in his contribution said investors look out for analysis and the quality of the story behind the numbers in making decisions in real estate investment. According to him they will also look at the return on investment characteristics and cost approach to decide for a particular property.

Earlier, FIABCI president, Nigerian chapter, Adeniji Adele said the workshop is in line with their pursuit towards ensuring that Real Estate Professionals are fully equipped to up their ante in the nation’s built Industry, and compete with their contemporaries globally.

Source: thenationonlineng

Why Nigeria’s Economic Growth is Slow – Report

The decline in government revenues and the slow and uneven growth in key sectors of the economy are key factors in the stagnation of the nation’s economic development, an economic analysis conducted by the Centre for Democracy and Development (CDD) shows.

The Assessment of the Effectiveness of Government Policies and Programmes on Economic Growth and Development, 2016 -2019, which undertakes to review the main economic goals of the current government, examines the implementation of policies and programmes and broadly assesses their effectiveness. It observed that growth rates while turning positive, have been lower than stated targets.

The report which was made available to PREMIUM TIMES on Tuesday, noted that generally the GDP growth rates, oil and non-oil revenues, federal government revenue and expenditure and particularly capital expenditure have been significantly lower than anticipated through the periods of 2016 to 2018.

Such anticipations were captured in the Economic Recovery and Growth Plan(ERGP) and in subsequent annual budgets.

“It is clear that the estimates, projections and expectations for GDP growth have been significantly different from the actual outcome, although the performance in Q4 2018 and Q1 2019 are more encouraging,” stated the report.

“For the last one year, the impetus for growth has mainly come from the non-oil sector.”

It identified that oil GDP growth rates were negative in the last three quarters of 2018 and so could not be relied upon to power sustainable growth and recovery.

The analysis further posited that although non-oil GDP growth had been positive, it still remained relatively low.

“Much stronger growth is needed from this sector to achieve the envisaged diversification and rapid economic recovery.”

The report also submitted that revenue shortfalls appeared to pose the biggest challenge inhibiting the delivery of a strong enough stimulus and capital investment to engender rapid growth.

 

It suggested that renewed efforts were needed to expand the tax base, partly through more vigorous enforcement and partly through the incorporation of MSMEs and the informal sector into the tax net.

The report also recommended that new areas of generating revenue, such as commercialisation, part-divestment, securitisation, joint ventures, combined with efforts to attract diaspora investments into these areas, should be explored.

 

“It must be noted that previous attempts at privatisation in Nigeria have, in most cases not yielded the right results. The necessary steps must, therefore, be followed to avoid the known pitfalls,” the report said.

Failure of privatisation

The report stated that the proposal to raise substantial revenue through wholesale privatisation of government assets appeared not to have been thought through.

“Privatisation by itself will not provide an appropriate solution. Firstly, this will provide revenue on a one-off basis and does not provide a sustainable way of raising budgetary resources,” it stated.

“Secondly, the history of privatisation in Nigeria has been a challenging one. Some concerns have been expressed on the risk of selling enterprises to privileged groups at below market prices, undermining the subsequent services and exacerbating income inequalities (Eke, 2017; Sahara Reporters, 2011).

“In some cases, the new owners are alleged to have stripped off and sold the assets, with the companies failing or being rendered comatose soon thereafter.

“More intelligent ways of leveraging public assets are needed, which will generate revenue streams and provide options for future government ownership.”

Taxes and other possible revenue sources

The report noted that greater efforts were made by the current administration in 2018 to raise taxes through the implementation of the Integrated Tax administration system and stronger enforcement and better monitoring of ministries, departments and agencies (MDAs).

It, however, observed that revenues anticipated to be earned from taxes on solid mineral production activities in 2017 and the first half of 2018 came to nothing.

“Budget under-performance has been 100%. This is a puzzle since there appears to be many mining activities going on in the country, with many of the licenses issued by the Federal Ministry of Solid Minerals,” it stated.

“The other anticipated source of revenue has been the recovery of stolen funds. Clearly, the government, through the Economic and Financial Crimes Commission (EFCC), has made substantial progress in this area.

“Between November 2015 and November 2018, The EFCC has indicated that it recovered N794 billion, US$261m and £1.1m from “looters”(Vanguard Newspapers, 12 Nov 2018). In the first quarter of 2019, an additional amount of N117 billion was said to have been recovered (Channels TV, 5 April 2019).

“However, not all the amounts have been finally forfeited to the government, and have therefore not been sufficient so far, to cover the revenue gaps.”

The report concluded that for the moment, the solutions being proffered to raise revenues had not been able to make a major contribution to the achievement of the substantial increase in non-oil revenue/GDP ratios that had been anticipated in the ERGP and annual budgets.

“Since revenue projections have been under-achieved, expenditure has also fallen substantially below the budget,” the report said.

“It was barely more than half of the budgetary projections in the first part of 2018.

“Whenever there are shortfalls in revenue, the recurrent expenditures, particularly salaries and other emoluments take precedence. Consequently, capital expenditure, which is critical for promoting growth and generating jobs floundered and is well below the 24% achieved in 2015.”

Sectoral Analysis

With respect to power, the report noted that the challenge goes beyond the shortfalls in capital expenditure.

“There is also some evidence that the privatisation of the sector may not have been done in the right way,” it further observed.

“It appears that some of the entities may have been sold to persons based on their political connections rather than their capacity to make the significant long- term capital investments that are necessary to make the business viable (Conversations with U. G Mohammed; MD, Transmission Company of Nigeria, 2018).

“This is particularly true with respect to the distribution companies, most of whom have not been able to make the necessary capital investments to develop the capacity to buy enough power, adequately distribute and collect the revenue.

“They argue that this is due to the failure of the government to implement the tariff structure agreed upon.

“Clearly, the current model is not viable. While a review of the whole structure is needed in the long term, it may be necessary for the government, as an interim measure, to pursue a policy of consolidation of the DISCOs (similar to what was done for banks) so that they can combine their financial resources to achieve economies of scale and make the necessary investments in the energy distribution sector.

“This is the minimum that is needed to substantially improve power supply, which is so critical for supporting stronger growth.”

Agriculture

In agriculture, the report noted that although the sector experienced sharp growth in 2017, there was a decline in 2018, and is a concern given the concentration of credit and intervention activities in the sector.

“However the performance of the sector did improve to 3.17% growth in Q1 2019, but experienced a substantially reduced growth rate of 1.79% in Q2 2019,” it submitted.

In the manufacturing sector, the report noted that while recovering from negative growth in 2017, it is still not growing as fast as needed, and appears to have experienced a substantial slow down to 0.81% growth in Q1 2019 and a decline of 0.13% in Q2 2019.

“The performance of the finance and insurance sector, while positive, remains steady and low,” it recorded.

“Only the information and communication and the transportation sectors experienced a significant surge in 2018.”

Explaining the dip in the contributions of the oil sector to the GDP, the report noted that the sector’s contributions had nothing to do with oil prices for 2017, 2018, and 2019, where the average prices had been higher than budgeted prices.

“It is largely because output, which is within the control of the government, has been consistently lower than the budgeted amount, to the extent that the positive price differences have not been able to compensate for the low production figures,” it said.

“Consequently, oil revenues have fallen, by an increasing rate over the 2016-18 period, below the budgeted amount.”

In its recommendations, the report noted that the power sector needs both increased capital investment and reforms in order to deliver the energy needed to promote rapid growth, adding that at a minimum, DISCOs must be “incentivised to both consolidate and re-capitalise.”

 

For the oil sector, it noted that Nigeria could do little about international prices, but It must focus on increased production and local processing since the sector by itself and through its inter-linkages with many other sectors of the economy can contribute to both growth and diversification.

“On diversification, there have been promising trends of increased production and exportation of agricultural products to the US, EU and Asia, as well as manufactured goods to the ECOWAS region,” it recommended.

“These should be nurtured through continuous progress in the areas of exchange rate stability, export incentives and in continued improvements to the ease of doing business.”

Source: premiumtimesng

Full Speech of Prof Charles Soludo at The platform Independence Lecture

Being the text of the prepared speech by Prof. Chukwuma Charles Soludo, CFR, former Governor of the Central Bank of Nigeria; at The Platform Nigeria’s annual independence lecture themed “Redesigning the Nigerian Economy with New Ideas” held at The Covenant Place, Beside the National Theatre, Iganmu; October 1, 2019.

I: Introduction/Disclaimer

Happy Independence Day Celebration!!!

Many thanks to Pastor Poju and the organizers of The Platform for the invitation. Let us start with a disclaimer. We accepted the invitation on 17th May, 2019 and had written our remarks a few weeks back. When our membership of the Economic Advisory Council was announced on the 16th September, we agonised as to whether we should still honour the invitation or whether we should still present the paper. Finally, we decided to be here but have removed several of the pages that contain issues we believe should be on the agenda of the Council— we do not want to pre-empt the work of the Council. More specifically, we do not focus on the macroeconomic, sectoral, and structural policies, programmes and projects needed at the moment.

We focus on the future, and concentrate narrowly on the type of meta-level, political-legal-governance foundation upon which the future can sustainably standOur thesis is that if you want to change a persisting economic structure, change the underling institutions (we can write a fat book on this: our experience with the NEEDS vis-a-vis banking recapitalization/consolidation was one case study that showed that to translate the hitherto slogan of private sector-led economy into reality needed a different banking/financial institution…). For the national economy, it will be difficult to have a competitive and prosperous post-oil economy of the future (with additional hundreds of millions of citizens and dwindling land space) with the same legal and institutional foundation designed for consumption of oil rent. You can’t build a 100 storey-building upon a foundation of an old bungalow. A post oil economy requires that all agents maximize their fullest potentials, and what is required will be a national rather than a federal response. You can’t clap with one hand. Once the focus is wealth creation rather than sharing and consumption of oil rents, we need a new national business model. Unfortunately, the link between law- Constitution- institutions- Judiciary, etc and economic transformation seems to be the weakest link in our design of national agenda. In the future, hopefully the National Assembly, Ministry of Justice, the states and other stakeholders might take up the assignment…

II: Context

We have not come to read the Book of Lamentations about Nigeria’s woes, nor to sing the songs of David. We see the half-empty glass, but we prefer to focus on the half-full glass. We want to focus on the future-rather than the past or the present. As mentioned above, we are asked to speak on “The Economic Restructuring of Nigeria”-an omnibus topic indeed! Since the First National Development Plan (1962- 68), transformation of the economic structure/diversification has been the fulcrum of all national plans. For decades, every government has tried its brand of ‘economic restructuring’ or economic diversification and yet the economy remains tied to the life-support of oil, peasant agriculture and largely informal services sector. Income inequality, poverty, and unemployment remain major defining features of the economy.

The urgency of the moment is warranted by the context of the new and complicating realities. Oil will be history in less than 20 years’ time but the pressures of peculiar demographics and geography are upon us. Nigeria has one of the highest population growth rates in the world. If current trends continue and you believe the population figures, then the future may be overwhelming. By the time a child born today turns 30 (about 2050), there will be about 400 million Nigerians and when she is 80 (about 2100), there will be about 752 million Nigerians (third largest population in the world). All these people will have to survive and prosper in a tiny but declining land mass (923,000 sqkm) – declining due to desertification and erosion, and Nigeria will have the highest population density in the world among the top ten most populous countries. Lagos is estimated to be home to some 88 million people by 2100 crammed in barely 3,345 sqkm of land (or 26,307 persons per sqkm-a nightmare! Lagos is clearly unsustainable in the long run and risky for its business concentration). All these people will need land, housing, water, food, power, education and health facilities, sewage and waste disposal, transportation, and yes, job, jobs! The population is very youthful with 43% between 0-14 years old; 53% between 15-65 years and 4% over 65 years.

And the world is not waiting for Nigeria. The world is on the 4th Industrial revolution with digital economy and we are struggling with the first stage of Rostow’s stages of growth. Artificial intelligence together with other future technologies such as robotics, synthetic biology, computational science, nanotechnology, quantum computing, 3D and 4D printing, internet of Things, cognitive science, self-driving vehicles, etc— will surely produce totally different social and economic configurations than what we know today. Check out China’s “Made in China 2025 Plan” and its targeted top 10 industries with an aim to dominate the world. All these entail humungous creative destruction going on with huge job losses and future structural unemployment. While electric cars are fast replacing diesel/petrol cars many of our people are still building petrol stations; small shops are proliferating while agglomeration in terms of huge shopping malls together with e-shopping are the trend; automation is upon us, etc. Ordinary people who can’t explain what has hit them, resort to all sorts of criminal activities to survive.

Most futurologists believe that with billions of people being added to the global population, only new systems for food, water, energy, education, health, skills development and job creation, economics and governance will avert potential disastrous consequences for humanity and the environment (See the 2015-16 State of the Future). Economic restructuring strategy of the future therefore entails thinking through the alternative future scenarios and mapping out alternative possible proactive responses. In which areas/sectors does Nigeria proactively position to become global leaders by the end of 2050 or the century? Closer home, Nigeria has signed the African Continental Free Trade Agreement (AfCFTA). Insularity won’t be an option. The name of the game of the future in an increasingly integrated world is innovate/compete or die.

Let’s break it down. Economic restructuring of the future is about positioning Nigeria to compete and win in an increasingly complex world thereby guaranteeing the security, prosperity and happiness of the 400 or 752 million Nigerians, in a world without oil. It will require deploying a gamut of legal-regulatory-governance regimes, macro and sectoral policies and programmes to alter the spatial/geographical concentration of economic activities, structure of production from primary to industrial and post-modern service sectors, from peasant to commercial agriculture, from exhaustible natural resources to renewable and dynamic human resource as engine of sustainable development; etc. With a current GDP of about US$400 billion (down from $540 billion) and negative per capita income growth (with rising unemployment and poverty), the restructuring of the future would entail transformational changes to generate and sustain broad based growth of at least 7% (from recent 1-2%) which is required for poverty reduction and employment generation.

Put differently, if we target to be a middle-income country of say, US$7,500 per capita by 2100 (from about $1,930 currently), then we need a GDP of over US$5.5 trillion by 2100 (thereby requiring double digit annual growth). The agenda to do this won’t just require thinking outside of the box – it would require thinking without the box at all: big, bold plan and action!  At the macro level, the fundamental challenge currently is that the economy is stuck at a very low speed lane in the context of a debt cliff with little fiscal space, while monetary policy is at near its limits, and low savings-investment trap, with rising unemployment and poverty. To get to poverty reducing and employment generating trajectory in the short-term requires serious heavy lifting, with major difficult choices and extraordinary coordination ahead. Surely the governments at all levels have their jobs cut out for them, and we won’t dwell on that here.

In sum, the alternative future that we see is one without oil, and where other exhaustible natural resources play very little role. The future economy will be driven by people—our youths and technology. Nigeria’s people/youths remain its potentially greatest asset— potentially renewable resource for productivity, huge market, and even export. Yes, the next bigger than oil export earner for Nigeria will (potentially) be its human capital. Currently, Nigeria earns almost as much from oil exports as it earns from remittances from its Diaspora. But we cannot export illiterates in a world driven by digital revolution. The easiest way to waste the future is to continue to churn out millions of semi-illiterate, largely unemployable citizens, most of whom see criminality as the only route to escape the poverty trap or drug as the opium for solace. With an urbanization rate of over 5%, the conflagration that might ensure when hundreds of millions surge to the cities but can’t find jobs, housing, water and food can only be imagined. Soon, the rich won’t be able to sleep because the poor, homeless and hungry are awake.

By the way, who says that we can’t have smart population policy that encourages people to have the number of children that they can train, and also ensure reliable population census using biometrics rather than the political population figures we have? Whatever the case, the challenge is how to deliberately optimize the potentials of the huge youthful population to be highly productive at home and competitive/exportable abroad. An educational system with 21st century curricula powered by technology that guarantees one youth, one to three skills might be a winning strategy.

As the Western population ages and declines, they would need productive labour and Nigeria can smartly position to become the largest supplier of such labour-indirectly through outsourcing or directly. Nigeria would have to leapfrog the industrialization ladder and services sector to provide urban jobs and rely upon smart technology to grow the food to feed the hundreds of millions. Peasant agriculture has little future especially as the population density surges with rapidly declining plot of land per capita. If Nigeria prospers relative to its neighbours, it would witness a surge in migration from other African countries under the free movement of goods and persons protocol-with all the further complications for existing facilities.

III: The Challenge of Weak Foundation

The question is whether the existing foundation is adequate or appropriate for the dynamics and challenges of the future? Unfortunately, the answer is no. Our Constitution, together with its command and control institutions concentrated at Abuja was designed for and around the sharing and consumption of oil rent. It is largely obsolete for the demands of a productive economy (without oil rents) which requires competitive and flexible rather than unitary federalism.  As the oil rent that held the system together is tapering off, its internal contradictions have burst open, requiring a coterie of survival/coping mechanisms to keep the system afloat. But for how long?

See for example, the 12 clusters of variables that are considered in computing the Fragile/Failed States Index by the U.S Fund for Peace. The index which aims to “assess vulnerability to collapse” summarizes the failure of Nigeria’s institution and measures four clusters of variables, namely: a) Cohesion (security apparatus, factionalized elite, and group grievance); b) Economic (economic decline, uneven economic development, and human flight and brain drain); c) Political (state legitimacy, public services, and human rights and rule of law); and d) Social (demographic pressures, refugees and IDPs, and external intervention). Nigeria’s ranking has deteriorated from 54 in 2005 and now stands between 13 and 15 over the past eight years and largely in the Red Alert category with countries such as Afghanistan, Iraq, Haiti, Guinea, Syria, Yemen, Somalia, etc. Long-term sustainable transformation must address the root of this systemic decline. In a multi-ethnic, multi-religious society such as ours, designing institutions for stability and prosperity requires great care and should always be a work-in-progress.

Since 2005 when we delivered the Democracy Day Lecture and in several of our previous articles (see “Nigeria Without Oil”; a three-part article on the back page of ThisDay entitled “Reconstructing Nigeria for Prosperity”, “The Political Economy of Restructuring the Nigerian Federation”, etc) we have elaborately demonstrated how the current Constitution and its institutions stifle innovation and competition and hence inimical to rapid economic transformation in a post-oil world. We showed how Section 162 of the Constitution has created a perverse Lottery Effect, destroyed the incentive for wealth creation on the part of governments and foisted an indolent culture of entitlements. As opposed to the productive, self-financing regions of the First Republic, all the tiers of government now converge at Abuja every month to share largely oil revenue. Except perhaps Lagos State, hardly any other state or local government or even the FGN can fund its recurrent expenditures without oil money.

Add to the above the suffocating concentration of powers at Abuja (see the long list of items on the exclusive and concurrent lists of the Constitution). Consequently, the federal government is saddled with hundreds of parastatals and agencies trying to inefficiently micro manage the entire country, with the recurrent expenditure of FGN plus debt service exceeding federal revenue. Abuja imposes common rather than minimum standards. It sets the same wage to be paid by states irrespective of their incomes-of course on the assumption that the oil money will always be there to pay for it. FGN maintains federal marriage registry, issues drivers’ license-which should be local government affair, runs primary and secondary schools, etc. We have centralized policing even with state governors as ‘chief security officers’-and expect the future 400 or 752 million Nigerians to be secured from Abuja. The Federal Government has exclusive right over all minerals, while the Land Use Act grants the Governors the right over land. To get to the solid minerals, you must have access to the land and the conflict between State and community powers over land vis-a-vis the federal right to what is underneath it has not been resolved.  The enduring conflict as well as the continuing flow of oil rents have combined to provide little incentive to develop the solid minerals. The list is long and we don’t intend to rehash it here. By trying to keep everyone in check, Abuja has inadvertently held the entire country down.

One final example is the judicial system. Property rights and rule of law constitute the foundation of a modern economy. In Nigeria, we copied the American presidential system but forgot to copy their multi-layered judicial system consistent with a federation. Instead we are stuck with a highly centralized system consistent with the command and control structure of the 1999 Constitution and its unitary federalism. Every little matter can end up at the only Supreme Court: if someone steals his neighbour’s goat in Calabar, or there is a dispute over ownership of a shop in Jos or someone dupes a petty trader of her capital in Lagos, the court cases may, on appeals, end up at the Supreme Court. A pre-election dispute in a local government election in Yobe or Abia state (a purely local and state affair) can also end up at the same Supreme Court and in many cases the judgement comes after the wrong candidate has served out the term.

The courts are congested: with about 117,000 pending cases at the Federal High Court alone, estimated tens of thousands at the Appeal court, and over 30,000 at the Supreme Court. Court cases, including commercial disputes can last for decades. As the population balloons, it is expected that the number of pending cases under the current system will continue to multiply. The prisons are overcrowded. Chidi Odinkalu estimates (using case study of federal prisons in Imo state and if those are representative) that the congestion rate is 170% and with 86% of prison inmates awaiting trial. Most prisoners end up serving terms higher than would have been the case if convicted. The judges are grossly overworked and underpaid. Nigeria’s Supreme Court is probably the only one in the world where the justices sit every day, and yet pending cases keep mounting in thousands.  As the saying goes, justice delayed is justice denied. How do we expect the future economy to compete and win in the new world in a society where it can take more than 20 years to settle a simple commercial dispute that takes few days in other countries? Also our system for fighting corruption is again concentrated at Abuja. Can we seriously expect the ICPC and EFCC to police 774 LGAs and the impending 752 million Nigerians?

We can go on and on. Global evidence is that institutions drive economic transformation but sadly much of our institutions are either obsolete or inappropriate for the demands of the future.  Some analysts and politicians brandish economic blueprints for a post-oil Nigeria but without the concomitant legal-political-governance infrastructure to deliver such Plans. This is actually a key missing link in many of the failed National Plans not only in Nigeria but also in many countries. Such economistic plans either sought to legislate politics out of public policy or misunderstood change to be a push-button technocratic process. Such plans are often predicated on the false assumption that committed and visionary leadership to implement them will fall from the skies without understanding that except by occasional fluke, the type of leaders in a society is a product of the system.  In the end, politics will always trump economics.

It is fair to say that no issue commands a greater, broader consensus in Nigeria today than a recognition that the current system needs fundamental overhaul and hence the deafening call for “restructuring” the Nigerian federation. Almost the entire Nigerian socio-cultural-political groups (South West/Yoruba Nation; South South; South East/Ndigbo; Middle Belt, and the former Northern Region) have either produced or are working to announce their template for “restructuring”. Even some political parties, led by the All Progressives Congress (APC), have either announced details of their position on restructuring or made “true federalism” the centre piece of their manifestoes for a better Nigeria.

More fundamentally, the APC promised a bolder action plan in its 2015 Manifesto: “As a change Agent, APC intend to cleanse our closet to halt the dangerous drift of Nigeria to a failed state; with a conscious plan for post-oil-economy in Nigeria. To achieve this laudable programme APC government shall restructure the country, devolve power to the units, with the best practices of federalism and eliminate unintended paralysis of the center”.  During the last general election, several candidates ran on the platform of ‘restructuring’. The loudest agitation for “restructuring” comes from ethno-religious-political organizations and occasionally also some politicians. Unfortunately, the fundamental economic argument is often beclouded by the politics of the agitation. Mutual suspicion has crept in about ‘motives’ and the word ‘restructuring’ now means different things to different people.

Perhaps it is time to simplify or change the language. Instead of ‘restructuring’, can we call it ‘systemic or institutional reforms’, or ‘devolution and fiscal federalism’ or ‘Designing a new constitution for prosperity’, etc. It is going to be a political-legal process, with continuing bargaining among different interest groups and the ensuing compromises but should be guided by our history and evidence. Useful lessons may also be learnt from other countries such as Switzerland, United Arab Emirates, Canada, the U.S. and Brazil. We should keep it simple but with eyes on the ball, namely: to design relevant political-legal-governance infrastructure to ensure security and prosperity of the 752 million Nigerians in 80 years’ time or even the most populous country in the world in the 22nd century!

What Should Be Done?

1)    Create a Productive Progressive (PP) Constitution for a world without oil.

Among other things, this would entail:

  1. a)Political-governance arrangements that ensure participation and ownership of the Nigerian project by all citizens of the federation– a stable and more efficient system which promotes fairness, equity and justice. The PP Constitution that gives everyone a stake should orchestrate a new Nigerian citizen/identity. A key focus would be to address those clusters of variables in the U.S Fund for Peace Fragile States Index and which ranks Nigeria under the Red Alert category. In 2003-4, we identified that exiting the Financial Action Task Force (FATF) list of non-compliant countries as well as debt relief were decisive for rejigging the economy and we framed policies and legislation around them. We succeeded and the economy was better for it. Similarly, exiting the Red Alert list of the Fragile States Index is a desideratum. Nigeria now ranks 14 while Ghana ranks 110-and little surprise that companies are relocating to Ghana especially given the AfCFTA.
  2. b)Devolution of powersaccording to the principle of subsidiarity and variable geometry – away from the current system of unitary-federalism, with its choking concentration of powers and responsibilities at the inefficient centre; thereby giving power back to the people. Unless we assume that oil boom will rebound and endure, devolution is a matter of survival for the FGN and the economy. The federal government should loosen its hold on policing, electricity (power), railways, ports, aviation, business incorporation, vehicle and drivers licensing, taxation powers, regulatory functions, schools, prisons, etc. This will give impetus for a totally different economy. The FGN can strengthen its regulatory oversight, while states may partner with local and international corporates to deliver on these. Cross River or Delta state, Rivers or Akwa Ibom, for example, may attract foreign investors to develop their ports and compete between themselves and reap bountiful revenues. Nigeria needs at least 6- 10 other cities like Lagos to emerge (for the 752 million Nigerians) but it can’t happen without competitive federation.

In addition, the PP Constitution should define a new Fiscal federalism that is consistent with devolution of powers and which alters the incentives faced by economic and political actors, thereby unleashing the competitive spirit, hard work, innovation and efficiency which are the hallmarks of prosperous economies of the future. Fiscal relations affect the behaviour of firms, households and governments and hence economic activity. The local government system should be scrapped from the Constitution. A federation has two federating units and not three— each state should decide on appropriate local government system for it. Section 162 of the 1999 Constitution needs to be scrapped and replaced with a fiscal arrangement that is consistent with devolution of powers. We also need to abrogate the Land Use Act of 1978, the Solid Minerals Act, as well as the various Petroleum/Gas Acts and amendments, and return the right of ownership, control and exploitation of these assets to the federating units as proposed by the APC Committee on restructuring led by Gov. El-Rufai. In turn, they should pay appropriate taxes to the federal government.

Nigeria urgently needs a new Fiscal Responsibility Act to constrain irresponsible fiscal behaviour and provide incentives to create wealth.  A new fiscal regime should ensure that never again shall we need a wholesale bailout of state governments.  For example, fiscal transfers should be based on performance as well as in the form of matching grants scheme (thereby replacing unconditional transfers with conditional transfers). Another example is that the fiscal responsibility law could constrain governments at all levels to meet their recurrent expenditures out of their internally generated revenues while revenue from natural resources are deployed only for physical and human capital development. Such fiscal responsibility Act may also constrain at least 90% of all borrowing to be for project finance that will repay itself. Our current structure is centred on consumption, with an unsustainable public finance. An alternative structure would free up resources for investment and hence growth. This will completely alter the incentive system and power a different trajectory for the economy.

Much of the tax powers are currently concentrated at the National Assembly and this constrains states’ flexibility in deploying fiscal instruments for development. For example, why should all corporate taxes and Value Added Tax be paid into the federation account? Wherein lies the incentive for states and local governments to attract and promote industrialization? Personal income tax will increasingly not be enough incentive in a future dominated by robotics and digital economy. If the power for the incorporation of companies is devolved to the states, perhaps some could be creative to design tax haven status for some categories of companies. Some countries make hundreds of millions of dollars per annum from this kind of innovation.  Our point is that the federating units should have the flexibility to deploy corporate taxation as a veritable instrument to attract or promote enterprise and for independent revenues.  Furthermore, why should we have uniform salary scales across the country or even common minimum wage? There is just too much of a unitary system which constrains everyone to move at the same speed instead of incentivising different segments of the society to innovate and prosper at different speeds.

  1. Legal-Judicial infrastructure and Law as active instrument of economic transformation

In the 21st century, a prosperous economy is not sustainable without a sound and efficient judicial system. We need a progressive and practical new structure that can deliver justice to the hundreds of millions of Nigerians and businesses at the shortest possible time. As a layman, we wonder why Nigeria can’t have state or zonal appeals and supreme courts over local and state matters or why state election matters should go to federal courts in a federation. The PP Constitution should provide for specialized courts, especially commercial courts. Nigeria needs to invest heavily on the judiciary-infrastructure with cutting edge technology as well as continuous upgrading of knowledge/skills of judges. Our judiciary should be part of our brand. Let’s do what it takes to brand Nigeria as a nation of laws. For example, London could not have become an international financial centre without efficient judicial system or thousands of contracts in the world indicating London as the jurisdiction for adjudication/arbitration. Can we at least target to be the number one legal jurisdiction in Africa? With AfCFTA, businesses will relocate to more friendly environments since they will have access to all African markets. As Africa’s largest economy, we ought to have its best judiciary. Furthermore, we need to consciously deploy law as an instrument of socio-economic transformation by enacting relevant laws to unleash competition and enterprise as well as progressive regulations for the future economy. Our ministry of Justice should have a new job description that is developmental.

While the above might seem a heavy agenda, we can start with a low hanging fruit namely, the APC’s minimum template. The Gov El-Rufai’s Committee on Restructuring has several interesting recommendations but three stand out, namely: state police, scrapping of the local government system from the Constitution, and resource control. The APC recommends abrogating the extant legislations and transferring rights over minerals to the federating units or states. With the APC Committee Report and Manifesto, it is fair for Nigerians to ask: so, what’s holding action?  The APC at least has a Committee Report which is public knowledge. Where is the position of PDP as the main opposition party?

What is suggested above is part of the foundational plan for Nigeria’s future prosperity without oil. The contradictions of the old, oil-based economy vis-a-vis the population and geographical pressures are swirling and the challenge of a new institutional framework to lead the emergence of the new economy is urgent. We have a choice of pre-emptive, proactive action to orchestrate a new productive (rather than sharing/consumption) structure or wait until change is forced upon us in a most chaotic manner. A wise man gets the umbrella ready before the rain starts. We are currently at the cul-de-sac and need a fundamental disruptive change to reverse the trend. A central message therefore is that systemic restructuring is not only progressive politics but excellent economics.

  1. Fix our broken politics through ideologically and value-oriented mass participation.

A secured and prosperous country of the future won’t drop from the skies. Nor can we legislate politics out of public policy. Every advanced or progressive society we see in the world today is the product of organization, struggles and continuous contestations for a more perfect union or society. In a democracy, there is no other route to a better future than the instrumentality of politics. Politics is therefore too serious to be left to those who call themselves politicians. It is our collective destiny.

Unfortunately, our politics is broken. It is destructive rather than developmental. We define Nigeria’s current politics as largely “dining table politics”— the ‘you chop I chop’, or what an author Michela Wrong describes as “It is our turn to eat” politics. Consequently, political parties are mere platforms to grab power— same people, same interest—driven by crass opportunism and primitive accumulation. It is largely about “what is in it for my pocket” and not about “how can I contribute to leave this world a better place than I met it”? When a minister is appointed, his friends and ethnic or religious group shamelessly celebrate or complain depending on whether they consider it as ‘juicy’ or ‘dry’ appointment. Yet the same people complain about corruption in government. We have a national crisis of value dressed in hypocrisy. We really have a long way to the future of our dream. But a problem identified is half solved.

For starters, we need to fix the electoral and judicial system to ensure that only votes count and all votes are counted. This will transfer real power back to the people, free from the stranglehold of an opportunistic elite. With power in the hands of the people and with the institutional reforms proposed above which require leaders with capacity for wealth creation, then ideas-based, cake-baking politics can emerge. The current politics is woven around the sharing and consumption of oil rents-and you don’t need any productive skills or to be a person of ideas to be able to “share the money”.

But the oil money is fast running out. Total oil income is barely $100 per person-not enough to provide 21st century primary and secondary education to our children. The 2019 budget of FGN (if implemented 100%) translates to about $120 per capita— to fund debt servicing (which is about 22%), pay salaries, run the huge bureaucracy, schools and hospitals, police and military, maintain embassies abroad, roads and railways, etc. The obscene cost of governance and stealing at all levels of government is known. This is within the context that some millions of children are out of school, over 30% of the population are food poor, millions without medication, water, housing, and jobs while a few politicians display obscene lifestyles. In the U.S, the wife of the Governor of the state of Maine (with per capita income of $47,969) in 2017 had to take up a job in a Restaurant to augment the income of her husband- as they wanted to save money to buy Toyota Rav4 car for her.  In Nigeria with per capita income of $1,930 and even in states with per capita income below $1,000 per annum, you can complete the story…! Soon or later, something will give and a totally different politics needs to emerge to secure the future.

Ideas-based or ideologically driven politics is the future. Forget about the names of the parties-democratic, progressive, liberal, etc-there are no discernible differences except the membership, which also switches and changes every minute. A review of the manifestoes of the political party candidates during the last elections is troubling. Many of us still remember the four cardinal programmes and ideologies of the five political parties of the Second Republic but I doubt how many people can coherently explain what their parties stand for today. For example, how can you identify an APC or PDP state if you see one?   Beyond sloganeering, we have serious work to do. Our view is that as the system transits from a rentier, cake-sharing regime to one of cake-baking, citizens of conscience, regardless of ethnicity and religion, must realign along ideological lines to offer Nigerians real alternatives regarding the pathways to their future.  Mass participation founded on patriotism, passion and values of hard work and integrity should drive the politics of the future. Those who have something to offer for a better future-especially our youths– must stand up to be counted or stop complaining. The perverse value of some of the youths summarized by the phrase “get rich young or die trying” is not part of the future we desire. We must be the change we want to see. Only a vigilant and active citizenry that holds public officers to account will secure the future.

IV: Conclusion

We must now conclude. Our summary message is that an alternative glorious future – the next Nigeria for 400 or 752 million Nigerians– is possible. It is a future without oil but powered by our greatest asset-human capital plus technology, and which guarantees security, prosperity and happiness. But transition to that future requires a new foundation as it is impossible to try to build a 100 storey-building upon the foundation of an old bungalow. Elements of this foundation include a PP Constitution that creates a competitive federation; devolution of powers that unbundles Abuja and loosens its choking stranglehold on the economy; a fiscal federalism that promotes competition, innovation and hard work; a new judicial structure and performance that brands Nigeria as a country of laws with the best judiciary in Africa; and a new developmental politics with citizens power.

Of course Nigeria has a long list of problems, but adversity comes with opportunities. With a will to overcome, the problems should not stop us. Nor should a few thousands of miscreants – kidnappers, terrorists, internet scammers, bandits, drug barons, robbers, and treasury looters – define us.  As we build the foundation for the next Nigeria, we must seize the narrative and sing a new song to rebrand Nigeria. As we bemoan the rising poverty and unemployment, we still remind ourselves that ours is still the largest economy in Africa and Nigeria as home to the most populous black nation on earth. When I hear about the 77 FBI list, I remember that Nigerians constitute the most educated and highest earning immigrant community in the US; when I hear about the drug barons, I remember that Alaba Market has the largest business incubator in the world; when the news about kidnappers, bandits and terrorists adorn the newspaper headlines, I remember the over 200 million law abiding and hard-working citizens; when I hear about the afrophobia and the stereotyping of Nigerians in South Africa, I recall that the richest black man and woman -Dangote and Mrs Alakija are Nigerians, or that Tony Elumelu foundation is empowering thousands of young African entrepreneurs or Allen Onyema/Air Peace recently took over the job of government by transporting hundreds of Nigerians from South Africa free of charge or that Glo communications is owned by our own Mike Adenuga or that the former Secretary General of the Commonwealth -Chief Emeka Anyaoku is a Nigerian, and yes, Nigerian banks – Zenith, GTB, UBA, Access, FBN, Union, etc have, since after banking consolidation, become our multinational corporations all over Africa, and that Nigerian investment banker-Adebayo Ogunlesi bought Gatwick and other airports in the UK.

When someone remarked that Obinwannne- the famed Forbes kid alleged scammer is from Nnewi, I quickly reminded him that Ibeto, Innoson Motors, Chikason, Coscharis, Emeka Offor, etc are also from the old Nnewi. When someone tells me that our youths are underperforming, I remind her of the youths at the Ikeja Computer village or that a young man from Anambra just invented a generator that runs on water or the young girls from Regina Pacis secondary school, Onitsha who won the global prize for innovation, and don’t forget that the patent for the world fastest computer belongs to Philip Emeagwali and that Jelani Aliyu from Sokoto designed the Chevrolet Volt car. Or when anyone tells me that Nigerians can’t write, I mention our Nobel Laurette Wole Soyinka, Chinua Achebe, and yes, the new kid on the block- Chimamanda Adichie, etc. When I hear of the looting leaders of today, I remember the visionary and selfless leaders of yesterday-Nnamdi Azikiwe, Obafemi Awolowo, Ahmadu Bello, M.I. Okpara, Alex Ekwueme,  Shehu Shagari, Sam Mbakwe, Aminu Kano, Balarabe Musa; Bola Ige, Lateef Jakande, Samuel Ogbemudia, and yes, former President Obasanjo has earned his place in Nigeria’s history as a leader and statesman, etc. Of course, we won’t forget our footballers, athletes, musicians and Nollywood stars-all brandishing our green, white, green flag to the world. The list is long, and sometimes I wish that Wole Soyinka or Chimamanda would write a bestseller entitled: “Nigeria: The Counter Narratives”.

The point here is that for every one big challenge, there are possibly more than ten opportunities out there. I believe that God has blessed Nigeria with everything to be the most prosperous home for the black race. We need to unleash the creative geniuses in our people by designing the appropriate institutions to power a 21st century economy without oil. The current National Assembly can choose to do something historic or continue to kick the can down the road, and hopefully a future parliament will come to the rescue. We have no other country but Nigeria and we must make it work. If God, in His infinite wisdom, decided to put us together thus far, there must be a reason. As Africa deepens its integration (starting with the AfCFTA), I dream of a future United States of Africa, and possibly with Nigeria as its California. I see our huge problems but I focus on the solutions. The choice is ours, and I believe that if we (together) choose to work hard at them, the next Nigeria of our dream is possible!

nigeria as the poorest country

FG To Spend N600bn on Capital Projects, in Three Months- Buhari

Muhammadu Buhari said he has authorized the release of N600bn into the economy as part of the 2019 capital expenditures in critical infrastructure in the last quarter of the year.

The fund is expected to address the poor infrastructure development, which has been the bane of this administration, as over N200bn of the funds will be injected into the construction, rehabilitation and expansion of about 11 critical roads, across the country.

The President, in his Independence Day nationwide broadcast, said his administration will accelerate implementation of the 2019 budget, which was approved in June, this year, to address the infrastructure deficits

According to him, “ Implementation of the 2019 Capital Budget, which was only approved in June 2019, will be accelerated to ensure that critical priority projects are completed or substantially addressed.

He stated that “ The Ministry of Finance, Budget and National Planning has been directed to release N600 billion for Capital Expenditure in the next 3 months”

The President said his administration will also welcome and encourage injection of private capital for infrastructural development through Public Private Partnerships, PPP.

“Through the Road Infrastructure Tax Credit Scheme, which I initiated in January this year, we are giving incentives to private sector inflow of over N205 billion in 19 Nigerian roads and bridges of 794.4km across in 11 States of the Federation.

The President said his administration will remain focused on optimizing the revenues generated from the oil and gas sector, adding that executive will work with the Legislature to accelerate the passage of the “ Petroleum Industry Bill and amendments to the Deep Offshore Act and Inland Basin Production Sharing Contracts Act into law, to ensure Government obtains a fair share of oil revenues, whilst encouraging private sector investment”

The President also promised to intensify the battles against oil thefts and illegal bunkering of Nigeria’s crude oil which had led to the loos of over $22bn in revenue in the first half of the year, according to the recent statistics by the National Economic Council, NEC

The President promised to continue the fight against illegal bunkering of crude oil and the smuggling of refined petroleum products across the borders, including the diligent prosecution and conviction of offenders found guilty of these acts.

“Whilst Nigeria remains committed to free and fair continental and international trade, we will not hesitate to take all necessary steps to tackle illegal smuggling, transshipment and other predatory trade practices that destroy jobs in our country.

He stated that government’s efforts to boast up revenue led to the increased efforts to combat militant attacks on the nation’s oil and gas facilities in the Niger Delta and accelerate the Ogoni Clean-up to address long-standing environmental challenges in that region.

The recent redeployment of the Niger Delta Development Commission from the Office of the Secretary to the Government of the Federation, to the Ministry of Niger Delta Affairs underscores our commitment to enhance the living standards of our communities in the Niger Delta, through coordinated and appropriate programmes.

Source: Businessdayng

Abandoned Road Projects Cut off South-East from Nigerian Economy

There were looks of abandonment on the faces of passers-by along Aba-Ikot- Ekpene road on September 19. The road links Abia to Akwa Ibom—two states in the oil-rich South-East and South-South regions of Nigeria. In the 1990s, Aba shoe and textile makers ferried their products to Akwa Ibom through the road. But the road now looked as forlorn as its passers-by.

The Aba section was overrun by dirty water. The middle of the section bordering Umuokpo and Onicha Ngwa communities in Obingwa Local Government Area was covered by comfortably-sat green grass.

“They have abandoned us to our fate,” Nonso Obima, a shoemaker at Ariaria, who lives in Ogbor Hill area of the road, said.

“They have cut off the section through which we supply our shoes and textiles to neighbouring states and Cameroon,” he cried.

Talking about abandoned road projects, the road was awarded on December 13, 2012, to Arab Contractors OAO Nigeria Limited at the cost of N3.780 billion. The road links Aba to Akwa Ibom and Cross River in Nigeria, and Cameroon in Central Africa. It was supposed to start from Ikot-Ekpene, criss-cross Aba and end in Owerri. The road was to be dualised, but much of Aba—Ikot-Ekpene axis was not. Those who live around confirmed that the project was started in 2012 but abandoned midway. Reliable sources said after a long period of abandonment, the contractor ran to the Ministry of Works complaining that the contract was undervalued. The federal executive council thereafter approved additional N6.17 billion in 2018, which is yet to be released.

Strangely, Minister of Information Lai Mohammed listed this road as one of the 69 ongoing projects in the South-East in August 2018. When BusinessDay visited this road in 2018, work was not going on as it was discovered that the contractor merely parked vehicles at a private residence in-between the United Evangelical Church and Onyedika Industries, Alaoji Ntigha. The long and short story is that the contract is yet to be completed seven years after being awarded.

Around 2011, this road had over 40 filling stations, 50 restaurants, seven hotels, over six manufacturing firms, three farm settlements and tens of super markets, among others, Ben Ihu, a resident of one of the towns along the axis, told BusinessDay.

“But most of them have closed shop,” he said.

If you think that this is the whole story, then visit Amasea-Ebenebe-Umuna road, which borders Anambra and Enugu states. The road was supposed to cut across Aguobu Owa-Mgbagbu Owa-Ebenebe- Awaha-Oyoha and Oyofo Iwollo.

It was also awarded on December 13, 2012 to Conduc Nigeria Limited at the cost of N3.035 billion ($19 million in 2012). Some sections of Ebenebe axis are in good shape, but the Ebenebe-Umuna section is nothing to write home about. Minor repairs were done in the Enugu State axis in December 2018, but the general impression by natives is that the contractor did a shoddy job. The road is estimated by Google map as 26 to 30 km. This project cost Nigeria $633,333 for one kilometre in 2012. Within this period in Ghana, a kilometre of road cost GHS 135,000 ($57,349).

Moreover, the Umulungbe-Umuoka-Amokwu-Ikedimkpe Egede-Ojieyi-Awhu was awarded on June 18, 2018 by the present administration. A company known as Enugu IDC Construction got this contract at the cost of N6.245 billion. No work was going on the road on September 23 when our correspondent plied it. Yet another abandoned road project. Only the equipment of Arab Contractors was surprisingly parked along this axis.
“The road is a nightmare whenever it rains,” John Ezechukwu, commercial vehicle driver, who plies this road every day from Enugu, said.

Sections of Onitsha-Enugu Expressway are currently being constructed by RCC, but this road has been in a state of disrepair for over a decade.

Every now and then, a lot of people plying this road have avoidable accidents because the work on this road is slow. Onitsha to Umunya has recently been built, but Amansea to Ugwuoba is bad, with construction in fits and starts. Vehicles now divert to Old Enugu-Onitsha Road, but this road itself is becoming dilapidated owing to pressure.

“We manufacturers using this road spend a lot of money to move our goods to Enugu,” Chukwubuike Nnoli, CEO of Zubnol Limited, an Awka-based pillow and duvets manufacturer, said.

“If you leave by 2pm to Enugu, rest assured that you can’t return because you could face insecurity along this axis,” he added.

Again, what is being classified by the Federal Government as Oseakwa Bridge at Ihiala town in Anambra State, which was handled by Horizon Construction Limited at N896.863 million, is not technically a bridge. It is not ongoing and the road links it to nowhere. Technically, federal government projects or roads connect states, but this purported bridge does not connect any other state. In fact, BusinessDay saw no bridge anywhere.

“We are not serious in Nigeria. We give out a contract and allow a contractor to run away,” Sam Ifionu, a native of Nkporo in Abia State, said in respect of Nkporo-Abiria-Ohafia- Road, which has been abandoned by the contractor.

Drivers now avoid the Nkporo-Ohafia Road to avoid falling into ditches as they now take an easier and better Abiriba Road. Even at that, a section of Abiriba road is threatened by erosion.

However, some sections of Abiriba-Arochukwu-Ohafia, a different road project, was ongoing as of September 22.

Contrary to claims by Minister Mohammed in 2018, the Olokoro-Isiala-Oboro-Nnono road, awarded to Bok Company Nigeria in 2010 at N515.315 million, was not ongoing as of September 20 when BusinessDay visited. Neither was the Olokoro-Alaukwu-Itaja-Okwu-Obuohia-Ikwuano Road, contracted to Abia Rhas in 2010 at N990.673 million, ongoing.

In Nigeria, contractors handle projects haphazardly owing to lack of financial mobilisation, poor supervision by the Ministry of Works or related ministries and corruption, analysts say.


There is something about Amanwaozuzu-Uzoagba-Eziama Orie-Amakohia Road in Imo State, awarded to Imo Vic Phranc Nigeria Limited on November 23, 2013, at N1.275 billion. It was supposed to be a rehabilitation, but BusinessDay observed that the road was broken, which natives believe is attributed to poor quality of work by the contractor. A greater section of Uzoagba was not repaired, and one village called Umueze, which links Uzoagba and Amakohia, was not done at all, villagers said.

Lai Mohammed said this road was being repaired in 2018, but this is far from the truth, pictures and videos show.

In case you have a health crisis, do not ply Okigwe-Anara-Amaraku-Atta-Owerri Road. Commuters make conscientious efforts to avoid this road for fear of hurting their waists.

Only drainages are constructed at Amaraku. Road from Amaraku to Okigwe bad and shoddy. The Federal Ministry of Works was not found on this road anywhere. Only the Amaraku-Attah-Iho repairs are done by Niger Delta Development Commission (NDDC) by Iyke Jordan Limited.

“The quality of work done sometimes leaves much to be desired,” said Ike Ibeabuchi, an Enugu-based manufacturer.

“Some individual contractors do not have the capacity too,” he said.

A civil engineer who works in one of the biggest construction firms in Nigeria, attributed abandonment of contracts to poor funding.

“Yes, corruption may be involved, but when you start, government pays you mobilisation. But you work on the basis of milestones. When you finish a milestone, you are expected to start the next milestone and when you are not paid, you pull out.

“Mind you, contractors work with bank overdrafts and when they are not paid, the interest rate accumulates,” the engineer said.

Blame past and present governments for the federal roads, but the state governors must be able to address poor road network in the South-East.

In Imo State, Naze-Nekede-Iheagwa Road has become a bad advertisement for Imo State. Students pay 150 instead of N100 to come to school from Owerri town as buses break down in muddy waters.

Osisioma is a bad advertisement for Abia State, with the road dirty and broken.

“Abia State must embark on urban renewal,” a shoemaker in the state recommended.

Nigeria requires to spend three to five percent of its annual budget to bridge infrastructure gap. A minimum of $3 trillion will be needed to bridge huge infrastructure gap in the country, according to the Bureau for Public Enterprises. Cash-strapped states in Nigeria are struggling to pay workers’ wages. But analysts say corruption and wastages are holding the country back.

David Henry, Ministry of Works spokesman, told BusinessDay that budget delay has been the major reason why the ministry has not mobilised some contractors.

“Secondly is weather conditions,” he said.

He explained the ministry only gives certificate of completion when a contract is completed, stressing that the government would soon mobilise all contractors being owed.

Source: Businessdayng

How Inclusive is Nigeria’s Financial Inclusion?

Latest figures by Nigeria Inter-Bank Settlement System (NIBSS) put Nigeria’s active bank accounts at 72.97 million as at the first half of 2019.

According to data by the Lagos-based organisation analysed by BusinessDay, Nigeria has 39.26 million registered Bank Verification Number (BVN) as at 22 September 2019.

This implies that the 72.97 million active bank accounts are registered to the 39.26 million BVN owners. Meaning there are multiple accounts to one BVN.

“I have five bank accounts; but I frequently use one of them,” Arua Nnamdi, a 26 years old Lagos-based entrepreneur told BusinessDay adding that the persuasion from some of his friends who are marketers with different banks “pushed me to open the other four bank accounts.”

BusinessDay poll of 10 bank account holders revealed that on the average they have three accounts registered to one BVN.

“I opened one bank account during my NYSC, another one when I got my first job which was compulsory as requested by the company to be used as my salary account. With the recent merger in the industry, my company moved its salary account to another bank,” Oyamedan Blessing told BusinessDay.

The case was the same when BusinessDay contacted Tobi in Federal University at Ekiti. Sarah, Musa and Joshua also shared the same story when they were contacted by phone.

“Access to a transaction account is a first step toward broader financial inclusion since it allows people to store money, and send and receive,” the World Bank said.

Latest figures by EFInA put Nigeria’s financial inclusion rate at 63.2percent, meaning that as much 36.8 percent adults still lack access.

According to the World Bank, financial inclusion means that individuals and businesses have access to useful and affordable financial products and services that meet their needs; transactions, payments, savings, credit and insurance -delivered in a responsible and sustainable way.

In the June 2019 edition of the NIBSS ‘Industry Customer Bank Account Data’, it disclosed that Nigerians opened 10.97 million new bank accounts within the same period but also revealed that the number of inactive bank accounts rose to 49.4 million in H1’19 from 39 million in H1’18. On quarterly basis, the number was up 5 percent in the second quarter of the year, from 46.89 million in Q1’19.

The Central Bank of Nigeria (CBN) plans to ensure that 80 percent of Nigerian adults are included into the financial net by the year 2020.The apex through its collaboration with industry stakeholders launched the National Financial Inclusion Strategy (NFIS) in January 2012 with the aim to help achieve the set target.

If the apex bank is to going to achieve its target, it would have to bridge the 16.8 percent inclusion gap in less than five months; a target many have said is too ambitious.

Declining purchasing power and the high cost of account servicing are top reasons why many do not have interest in owing a bank account, Checks by BusinessDay show.

According to the CBN’s guidelines on bank charges, which took effect on May 1, 2017, withdrawals from other banks’ ATMs within the country, attracts N65 charge after the third withdrawal within the same month.

According to the guidelines, bills payment on electronic channels of the banks also attracts N50 for transactions below and above N10billion, while real-time gross settlement attracts N550 per transaction.

The apex bank stated that alerts on transactions should not be more than N4 per SMS, while bulk payments such as salaries and dividends attract a maximum of N50 per beneficiary, which is paid by the sender.

Source: Businessdayng

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