Friday, 4 December 2015

When Shall Our Nightly Visions, Give Way to Mornings of Fulfillment?

WANDERING, WONDERING...

Melancholic blues rings loud
On the alters of Nationhood
Mass-Servers in self-centred homilies
"Bless" our forlorn hopes
With sermons of democracy dividends

Wandering, wondering...

Normads on a journey to greenland
Sheep and Shepard in a sleepwalk
Wind-driven, like sails to neverland

Wandering, wondering...

Summits and talkshop
Outcomes a slogan: 2020!
More summits, more talkshops
Another slogan: 7 point agenda!
Still discussing, still planning
Another slogan: Due Process!

Wandering, wondering...

Another homily:
Blessed are those who talk
For from words did our world take root.
Blessed is the idle hand
For it shall lag and lack
Yes blessed is the one who steals and stores abroad
He shall truly be homeless
Wandering from clime to clime
And wondering good home could be

Wandering, wondering...

When shall we like the morning sun burst forth with light?
When shall we like the stream swirl with hope?
When shall talk cease and work increase?
When shall our nightly visions give way to mornings of fulfillment?

Wandering, wondering...

Bolaji Okusaga

Welfarism and Production - The Paradox of the Nigerian Context

STILL ON APC’S INSISTENCE ON THE N5,000 POLICY: WHAT IS THE PLAN? WHERE ARE THE RESOURCES? HOW SUSTAINABLE IS THIS?
I love campaigns and politics because both are platforms for elevated speeches and promises. But after elections, reality always beckons. Now, Alhaji Lai Mohammed, the APC spokesperson has insisted that the APC intends to keep this promise.
While I am not entirely condemning this plan, I am just imagining the implication of paying N5,000 naira monthly to the bottom 25 million and the humongous bureaucracy we need to create to make that happen; and since governance is about the allocation of priorities, I am also looking at how a whopping 1.3 Trillion naira from the national treasury annually will help achieve the goal of diversifying our economy and creating a sustainable basis for national wealth. While the welfare pay-out may make some sense from a preventive giving perspective, it begs the question from an economic sense, given that we are not yet an industrial society, able to meet its local demand and possessing the capacity for broad-based growth away from dependence on commodities. So what really are we trying to achieve? How are we going to manage this without giving rise to other negative consequences? Is it possible to reduce inequality, decrease social tension and create vents for shared prosperity through other means?

WELFARISM IN A LARGELY CONSUMING ECONOMY - WILL THIS BE AN INCENTIVE OR A DIS-INCENTIVE TO PRODUCTION?
The Industrial Revolution changed human life greatly by introducing exponential efficiency and creating more prosperous societies. But alongside the gains of the industrial revolution came other social ills, chief of which was inequality and social tension between the owners of production and labour. Following the negative impacts of the Industrial Revolution, Britain went from being a Welfare State (one that reaches out to the poor and indigent using the resource of the state) to a Welfare Society (one that seeks through measures such as taxation to redistribute wealth in order to reduce inequality and social tension).
A welfare state provides a range of goods to its citizens through legal entitlements; the welfare society, provides welfare through private means, essentially by taxing the rich to pay the poor. The latter being a refinement of the former, coming out of the Liberal Reforms of the 1940’s Britain, at the end of World War II.

THE VALUE JUDGMENT THAT PREDISPOSES A COUNTRY TOWARD A WELFARE SYSTEM –IS NIGERIA THERE YET?
The most important values judgment that predisposes societies to welfarism is that, if at least one is better off but no one worse off, the economy is better off. This judgment presupposes that aggregate production and, by extension, national wealth is adequate to cater for the weak and the indigent, while not acting as a disruptive force against production. But is Nigeria there yet?

HOW DO YOU DIVERSIFY YOUR ECONOMY IN A SITUATION WHERE MORE THAN A QUARTER OF THE NATIONAL BUDGET THAT CAN HELP CREATE AN ENABLING ENVIRONMENT FOR PRODUCTION IS GIVEN AS WELFARE PAY-OUTS?
For post-industrial societies, yes, welfarism may have some pertinence. But for societies hoping to build their productive base and aspire to a more efficiently run system which can guarantee more employment opportunities and increase national prosperity, welfarism may pose a big problem. This is because, in making the decision to push for welfarism, there is always the trade-off between equality and efficiency. While this may have some basis in a post-industrial society, it defeats the purpose in a pre-industrial arrangement. The APC need therefore to make its plan for implementing a N5,000 monthly stipend for the bottom 25 million clear so we can interrogate it. For like someone recently said, “a goal without a plan is merely a wish”. God bless Nigeria.

Lee Kuan Yew and Singapore's Journey to Self Discovery - Any Lesson for Nigeria?

LEE KUAN YEW AND THE NANNY STATE MODEL:
Upon independence from Britain in 1965, no one gave Singapore the slightest chance of surviving. What with their domineering neighbor, Malaysia and the ethnic divisions within this thing Island State. However, the story of the transformation of Singapore - a tiny island with no natural resources into a thriving economic success - still confounds a lot of people including my humble self. As I re-read the book - "From Third World to First" - written by the protagonist himself, I am pondering on the amount of rigor and commitment Lee Kuan Yew applied on this interesting journey to self discovery.

NIGERIA - SEARCHING FOR FIFTY LOST YEARS...
Reading Lee Kuan Yew's book again, I can't help but search for parallels between Singapore in 1965 and the Nigeria of today. It suddenly dawned on me that Nigeria has lost fifty good years.
WHERE IS THE GRAND VISION? ARE WE NARROWING IT DOWN TO FIGHTING CORRUPTION AND RUNNING A WELFARE STATE AT A TIME OF DWINDLING RESOURCES?
All we are doing now is basically trying to lay bare plans on the table and if all I am hearing about spending to overcome the slow growth cycle and allocating 1.3 Trillion to a programme targeted at giving 5 thousand naira monthly stipend to 25 million people at the bottom of the pyramid, while keeping our bloated public service, is anything to go by, then I am not sure we are set to embark on a journey to recover our fifty lost years yet.

PROPOSING AN 8 TRILLION NAIRA BUDGET AND ALLOCATING LESS THAN 40% TO CAPEX WILL NOT GET US ANYWHERE;
Doubling the budget estimates at a time the revenue source of government, Oil, is fast losing value, only to spend a huge chunk of it on recurrent expenditure, is something I cannot comprehend. Where are we going to fund the budget from? I hear that President Buhari intends to borrow 2.10 Trillion naira; and I am really worried that we are not doing the hard rigor in finding solutions to Nigeria's economic imbalance. I think we are taking the easy route.

WE NEED TO AVOID THE GREEK SCENARIO.
Given the false protection which being in the Euro-Zone provided, for a long time,the government of Greece was using borrowed money to fund it's budget. The government of Greece prioritized welfare spending instead of focusing on building the Country's economic base through policies which encourage production. The government of Greece relied on one main source for revenue - tourism. As the global recession kicked-in in 2008, funds from tourism started to dry up and Greece's Creditors began to demand their money. The recession made it hard for Greece to pay back, because tax revenues were little, so keeping Greece's bloated public spending and pension programmes became a huge burden. And with a none existent production base and with tax evasion being commonplace and pension rights being unusually generous – there was no internal support base for Greece to fall back on. I hope Nigeria does not travel down that route. Rather than play Greece therefore, can we play Singapore - by investing in audacious infrastructure programmes and supporting production?

ENOUGH SAID - I AM ENJOYING LEE KUAN YEW'S BOOK.
I am praying for some kind of role-play and hoping that President Muhammadu Buhari could wear Lee Kuan Yew's character. I hope that dream can come to reality, because Nigeria truly needs a Nanny at this point.

Corporate Social Responsibility in the Age of Social Media

1. DEFINING CORPORATE SOCIAL RESPONSIBILITY (CSR)
Corporate social responsibility (CSR) evolved from the idea that corporations and business concerns have a duty of care to all the stakeholders that feature in their business cycle and business ecosystem – from production to packaging, marketing sales, services, suppliers and counter-parties as well as within the regulatory and social environment. These duty of care implies that corporations must express consideration for stakeholders and aim to mitigate adverse consequences which may arise from their operations.
From the forgoing, it is clear, that there is an ongoing dialogue as to the role of businesses in society. As society evolves, this dialogue increases sensitivity to, and awareness of environmental and ethical issues. This dialogue continuously throws up issues such as customer service, product / service quality, product stewardship, the role of business in protecting the environment, especially with climate change, the management of diversity in the work place and the treatment of women in the workplace. These issues are constantly highlighted in the media and in face to face conversations between the corporation and individual citizens in society. Given this never-ending scenario, governments and regulatory bodies, who act as umpires in these conversations, are constantly changing the terms of engagement in keeping with the need to protect society and citizens within the bounds of the social contract which exist between businesses and society. On the one hand, a crucial audience in this conversation, investors and investment community take account of the outcome of this conversation in rewarding or punishing corporations in terms of the flow of investments. While consumers, on the other hand, also gauges corporations CSR performance in their decision to extend or withdraw patronage for corporations. The need to stay above board in this conversation is constantly contributing to the pressure on corporations to operate in a socially, environmentally and economically sustainable way.


2. UNDERSTANDING THE STAKEHOLDER
As corporate organisations evolve into influential constituents in communities, business ethics became an important topic for governments and local communities. From the dark ages when religious institutions held so much influence, to the current clime, where business organisations dictate individual and collective destinies, the transformation of business from mere providers of value to centres of social developments dictated a change, not just in the perception of business by stakeholders, but also in the expectation from business, in the fulfillment of the social contract. Hence the importance of stake-holding in the social accountability process. The contract between an organisation and its stakeholders is built on a two-way exchange of value and expectations. While all the business organisation places value on delivering profits to shareholders, in its interaction with other stakeholders, it cannot afford to place profit as the fundamental driver of its interaction with the stakeholder. It must carefully navigate the demand of value creation and relationships with stakeholders in order for it to achieve its corporate objective

The need for stake-holding therefore arises in the demand for the business organisation to live up to its obligations and responsibilities in proportion to its influence in society. Hence an exposure of the business organisations and/or its executives for immoral and fraudulent conduct is usually punished, not just by the regulators, but by other stakeholders such as the consumer, who may withdraw patronage for such business organization, and by so doing hasten the death of the organization. Examples of such instance are the Enron / Arthur Anderson and Worldcom saga.

3. ACCOUNTABILITY AS KERNEL FOR CSR
Organisations exist in the public space, to deliver value which meet a need in society and bear both good and bad consequences for society. For example, an industrial concern producing products which are needed within the local community, aids the economy of the community by providing employment and allocating contracts to local suppliers on the positive end. But on the negative end, the industrial concern places a demand on land and other resources within its operating environment. Its operations may also come with environmental impacts such as the flaring of dangerous gases and the release of toxic wastes into public water ways. These dual consequences places a need for corporate accountability if the positive benefits are to be maximized and the negative consequences minimized. With openness and transparency on the part of the industrial concern, it is able to enter into a dialogue with the community on better ways of producing its products, while coming to compromise on the most sustainable route to guaranteeing a win-win bargain between itself and the society who enjoys the benefits of its products and bears burden of the negative outcomes from its production process.

Given the need for organisations to be open and transparent in their dealing and reflect an alignment with best business practices in their operations, the creation of an open world through the social media, places a real burden on corporations. Not only does the social media blur the line between what can be expressed in private and what can be expressed publicly, the fact that the platform is conversational rather than just being a listening platform also raises the bar in terms of engagement as well as accountability.
From the foregoing, it is clear that CSR as a business practice is evolving. And needless to state that the emergence of the social media makes it all the more compulsive.

4. CSR AND CORPORATE ENGAGEMENT – THE SOCIAL MEDIA NEXUS
Based on the need to strengthen corporate reputation, improve corporate performance and market attractiveness, companies over time have come to reckon with corporate social responsibility as a key vehicle for achieving their corporate objective. Hence, beyond the evolution of the concept of corporate social responsibility, the emergence of social media serves to broaden the context rather than the concept. From corporate philanthropy, which creates a platform for sharing without ingraining responsibility into company’s business practices, to the era of the triple bottom line, which extends the whole idea of corporate accountability beyond profits to its impact of business on people and the planet, to sustainability principles which discusses accountability more from a continuity and efficiency perspective – the emergence of the social media has served not only to broaden the base for accountability, but to also open up discussions on these issues with a wider segment of the population.
The nexus for discussion on key issues regarding responsibility and accountability therefore became more open, with engagements becoming wider given the virtual platform which social media avails. Beyond the social reporting sessions which physically brings stakeholders together to discuss the salience and relevance of corporate contribution, there is an ongoing discussion on corporate citizenship and responsibility in the virtual world

5. THE SOCIAL MEDIA LANDSCAPE
In today’s digital reality, where virtually everything that is happening in the real world is being replicated on cyber-space, the concept of Social Networking is an emergent phenomenon spreading across the globe with so much coming out of America, Europe and Asia and Africa.
Among the notable networks on the cyber space which has crashed into global thought and captured the popular imagination are:
1. Facebook
2. Twitter
3. Insagram
4. Linked-In
5. Google Plus
6. MySpace
7. Tagged
8. Cyworld
9. Bebo
10. Delicious
11. Hi5
12. Tribes.com
13. Orkut

Basically, a social network site is a web-based service that allows individuals to do the following:
• Construct a public or semi-public profile within a bounded system 
• Articulate a list of other users with whom they share a connection 
• View and traverse their list of connections and those made by others within the system.

Ever since the advent of the internet and computer –mediated communication, which first came in form of messaging and collaboration through electronic mail, the world has become a small place with ideas being traded across geographic borders. However, with the emergence of Social media a new dynamics was added to communication on the cyberspace. Today, most Social Network sites support the maintenance of pre-existing social media, but others help strangers connect based on shared interests, political views, or activities. Some sites cater to diverse audiences, while others attract people based on common language or shared racial, sexual, religious, or nationality-based identities. Sites also vary in the extent to which they incorporate new information and communication tools, such as mobile connectivity, blogging, and photo/video-sharing. 

6. SOCIAL MEDIA: HOW IT WORKS
The backbone of Social Sites consists of visible profiles that display a list of Friends or contacts who are also users of the system. Profiles are unique pages where subscribers can reveal their personal details. After joining a social site, an individual is asked to fill out forms containing a series of questions. The profile is generated using the answers to these questions, which typically include descriptors such as age, location, interests, and an "about me" section. Most sites also encourage users to upload a profile photo. Some sites allow users to enhance their profiles by adding multimedia content or modifying their profile's look and feel. Others, such as Facebook, allow users to add modules or applications that enhance their profile. The visibility of a profile varies from site to site and according to user discretion. By default, profiles on some social sites are crawled by search engines, making them visible to anyone, regardless of whether or not the viewer has an account. Alternatively, LinkedIn controls what a viewer may see based on whether she or he has a paid account. Sites like MySpace allow users to choose whether they want their profile to be public or private. Facebook takes a different approach—by default, users who are part of the same "network" can view each other's profiles, unless a profile owner has decided to deny permission to those in their network. Structural variations around visibility and access are one of the primary ways that social sites differentiate themselves from each other.
While social sites are often designed to be widely accessible, many attract homogeneous populations initially, so it is not uncommon to find groups using sites to segregate themselves by nationality, age, educational level, or other factors that typically segment society, even if that was not the intention of the designers.

7. THE GROWTH OF SOCIAL MEDIA

Because of its appeal to groups and community, social media became a global phenomenon as people rally to own a chunk of the cyberspace where they could share their identity, thoughts and feelings on particular subjects of interest and have others do same. Overtime social media started to appeal to particular communities before opening up to others. A case in point is Facebook which was essentially a Harvard Network before becoming an open network.
Today popular Social media command billions in terms of user numbers and keep a huge data base of contacts and data for direct marketing and business networking.

8. SOCIAL MEDIA AND SOCIAL CAUSES
Beyond friendships and professional networking that were the primary purpose for the setting up of social sites, social sites such as Twitter, Google Plus and Facebook and Causes.com are getting increasingly visible in the corporate accountability space – either taking position on issues such as same-sex marriages, climate change, corporate misdemeanors and corruption.
With the invention of the mass media through the discovery of the printing press, the radio and television, inhibitions to the movement of information was greatly reduced. However, most of the information received were linear in nature as opposed to interpersonal and interactive communication, which allowed the refinement of positions in the communication encounter. Where rejoinders were given, the original information would have become cold and cannot be actively pitched with the response. All that was soon to change with the invention of the social media – a platform which allowed, not only for the dissemination of information, but more importantly, availed the immediacy of feedback in the communication encounter and created a conversational approach to information dissemination. 

Given the extensive coverage of the social media, organisations are now more under scrutiny than they have been in history. Now organisations are made or marred in social communities depending on their corporate conduct, track-record and the openness of their business as well as their ability to engage on critical issues within social communities.
In this new reality, doing good and doing well are not enough, as organisations need to explain the basis of their action and constantly touch base with their target audience to explain their actions in order to stave-off a misreading of their intentions. Beyond explaining intentions, organisations must also live true to their creed as any deviation from thee corporate promise is immediately picked up in the social media and a negative trend may start to emerge around the organization. From allegations of a deep-fried rat in KFC menu, to the negative trend around the BP Oil spill in the Gulf of Mexico, to the United Airline’s breaking a Guitar saga, to local corporate misdemeanors such as the MTN /NCC fine issue and frequent customer complaints on poor customer service in the Nigerian banking industry, organisations are constantly being held against their defined creed, product quality, production and safety process, service charter and declared CSR philosophies in the new court of public opinion which the social media provides.

9. SOCIAL REPORTING AND SOCIAL MEDIA
Social reporting basically implies civic engagement involving stakeholders within the social and operation environment of corporation which are set-up to explain intentions, request feedback on social interventions and agree better ways of achieving the social contract between the organisations and its various stakeholders within the defined community. In this process, players within the community, the civic and professional space participate directly or indirectly in exacting responsibility and commitment from the organization. It can be initiated by the organization itself, the government acting through regulatory bodies, the private sector acting through trade or business groups or civil society actors who are watchdogs monitoring alignment with self-declared commitments by the organization or its compliance with codified and extant regulations.
In the social reporting process, the following issues are reported, tested and validated by host communities acting through informed observers:
- The social relevance of business strategy 
- Organizational profile and social commitment 
- Stakeholder priorities and engagement 
- Governance framework
- Ethics and Integrity

With the advent of the social media, the social reporting process has moved from being a cycle or calendared activity to a daily requirement for businesses and corporations. This is because, the social media places enormous social and environmental pressures on corporations and increases the attention paid to day-today social incidents, which were before now unnoticed given the news cycle and the linear nature of traditional news media, with agenda setting being the sole prerogative of media gate-keepers. All that has changed with the social media, as institutional gate-keeping has given way to social gate-keeping, giving the ordinary man on the street the power to set business agenda. From public responses to issues such as the BP Gulf of Mexico and Exxon Valdez oil spills to the Nike child labour issue in the Philippines – the average citizen with an active network on the social media has proved to be as strong, if not stronger than the traditional newshound. From these examples, it is clear that the social media, given its extensive reach, has increased the pressure for corporate disclosures and altered the basis for gauging the perception of corporate organisations, while changing the framework for corporate social reporting and corporate accountability mechanism as well as the measurement of corporate image and corporate reputation.

10. MAKING CORPORATE RESPONSIBILITY TRULY SOCIAL
The importance of the social media in shaping the perception of the corporate enterprise cannot be over-emphasized; for not only is the social media a platform which brings the corporate organisation together with its publics, it also serves as a forum for the discussion of corporate conduct and performance. And given that corporate responsibility and the social media are both evolving and emergent phenomenon, with great public interest and investment, there is a need for organisations to become more active participants in discussions which shapes the role of corporate organisations in society as well as and expectation arising therefrom.
From the foregoing, it is clear that the social media has hastened the transition of corporate reporting from a corporate ritual with mere information transmission to active stakeholder participation in an ongoing conversation which seeks answers to pressing questions regarding the integrity of the business, its willingness to operate transparently and be open to constant scrutiny on its products / service, corporate conduct, contributions, economic viability and sustainability as well as its role in society.

Sunday, 26 April 2015

SEEING VALUE WHERE OTHERS SEE CHALLENGES – THE STORY OF SOUTH AFRICAN BUSINESSES IN NIGERIA


SEEING VALUE WHERE OTHERS SEE CHALLENGES – THE STORY OF SOUTH AFRICAN BUSINESSES IN NIGERIA
By Bolaji Okusaga

1. THE PARADOX OF HAVING A HUGE ECONOMY WITH WEAK INFRASTRUCTURE AND UN-CORDINATED POLICIES
With a population of 170 million people out of Africa’s 903 million total headcount, which represents one-fifth of the continent’s population, Nigeria is a huge paradox for global investors looking for opportunities in Africa.
When Nigeria’s huge potential is juxtaposed with unsavoury conditions which are detrimental to investment, such as corruption, excessive bureaucratic bottlenecks and infrastructure challenges, an investor is likely to face a huge dilemma. For instance, the World Bank’s 2013 “Doing Business" survey puts Nigeria at 185th out of the 189 countries it surveyed on ease of getting electricity. In addition to shortfalls in power generation, transmission and distribution, transportation systems and other critical support infrastructure are also relatively under-developed. This, coupled with the endemic corruption and the bureaucratic red-tape make doing business in Nigeria tougher than in   other climes.
Beyond these challenges, however, Nigeria offers a basket of opportunities for the intrepid.  Nigeria is currently rated as the biggest economy in Africa, accounting for 26% of the economic output in sub-Saharan Africa and over 70% of the economic output in the ECOWAS region.  Except for the year 2015, which has seen a reduction in growth projections because of falling oil prices and the anticipated crisis from the general elections, Nigeria has maintained an average year on year economic growth of 6% in the last 10 years. Other macro-economic variables have also remained relatively stable over this period.
Despite these positive indices, business in Nigeria is admittedly tricky, hence the departure  of a lot of European and American trans-national corporations and the refusal of others to   operate in Nigeria. Aside core investors in commodity and extractive industries - and a couple of players in manufacturing, who had been operating  in Nigeria before its independence from Great Britain in 1960, a lot of European and American Technology and Consumer Goods businesses do not dare to take the plunge.

It is therefore no surprise that the likes of Starbucks, McDonald's, and a host of other companies involved in retail and distributive trade are missing the huge opportunities presented by Africa's biggest and most populous economy. To these companies, the risks outweigh the possible benefits- a clear case of seeing the cup as half empty.
The loss of these European and American companies is the gain of South African companies. Operating in Nigeria despite the huge challenges, they are reaping huge returns on their investment. From the foregoing, it is glaring that navigating Nigeria’s interesting investment paradox, borders on differences in perspective.
 While the West is seeing the glass as half empty, Chinese and South African companies are seeing the glass as half full and are therefore coming to the party with enthusiasm and a "can-do" spirit.  This positive perspective informed MTN's huge investment in the Nigerian Telecommunications Industry in 2001 - at a time when Nigeria was perceived as one of the low value ends of the frontier markets.
Given that the MTN investment was a Greenfield investment in a newly liberalized industry, the huge risk which MTN took at its market entry into Nigeria was such that the company's share price initially plummeted on the Johannesburg Stock Exchange. However, as if it knew what others did not know, MTN was undeterred and continued to inject the liquidity needed to shore up its Nigeria operations. The investment paid off  and as the cliché goes, the  rest is history.

 2. BEYOND HALF-FULL: HOW HAVE SOUTH AFRICAN INVESTMENTS FARED IN NIGERIA?
Despite the infrastructure challenges, bureaucratic bottlenecks and corruption often cited as the bane of investing in Nigeria, South African businesses appear better suited to the Nigerian business environment than their Western counterparts.
From the retail end, with players such as Shoprite and Game, to Hotel and Hospitality with the Protea Hotel chain (which was recently acquired by Marriot, the American Hotel chain), onto Media and Cinema with companies like MultiChoice and Nu-Metro, banking and financial services - Stanbic IBTC Bank, First Rand Bank, Old Mutual and Nedbank (which recently acquired a sizable stake in Ecobank, the Nigeria led Pan- Africa  Banking Franchise), and other mid-sized businesses dotting the Nigerian business landscape, South Africa today stands as one of the major players in the Nigerian economy.

Following the restoration of democracy in Nigeria in 1999 and the adoption of the New Partnership for Africa Development (NEPAD) statute in the early 2000's, South Africans were quick to identify opportunities in Nigeria and were bold in their market entry. First to make a statement with its entry was MultiChoice, which had arrived well before the return of democratic governance and adoption of the NEPAD Agreement, and its entry re-invented the media, cable and pay-TV industry in Nigeria.
Offering unparalleled value within the local market, MultiChoice quickly became a monopoly, dominating the Nigerian market and making it difficult for the local players to compete in this capital intensive industry. Following the MultiChoice example, MTN also rolled out its services as the second player within the newly liberalized Nigerian Telecommunications market, immediately asserting its leadership of the industry,  rolling out critical infrastructure across Nigeria and making huge investments in brand building. Unsurprisingly, MTN became the market leader in less than one year of its operations.
While MTN was growing value in the Telecommunications sphere, the Protea Hotel chain was also planting its presence in Nigeria's major cities.  Today Protea is the largest hotel chain in Nigeria, operating through a unique franchise model which seeks out Nigerian hotel and hospitality Investors as partners, while bringing in its own brand franchise and management expertise.
Furthermore, South Africa also registered its presence in the Nigerian Financial Market with the entry of Stanbic Bank, a wholly-owned local subsidiary of South Africa's Standard Bank.  Seeing the need to grow its presence in Nigeria, it soon acquired a mid-sized local Universal Bank with a huge Investment Banking franchise - the IBTC Chartered Bank. It is on record that the deal is the first ever tender offer in Nigeria and with it came a 525 million dollar Foreign Direct Investment, the biggest single investment in Nigeria’s financial industry till date.
Through this investment, South Africa was able to make inroads into the Nigerian stock exchange given the fact that IBTC Chartered Bank was then the largest equity trader by volume and value on the Nigeria exchange as well as the largest portfolio manager and is represented on the council of the Nigerian Stock Exchange. Furthermore, this strategic acquisition also brought South Africa into Nigerian government bond management because the acquired Bank is the sole broker for the Federal Government of Nigeria and was picked by the government to be the settlement bank for the electronic warehouse receipt system introduced by the Nigerian Commodity Exchange.
Aside from the Stanbic IBTC success story in the Banking sector, South Africa is also deepening its participation in the Nigerian manufacturing and consumer goods sector. Tiger Brands, a South African company, recently bought a majority stake in UAC Foods and Dangote Foods. This strategic acquisition comes as a move to shore up the earnings of Tiger Brands, which has flattened at home, given Nigeria’s huge consumer market.
 Furthermore, Shoprite, another South African firm, is making huge forays into the Nigerian retail sector, with retail presence in key Nigerian cities of Lagos, Ibadan, Enugu, Ilorin and a host of others. The fast expansion of the Shoprite franchise is driven by a retail boom in Nigeria. The retail sector in Nigeria has continued to expand, with value sales increasing strongly in 2013 and 2014, faster than GDP growth.
 This development is propelled by an expansion in Nigeria’s urban and middle class population and an increase in disposable income.  Away from retail, South Africa has also entered Nigeria’s lucrative beer market with SABMiller.  SABMiller recently built a state-of-the-art brewery in Onitsha, in the South-East of Nigeria, and is gradually growing its distributive capacity pan-Nigeria.

Aside from all of the businesses mentioned above, there other new entrants into the Nigerian economy from South Africa, and these includes, Nedbank, FirstRand, Old Mutual, Sanlam and MMI Holdings.
3. INITIAL POLICY OBSTACLES AND SOUTH AFRICA’S ENTRY IN THE ERA OF LIBERALISATION
The curious though unspoken question on the lips of international venture capitalists and investors, is how come the South Africans seem to be succeeding where others are failing? This question comes against the background of the noted challenges in the Nigerian environment which are compounded by the absence of a stable policy environment.
The history of international investments in Nigeria before the return of democracy was not particularly savoury, what with the indigenization decree of the 1970's under the Military governments of Murtala Mohammed and General Olusegun Obasanjo, which saw a lot of foreign business interests in Nigeria ceding their stakes to Nigerian shareholders in a push for the localization of multi-national businesses in Nigeria. This move saw the exit of Shell Petroleum and British Petroleum from the down-stream sector of Nigeria's lucrative Oil and Gas market.
As if the set-backs of the 1970's were not enough, the structural imbalance of the 1980’s also saw the plummeting of industrial capacity in Nigeria. This situation arose largely from the rationing of foreign exchange under a corrupt and highly politicized import licence order. Given this scenario, there were frantic calls for structural reforms. These reforms were soon ripe and ready, following the huge debts which Nigeria incurred from the London and Paris club of Creditors.
Initial reforms were thus undertaken in the late 80’s to early 90’s,  tailored towards budgetary tightening and fiscal discipline with a view to raising industrial capacity in order to reduce dependence on imported finished goods. Prodded further by the Breton Woods Institutions, to undertake more reforms, given its huge sovereign debt, the Nigerian Military government under General Ibrahim Babangida, announced more fiscal reforms; starting with the Second-tier Foreign Exchange Market, which saw the devaluation of the naira, and the Structural Adjustment Programme which engendered a high-level of fiscal tightening in a bid to refocus the economy.
As all these reforms were going on, the Nigerian economy was still largely perceived as unattractive to Foreign Investors in Europe and America who only saw opportunities in the commodities and extractive industries and were uninterested in deepening their involvement in the Nigerian manufacturing and retail sectors having been scarred by the indigenization decree promulgated by the Murtala/Obansanjo Military regime. The conventional wisdom at the time was therefore to stay aloof to the reforms and the liberalisation of critical sectors of the Nigerian economy that followed thereafter.

 Therefore, while the Nigerian government devalued its currency and made it attractive for smart foreign investors to take advantage of its economic liberalisation policy, investors watched from afar, wary of the policy-somersault. It was this confused and highly volatile environment that South Africa was soon to profit from, following the return of democracy in 1999 and a renewed push for foreign direct investment by the new democratically elected government.

4. BOOSTING INTRA-AFRICA TRADE: THE NIGERIA / SOUTH AFRICA EXAMPLE

Aside from the existence of South African companies in Nigeria, Nigerian businesses are also gradually making in-roads into South Africa, thereby helping to boost the intra-Africa trade that was very low before the advent of the New Partnership for Africa Development (NEPAD).  Nigerian energy firm, Oando, for example, is  listed on the Johannesburg Stock Exchange, while Dangote Group has also invested over $378 million in South Africa's cement industry. In addition to these two companies, there are also a couple of other Nigerian businesses in South Africa such as Arik Air, First Bank and Union Bank which have representative offices in South Africa.

 Between 2007 and 2008, trade volumes between both countries stood at approximately $2.1 billion. By 2012 this figure had increased to $3.6 billion. It must be noted that 83% of this trade figures came from South Africa’s purchase of crude oil from Nigeria. Between 2002 and 2012, South African imports from Nigeria increased by about 750%, with crude oil sales accounting for a greater chunk of this figure.  This scenario points to the fact that, outside of trade in crude oil and commodities, trade volumes between both countries are still relatively low.

5. THE DOWN-SIDE OF SOUTH AFRICA’S INVOLVEMENT IN THE NIGERIAN ECONOMY

The South Africans may have cashed in on the opportunities availed by the liberal regime bought on by the new democratic order in Nigeria and are making a kill where the west did not initially see any prospects, but there are  a couple of things South Africa is also not getting right.
One of these is the tendency of South African firms to only trade among themselves rather than patronize local options in Nigeria.  It is usually alleged that MTN Nigeria, in giving out its banking and collection mandate, will prioritize Stanbic IBTC Bank, a bank with South African interest, above local Nigerian Banks. The same is said of the other South African businesses. This situation has tended to increase the mistrust between Nigerian local businesses and their South African counterparts. Given this situation, the prevailing feeling within the Nigerian business community is that the South Africans are not returning the friendly gesture of Nigerian businesses and consumers towards South African interests and are therefore not displaying ‘brotherly’ love towards Nigerian businesses.

Aside from this, there is also the issue of the monopolistic tendency of South African firms which creates industrial tensions, especially in the Telecoms and pay- TV segments of the Nigerian economy where South African behemoths like MTN and MultiChoice are dominant. Accusations are rife about the deployment of arm-twisting tactics in the bid by these players to retain their dominant positions. Beyond this, there are also the allegations of over-pricing of services in Nigeria, in comparison to the prices these firms charge in South Africa.

Furthermore, there is also the issue of the non-reciprocation of Nigeria’s open door policy in South Africa. The poser often raised by cynical Nigerian business analysts is, ‘which major Nigerian company has made any inroads worth mentioning in South Africa even though South Africans are making a huge kill in Nigeria?’ Skeptics also cite the exit of Thisday newspaper from South Africa under a very curious circumstance, as proof of hostility of South Africa to Nigerian businesses.

Complaints about the non-reciprocity of the open door policy to Nigerian businesses in South Africa often creates inter-government friction, to the extent that  bi-lateral relations between the two countries was nearly damaged in 2012 when 125 Nigerian business travelers to South Africa were denied entry into South Africa for not having valid Yellow Fever certificates. The Nigeria government, in retaliation, also expelled 56 South Africans. This situation led to huge tensions which were later resolved with the easing of travel restrictions

6. BEYOND THE OPPORTUNITIES AND THE CHALLENGES, WHAT DOES THE FUTURE HOLD FOR NIGERIA- SOUTH AFRICA BUSINESS RELATIONSHIP?

Having x-rayed the opportunities and challenges of South African companies doing business in Nigeria, it is evident that great prospects lie ahead for this ingenuous partnership which is opening up vistas of opportunities for boosting intra-Africa trade.  However, a couple of things need to be addressed on both sides:

a.      Easing of Visa processing and travel restrictions

While it may be tough to have a visa free regime or a visa-on-arrival situation, there is the need to ease visa processing in order help facilitate the interchange of business between both countries.

b.      The setting up of a clearing house for the resolution of business and investment disputes

Given the necessity for speedy resolution of business disputes between both countries, there is the need for the setting up of a conflict resolution mechanism outside of the traditional legal and arbitration systems provided by both countries. This will help ease investment processes and speed up transaction time while creating better value for investors seeking opportunities in both countries.

c.       The need for reciprocity in the spirit of African brotherhood.

There is the need for reciprocity in term of access to opportunities between both countries. This will go a long way in strengthening relationships and lessening tension.

d.      Political and fiscal risk

This is particularly important because if businesses are not sure of the political and fiscal risks that they are likely to confront, it might stifle investment and lead to value attrition. The withdrawal of the 2.3 Gega Hertz (GHz) licence initially awarded to Multilinks (the Nigerian subsidiary of Telkom), which happened under very curious circumstances, was one of the reasons for the exit of the company from Nigeria.

e.      Resolving the issue of high costs of doing business

This particularly relates more to the Nigeria environment than the South African environment.  Nigeria needs to bridge her infrastructure deficit in order to be able to attract more quality investments from South Africa. A situation where a company like the MTN was saddled with building its own backbone before being able to operate in Nigeria is not standard practice and will therefore not be the case in more investment friendly environments. There is the need for Nigeria to look more critically at building the necessary support infrastructure which will make doing business in Nigeria a lot cheaper and help drive foreign direct investment.

7. FACILITATING INTRA-AFRICA TRADE BY SETTING THE RIGHT EXAMPLE - THE NIGERIA/SOUTH AFRICA OPTION

The popular view that Africa stands to benefit more from trade among Africans than  trading with Europe, America and Asia rings true when one considers the progress made so far in  Nigeria's partnership with South Africa and the benefits that have accrued there-from. However, more effort is required to take this to the next level.

Currently, Africa's intra-regional trade stands at about 10 - 12% of Africa's entire trade. This is very small when compared with intra-regional trade within North America which is over 40% and intra-regional trade in Western Europe which is about 60%. African Countries trade more with America, China and Europe than they do among themselves.  This is largely attributable to the existence of artificial barriers to trade as well as poor transport and communication infrastructure across Africa. Furthermore, the lack of a political will to affirm commitments on the lifting of cross-border restrictions on the movement of goods and services across Africa beyond mere promises represents a major hindrance to achieving the desired end-state.
Given the need for the economic integration of Africa, African leaders adopted the decision to establish a Pan- Africa Continental Free Trade Area (CFTA) by the indicative date of 2017 taken during the 18thOrdinary Session of Heads of State and Government of the African Union that was held in Addis Ababa, Ethiopia, in January 2012. But, beyond boosting intra-Africa trade by strengthening trade within regional blocs in Africa, there is the need for the big economies and fast growing economies in Africa to set the right example by removing barriers to trade among themselves. Nigeria, South Africa, Egypt and other fast growing economies in Africa such as Kenya and Angola warehouse about 45% of Africa's total economic output, and given the need to raise intra-Africa trade, Nigeria and South Africa, two of Africa's economic power-house need to take the lead.
Bolaji Okusaga is the Managing Director of The Quadrant Company, a Lagos based Public Relations Consultancy

Sunday, 22 February 2015

HOW DO WE GET OUT OF THE CYCLE OF VIOLENCE IN NIGERIA?

 WE NEED TO FOCUS ON BUILDING THE MIDDLE CLASS, WHILE CREATING SOCIAL SAFETY NETS FOR THE BOTTOM OF THE PYRAMID:
While Latin America is reaping the gains of economic reforms in Countries such as Brazil, Argentina and Mexico and migrating a lot of people from the bottom of the pyramid to the middle class, we are reaping violence and poverty even though our economy is growing; and one would have felt that a lot more people would have been pulled out of poverty and that we would have started to narrow the gap between the top and the bottom of the pyramid, but the contrary has been the case.
A STRUCTURAL DYSFUNCTION AND A HARVEST OF VIOLENCE: While it is true that a lot of the crisis we have witnessed in Nigeria are a consequence of bad politics, the root causes are more about economic exclusion than politics. From the Area Boys and OPC in the South West, to the Bakassi Boys and Biafra renaissance in the South East, from the MEND Militancy in the South-South to the Boko Haram and Fulani Herdsmen in the North; able bodied men who should have ordinarily been gainfully employed are easily lured into anti-social groups that portend grave danger to the stability of the State.
WHAT CAN WE DO TO STEM THIS TIDE?
I imagine that it is possible to turn the tide if we can do three things very well within the next 5 to 10 years:
1. Education: We need to prioritise education so as to open peoples world to possibilities and give them a life-skill. Chief Obafemi Awolowo was able to do this in the old South West and I believe that an investment in Education always pays off across generations.
2. Job Creation: Given that a lot of the unemployed in Nigeria are actually unemployable because they lack requisite skills, job creation needs to be bundled with vocational skills acquisition using the traditional guild systems so we can start to see people emerge as Mechanics and become employable in the manufacturing industry and in the automotive sector. We need to rebuild the guild system, so we can start to see people also become bricklayers and foremen and become employable in the Construction Industry. We also can start to see people become welders, vulcanisers, blacksmiths, hair-dressers, tailors, cobblers and a host of bottom of the pyramid possibilities will start to emerge, which will mean more than violence and low life-expectancy.
3. Creation of Smaller Governments and Bigger Social Safety Nets: Let us spend less on people in government and their hangers on and spend more on things that guarantee a better quality of life for the people at the bottom of the pyramid, so they too can have access to a life that defines them as humans and not beasts.
ITS TIME TO REORDER OUR PRIORITIES
Let us spend less on Estacodes and private jets and spend more on public schools and primary healthcare centres. Let us spend less on furniture allowances for Legislators and spend more on feeder-roads and rural electrification projects. Let us spread the social safety net and help increase the disposable incomes of those at the middle and the bottom of the pyramid, so we can create a healthy economy, one that looks after the vulnerable in society and profits the rich. One that guarantees a hope for movement across the socio-economic classes, provided people are ready to work hard and be better at what they do. Let's bring back the notion of government as service as opposed to it being about bread and butter, so we can reduce the violence in the land. I believe it is possible. It is about reordering our priorities.

ARE OUR LEADERS THINKING OF US, OR ARE THEY OVERWHELMED WITH THE SPOILS OF OFFICE AND THE LIES BY SYCOPHANTS AND HANGERS-ON?

Greed rather than service seem to be the underlining motive for going into government in Nigeria. Let me give you three scenarios that bring my thesis to life:
1. HOW MUCH DOES IT COST TO FEED A PRESIDENT?
From the 2015 budget estimates, it will cost 4 Billion Naira to feed the President, his household and guests in 2015. That amount will provide more than 312,000 packs of Indomie Noodles daily, for one year. That is enough to feed the Children in the displaced people's camps in North-East Nigeria for one year. I would reckon that if our leaders were thinking about us, just a quarter of that amount is more than enough.
2. HOW MUCH DOES IT COST TO HOUSE A VICE PRESIDENT?
Initially, the amount budgeted for the building of a new residence for Vice President Namadi Sambo was 7 Billion naira but given the need to accommodate the lifestyle of the Vice President, the initial plan was altered leading to a cost over-run of 9 Billion naira, bringing the entire cost to 16 Billion naira. 16 Billion Naira will build at least 2 standard Primary Healthcare Centres in each of the 36 States of Nigeria at an average cost of 200 Million Naira. Why do we need a new House for a Vice President? Should that truly be a priority if our leaders are serious?
3. WHAT IS THE SALARY OF A NIGERIAN SENATOR?
The Economist magazine revealed that Nigeria federal legislators, with a basic salary of $189,500.00 per annum (N30.6m), are the highest paid lawmakers in the world. It looked at the lawmakers' basic salary as a ratio of the Gross Domestic Product per person across the world. According to the report, the basic salary (which excludes allowances); of a Nigerian lawmaker is 116 times the country's GDP per person of $1,600.00. In another report, the 469 federal lawmakers (109 senators and 360 members of the House of Representatives) cost Nigeria over N76 billion on annual salaries, allowances and quarterly payments. Each member of the 54 standing Senate committee, receives a monthly imprest of between N648 million and N972 million per year, while, a member of the House of Representatives receives N35 million or N140 million as quarterly or yearly allowances; which means conservatively the 25 per cent of the overhead of the nation's budget goes to the National Assembly. Aside from their scandalous wages, kept from the public consumption, their intended imbedding pensions for life for its principal officers into the Constitution; and now the Federal government's reports that the National Assembly have spent N1 trillion from 2005 to 2013, really makes non-sense of the meaning of service. If only they had cut their wages and allowances in the last 10 years by a half, we would have been able to deliver basic infrastructure which can stimulate growth in the domestic economy.
WHILE AN AVERAGE AMERICAN PRESIDENT AGES IN OFFICE, OURS GET FATTER. WHILE AN AVERAGE BRITISH POLITICIAN RIDES THE TRAIN, OURS RIDE PRIVATE JETS. Little wonder why Nigeria is not working for the good of all?