NIGERIA: HAVING THE COURAGE TO RENEGE ON A WILD PROMISE

APC’s FIVE THOUSAND NAIRA PROMISE FOR THE UNEMPLOYED AND VULNERABLE: LET’S NOT BEAT OURSELVES UP OVER AN IMPROBABLE PROMISE:

For me, I think the government was courageous in telling the truth, to Nigerians, on the impracticability of the proposition. Just like School feeding, just like State Creation and other bogus promises which only appeal to the undiscerning, there is no basis for those lavish schemes which are not sustainable and only speaks of spending without a carefully thought out spin-off and possible benefit for the economy. I am not saying that investment in human capacity development does not pay dividend. What I am saying is, there are more strategic schemes which can help the bottom of the pyramid, bridge inequality and create a sustainable basis for the development of the economy.

LET’S REVIEW A COUPLE OF THINGS THAT THE GOVERNMENT CAN DO AS REPLACEMENT FOR THE BOGUS FIVE THOUSAND NAIRA PROMISE

1. EDUCATION - Tied to poverty is illiteracy. How do we avail the right kind of education that can feed our development needs and de-emphasize education that prioritizes white-collar jobs over blue-collar? How do we create an education system that can accelerate development; and one that targets the bottom of the pyramid - giving them requisite vocational skills that can feed into a chain of small businesses and guarantee a supply of support skills that can help quicken our infrastructure and industrial development? That should be our priority. School feeding is of secondary importance here, and may be introduced if the economy is buoyant and is able to support the investment long-term, otherwise, why not seek other platforms in which the parents of school-children can be supported, while the right infrastructure and instructional environment is created?

2. ENERGY - Growth and Development are actually not synonyms. In Nigeria's case, growth averaged 6.2% for 10 years from 2004 – 2014, without commensurate development. How can a nation fast-track development with electricity supplies to the national grid averaging 2,500 Megawatts in a nation of 178 million people? It is often said that small businesses are the engine room of development in any economy, and China remains a classic example. There is correlation between access to energy and cost of doing business as well as the development of small businesses. Rather than invest 3 Trillion in hand-outs to constituents that are not properly delineated, given the absence of a credible National Identity Scheme, why not invest it as part of Development Financing for Energy and other Infrastructure? If this is done, not only will we be able to create over 200, 000 (two hundred thousand) direct jobs in the energy and infrastructure sector, we’ll also be able to liberate over 2,000,000 (two million) indirect jobs from Agribusiness, manufacturing and allied industries, as a result of acquired energy and infrastructure efficiencies. This does not include the tax income and foreign direct investments that will flow therefrom.

3. EMPOWERMENT - Agriculture contributes about 21% of Nigeria's GDP but it is largely done at subsistence level with no empowerment for rural and small-holder farmer, whose manual efforts are greeted with very low yield-per-hectare, hence the high-level of rural-urban drift; and tied to this is the high level of destitution and crime in our urban centres. So rather than worry about giving a five thousand naira monthly stipend to the vulnerable, the focus should be on how we can empower small-holder farmers, implement a value chain approach to the development of our Agriculture while moving the dynamics of the Agriculture sector from Farm-gate to factory-gate, leveraging access to credit, fertilizers, all year round irrigation, extension services and the building of Agro-Allied Industries in identified Agric-Belts. Furthermore, beyond Agriculture, there are over 12 Million registered SME’s in Nigeria, with less than half of these operational due to a lack of access to credit and other economic infrastructure such as electricity. So rather than invest 3 trillion naira on a preventive giving scheme, why not set-up a Development Finance framework to empower over a million MSME’s? If one million MSME’s are empowered and are able to create at least 2 new jobs each, that is another 2 million jobs added to the economy with productivity gains added, representing a boost to our Gross Domestic Products.

SO WHY INSIST ON THE 5 THOUSAND NAIRA STIPEND?

It’s a promise, if implemented, may derail this government from achieving anything worthwhile, rather than hyper-inflation, which may, in fact render the naira totally useless. We have seen the result of bogus schemes such as this. Remember the the Robert Mugabe's programme which returned land to poor uneducated black farmers who did not have the capacity to maximise the potentials of the land. This populist policy threw the Zimbabwean Economy into the deep recession, which the Country is battling till date. Let's not start a wild scheme in Nigeria. ‪#‎LetsFaceFacts‬

Nigeria: The Search for the Right Economic Paradigm

MY CURRENT THOUGHTS ON NIGERIA – WE BADLY NEED TO CHANGE PARADIGM.

Nigeria is drifting and there seems to be a scarcity of wisdom, not just in the corridors of power, but everywhere. We seem to be great at recycling our leaders in an attempt to leverage experience in resolving a current challenge. It happened in 1999 and it repeated itself in 2015. But, the missing link has really not been “experience”, it has all along been “vision”. I reckon that for us to go into the future, “vision” must replace “experience”. In trying to find answers to the current challenge, we must look beyond the immediate. We really need to ask ourselves: “what really do we want Nigeria to be like in 30 – 50 years from now?”

MY CONVERSATION ON ZERO-BASED BUDGETING, THE 2016 BUDGET ERRORS AND THE CURRENT STATE OUR ECONOMY...

At the start of the debate on “Budget Padding” and all the phony figures that were emanating from the proposed 2016 budget, a foreign friend asked me some curious questions: “I thought your new government initially spoke about zero-based budgeting as done in China, I do not think that what was delivered was zero-based budgeting as there would have been no room for these levels of error if only the government had stuck with what it initially pronounced”. I tried to defend the government but my defence was feeble as my friend immediately countered by saying: what zero-based budgeting means is budgeting in which all expenses must be justified for each new period. Zero-based budgeting, therefore, starts from a "zero base" and every proposed expenditure – be it OP-EX or CAPEX - is analyzed for its needs and costs. So where did all the errors come from?” I was dazed. Before I could recover, my friend again asked another interesting question: ‘Did the current government weigh the challenge of falling Oil prices and the huge level rot in the system before aspiring for power?” That question was immediately followed by another one: “Beyond the quest to fight corruption, does the current government have a broad plan for the revival of the economy and the entrenchment of a system that works?” Both sounded like rhetorical questions to me because I could not proffer a clear answer.

SO, WHERE DID WE GO WRONG?

At the start of the current foreign exchange imbroglio, the government allowed the CBN governor a free reign as he experimented with currency controls – banning and unbanning items fit for access to the dollar at the official rate, yet no fiscal policy direction was unveiled to address imbalance within the economy. So, rather than put together a crack team to look at the issues more robustly, government played the ostrich.

WE PLAYED THE OSTRICH - USING MONETARY INTERVENTION TO ADDRESS AN ISSUE WHICH NEEDED A COMBINATION OF FISCAL AND MONETARY MEASURES

The government allowed the CBN Governor a free reign as it experimented with currency controls at a very delicate time, rather than put together a crack team to look at the issues more robustly. We got a downgrade on the JP Morgan Bond Index, it was fine. Foreign Investors started to flee our Bourse – it was fine. We started to lose foreign direct investment flows – it was fine. Government persisted in its ways and now, there is a huge gap between the official rate of the dollar and the black-market rate, with speculators having a field day in the middle – I hope we still do not perceive this as fine? Because, at this rate, if we do not start to do the right things, we might be heading for a recession.

NO DOUBT, PRESIDENT BUHARI MEANS WELL – BUT BEYOND GOOD INTENTIONS, WE NEED A LEADERSHIP THAT CAN LEAD THE WAY OUT OF OBSOLETE PARADIGMS

The problem is not good intentions. The real problem is that we are so used to doing nothing but corruptly courting the income coming from Crude Oil, with no push for a change in paradigm. We have designed all manner of Development / Rolling Plans – from Vision 2010 to NEEDS, to Vision 2020 – but, we have NOT action-ed any.

TRUTH IS, RIGHT ACTIONS ARE BETTER THAN GOOD INTENTIONS.

I still believe in good intentions, but I am longing more for right actions, right now, because Nigeria badly requires a leader that is an innovator and a change-maker, who is endowed, skilled and emotionally engaged. While right actions usually flow from good intentions – good intentions remain the starting point; we must take it further, because, in solving the current challenge, there is a need for revolutionary change and not incremental change.

POST-SCRIPT: MY SUGGESTION

While I accept that there really are no quick fixes for the position we found ourselves following the fall of Crude Oil prices in the global market, but our government did not help matters at all. Truth is, we have no one to blame but ourselves. Our love for everything foreign and our reliance on a wasting asset has led us on this path. Now what is desirable are innovative solutions rather than a hard-line position. Nigeria cannot be an island unto itself. We need the world, just as the world needs us. Devaluing by 20% when our dominant export had lost over 80% of it's value,and meandering on the corridor of a hard-line exchange control, seem to me like playing the Ostrich. What we should have done was to begin to address key fundamentals like interest rates, a possible quantitative easing with rate hikes on letters of credits for imports and subsidies for target sectors like Agriculture and Manufacturing, while reaching out for foreign investment.

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.

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 18^thOrdinary 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

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?

A NATION CANNOT RISE ABOVE THE PERSPECTIVE OF IT'S LEADERS:

 Its time for a new vision. It's time for a different agenda. It's time for a fresh perspective to the problems of Nigeria
CHINA OFFERS US A GOOD EXAMPLE:
China may not be a Democracy sensu stricto, but because the Communist Party of China runs an hierarchical system, it is possible to discern distinct generations of Chinese leadership. There is usually a 10 year cycle before new leaders who have been groomed and prepared for the role are given the mantle of leadership. Over the years, there has been changes in the leadership of China across generations and each generation, in defining its own vision, comes to the table with a distinct extension of the ideology of the Communist party.
THE FOUNDERS GENERATION, DEFINED BY THE IRON RICE BOWL - MAO ZEDONG AND THE ERA OF BIG STATE AND SMALL ECONOMY:
The first generation, from 1949 to 1976, consisted of Mao Zedong as core, along with Zhou Enlai, Liu Shaoqi, Zhu De, Chen Yun, Peng Dehuai, and later Lin Biao. This was the era of the Iron Rice bowl, when the State was everything and directed everything as China was purely Communist and was directed by a stiff State policy which frowned at individualism and capitalism and pursued a communal posture and communist ideology. With the death of Chairman Mao, the weakness of this perspective as seen in the high level of poverty based on low aggregate production because the State guaranteed the iron rice bowl (in literal parlance - job security) to all its citizens regardless of whether they were productive or not, forced a new vision by a new generation.
THE SECOND GENERATION - 1976 - 1992 - THE MOVE FOR A LIBERALIZED ECONOMY
The era began with Hua Guofeng as the successor to Mao, but his position was soon eclipsed by the ascendancy of Deng Xiaoping as the paramount leader, in which position he remained at least until 1992 when he resigned from his leadership positions. This era saw the implementation of structural reforms aimed at raising China's economic fortunes. It saw the move for the control of population growth, labour reforms and the move for a better management of economic resources. This generation saw the smashing of Chairman Mao's Iron Rice Bowl and the move towards a liberal economy.
FROM THE THIRD TO THE FIFTH GENERATION: OPENING CHINA TO THE WORLD AND TAKING CHINA TO THE WORLD
From 1992, when the third generation took the reins of power, we have seen China open up to the world by joining the World Trade Organisation, hosting the Olympics and getting involved with Africa towards driving its industrial growth agenda by aligning with resource rich Countries in Africa in exchange for infrastructural and technical support. The third to fifth generation have asserted China's presence on the world stage not only as an alternate power but also a key economic bloc.
WHILE ALL THESE WAS GOING ON IN CHINA, NIGERIA HAS REMAINED STUCK WITH ITS SECOND GENERATION OF LEADERS
Nigeria has been stuck with the second generation of leaders who took over from the founding Fathers who have just been recycling themselves in the corridors of power instead of allowing a new generation of leaders to emerge. Little wonder then why Nigeria appears to be stagnating? Its time to change this trend.

BEFORE THE CANDIDATES GET CARRIED AWAY - LET'S FOCUS ON THE REAL ISSUES: WHERE ARE WE ON THE HUMAN CAPITAL DEVELOPMENT INDEX?

I just read Muhammed Buhari's pledge today. It looks to me a right-headed document and a breath of fresh air, but it still did not address succinctly, the most critical issue: How do we raise the standard of living of our people and make development truly count for the ordinary Nigerian? This question is at the heart of "corruption of need" in Nigeria. A smart government will focus on this because it is the route to addressing our development challenge and surmounting the obstacles on our route to exiting Nigeria's resource curse. Nigeria has the largest population in Africa and has an abundance of natural resources. While it focuses its attention on its natural resources, it is losing its human capital. Truth is our human capital is the unique resource which ordinarily should give us an edge. Our large population should be a key source of competitive advantage. Aside from having a large workforce, this resource has the potential of transforming Nigeria into a large emerging market and can also trigger local production which can serve the African region. The combined net effect of these is economic development through an increase in the Gross Domestic Product and social stability. The flip-side of this possibility is currently at play. The opposition needs to come to the table with a Human Capital Development deal which raises our national productivity and develops capacity for tomorrow's economy.

 THE STARTING POINT: HOW WE ARE DOING IN TERMS OF FULFILLING THE MDG's?

 The Millennium Development Goals offers us a good platform for building our Human Capital. There are 8 of them:

 1. Eradicate extreme poverty and hunger

 2. Achieve universal primary education

 3. Promote gender equality and empower women

 4. Reduce child mortality

 5. Improve maternal health

 6. Combat HIV/AIDS, malaria and other diseases

 7. Ensure environmental sustainability

 8. Global partnership for development

 THE INTERVENTION POINT: WHAT IS OUR SCORE CARD ON THE MDG's THUS FAR?

 MDG 1: Eradicate Extreme Poverty

 Poverty Rate: 46%. Access to Clean Water: 49%.

 Nigeria's poverty rate is very high, and when one considers the fact that Nigeria is home to some of the richest people in Africa, the social and economic inequality becomes even more glaring, with the combined income of the top 1 % of the Nigerian Society being more than the combined income of the bottom 50%.

 MDG2: Achieve Universal Primary Education:

 Primary School Enrollment Rate: 65.7%

 This is relatively okay and growing, however, the school enrollment rate of the Girl-Child remains low and is being threatened by Religious insurgency up North.

 MDG 3: Promote Gender Equality

 While the nation's legal framework supporting Gender Equality falls far short of the MDG requirements, the ratio of Female representation in the executive arm of government is actually near target.

 MDG 4: Reduce Child Mortality

 Still very high. With 608 deaths per 100,000 deliveries, Nigeria ranks second only to India in the list of nations with the worst child mortality. The UNICEF Multiple Indicator Cluster Survey (MICS4) report recently conducted indicates that under-five mortality in Nigeria increased from 138 per 1,000 live births in 2007 to 158 per 1,000 live births in 2011.

 MDG 5: Improve Maternal Health

 Still very high but improving. 510 deaths per 100,000 live births in 2013, down from 630 deaths per 100,000 live births in 2010

 MDG's 6: Combat HIV/AIDS, malaria and other diseases:

 HIV Prevalence Rate: 3.1% (Still high and is essentially being spread by Commercial Sex Workers)

 Malaria: According to UNICEF, Malaria is the most significant public health problem in Nigeria. The economic cost of malaria, arising from cost of treatment, loss of productivity and earning due to days lost from illness, is as high as 1.3% of economic growth per annum. The disease is a major cause of maternal mortality and poor child development.

 Tuberculosis: According to WHO Tuberculosis is still a major public health problem in Nigeria, with the country ranking 5th among the 22 high TB burden countries which collectively bear 80% of the global burden of TB. The number of TB cases notified in the country increased from 31,264 in 2002 to 90,307 in 2008.

 MDG 7: Ensure environmental sustainability

 Deforestation Rate: According to FAO, Nigeria has the world's highest deforestation rate of primary forests. Between 2000 and 2005 the country lost 55.7 percent of its primary forests to excessive logging, subsistence agriculture, and the collection of fuelwood.

 Oil Spillage: According to Oil Spill Conference Nigeria 2014, over 600 oil spill incidents are recorded in Nigeria annually

 Gas Flaring: According to World Watch Institute, Russia and Nigeria are the two largest emitters of flare gas in the world. According to World Bank statistics, Nigeria flares about 20 billion cubic meters of gas annually.

 MDG 8: Global partnership for development: Nigeria will need to rev-up Global partnership working with the likes of the UNDP (United Nations Development Programme) in order to be able to meet MDG 1 - 7.

 WE SEEM TO BE FALLING SHORT RATHER THAN RISING IN TERMS OF MEETING THESE GOALS:

 In 2013, the United Nations singled out Nigeria along-sides Sierra Leone and Somalia as Countries that need to do more if the goals of the MDG's are to be realized. I reckon that government needs to do a lot of reality checks rather than continue to chase shadows. We need to focus our priority on poverty reduction and human development, essentially looking at Health and Education. We cannot continue to save-up to go for treatments abroad, while also investing what could have been used to develop the local education system on overseas university enrollments. It’s time to get our priorities right; and I reckon that if our politicians are right-headed, this should be a key campaign topic, rather than such things as rotational Presidency and ethnic balancing. Truth be told, with our wealth and with the strength of the local economy which is put at about 510 Billion Dollars (2013 GDP rebased figures), we are lagging behind the world and we need to do something fast. WE NEED TO KNOW WHO IS PRIORITIZING HUMAN CAPITAL DEVELOPMENT AND WHO IS NOT.

 Bolaji Okusaga is a Lagos based PR Practitioner

EATING AWAY OUR FUTURE - OIL AND THE DILEMMA OF A NATION

According to a Standard Bank study, Nigeria has earned revenues in excess of $1.6 trillion in the last 50 years, but there is so little to show for it in terms of infrastructure or in terms of sovereign investment. Nigeria recently set up a Sovereign Wealth Fund, albeit with a lot of resistance from the Governors Forum, who will rather that the monies in the excess crude account be shared and squandered as we have done in the past fifty years; but even then, that intervention is too little and needless to state that it may be too late as time is running out on the Kleptocracy that Nigeria has been in the last 50 years.

 COMPARING OTHER OIL PRODUCING COUNTRIES SOVEREIGN INVESTMENT TO THEIR GDP:

 Given the need for resource based economies to diversify their income base, a lot of Oil and Commodity led economies started the move from traditional reserve management to investing proceeds from their resources in other investment vehicles such as Stocks and Bonds across the World; and by so doing, diversify their income base while edging against volatility in the resource or commodity market. In doing this, a lot of these economies had reckoned that capital need to be deployed in economies with capacity and markets with growth potential in order to drive maximal output and investment appreciation. Today, a lot of those investments have grown and are providing a cushion for periodic volatility in the resource or commodity market. Saudi Arabia for instance has a Sovereign Investment value worth 98% of it 780 Billion Dollar GDP, while Kuwait has a Sovereign Investment that stands at 150% of its 200.062 Billion Dollar GDP with both Countries also ranking very high in terms of per capita GDP. But on the flip-side, Nigeria's Sovereign Investment stands at 0.3 percent of 2013 GDP of $510, with a current reserve that is less than 40 Billion Dollars.

 CREATION OF BIG GOVERNMENT AND BOGUS BUREAUCRACIES RATHER THAN INVESTING IN HUMAN CAPACITY AND INFRASTRUCTURE

 Now we seem to be in panic mode since Crude Oil began to witness a free fall in the international market because we have failed to appropriate the opportunity provided by the in-flow of over $1.6 Trillion in the last 50 years, to build robust infrastructure which can support growth and create jobs. We have also failed to invest in the future, beyond traditional reserve management, and by so doing, stabilize our economy. Yet we keep feeding a big government created by arbitrary State creation and funding of phony Bureaucracies which are self-serving and not adding value, to the extent that Nigeria has the largest Public Sector in Africa and one of the lowest private sector employment to population ratio in the world. But this large Public Sector has not translated to greater efficiency in th

 e delivery of public service and part of the hindrance to competitiveness and ease of doing business in Nigeria is the corruption and inefficiency of Nigeria's bogus Public Sector.

 WE NEED TO RETHINK OUR ROUTE TO NATIONHOOD

 Rethinking our route to nationhood seem to be the sustainable solution to stemming the kind of profligacy we have seen in the last 50 years. I really do not believe we need 36 States if 2/3 of these States are going to remain takers and not contributors to the National Treasury. We do not need a bogus Bureaucracy which duplicates Civil Service Structures across the 36 States if all we have seen is more corruption than service. What we need no is a system which frees each Federating zone to create wealth from the different resources available within their immediate environment - whether human or natural resources - and share same with the centre rather than having the centre become Lord and Master with parasitic States that do not have any source of revenue beyond the Federation Account. Truth be told, Nigeria will remain a profligate State under the current arrangement.

Bolaji Okusaga is a Lagos based PR Practitioner

HOW DO WE MAKE NIGERIA A SUSTAINABLE ENTERPRISE?

This seems to be the all-important question that no one is proffering an answer to. We have a Constitution that says all monies that accrue to government must go to the Federation Account and must be shared amongst the different tiers of government in agreed ratio with no provision for savings or investments. As if that is not enough, the issue of recurrent to capital expenditure in the annual budget also remains a major bane to development - what with a housing deficit of 17 million, with over 135,000km of road network in the country still remaining un-tarred; with Doctor to patient ratio still very low and hospital facilities nationwide inadequate for a population that is increasing by over 2% each year - the question remains: how do we move forward?

 WITH 72% ALLOCATED TO RECURRENT EXPENDITURE AND 28% TO CAPITAL PROJECTS - LITTLE WONDER WHY NOTHING NEW CAME OUT OF THE 2009 - 2014 OIL BOOM?

 It is common knowledge that our Public Service rather than add value keeps depleting the nations resource base. A lot has been said about Government being the biggest employer of labour, but truth is, what percentage of the 72% budgeted for recurrent expenditure actually goes to salaries and emoluments of public sector workers? Analysts posit that just 40% of the entire 72% voted for recurrent expenditure actually goes for Salaries and Emoluments. The rest is swallowed up by corruption.

 IF I WERE PRESIDENT, I WILL SEND THE ENTIRE PUBLIC SECTOR HOME AND STILL PAY THEIR SALARIES UNTIL I AM ABLE TO DETECT THE HOLE THAT IS SWALLOWING 60% OF THE AMOUNT BUDGETED FOR RECURRENT EXPENDITURE

 This sound illogical, but very plausible, because by sending the entire public sector home while still paying them salaries, you will be able to determine the service that is really essential and also saving about 60% of the amount allocated for recurrent expenditure.

 IF I WERE PRESIDENT - I WILL COMPEL THE GROUPING OF STATES INTO REGIONS SO AS TO HAVE ECONOMICAL VIABLE UNITS AND NOT TAKERS

 What is the use having 36 States with over 60% of the States as takers and not givers? Shouldn't we be moving towards more economical models which enable better resource management and frees the private sector to actually lead growth while government boosts Capital Expenditure and ensures budget performance while reducing corruption?

 UNFORTUNATELY, NON OF THE SO-CALLED PEOPLE ASPIRING TO RUN NIGERIA IN 2015 ARE FOCUSING ON THIS ALL IMPORTANT ISSUE. How do we create a viable nation and prioritize what really matters?

Bolaji Okusaga is a Lagos based PR Practitioner

BRIDGING NIGERIA’S INFRASTRUCTURE DEFICIT - THE SEARCH FOR AN ALTERNATIVE MODEL

The recent study conducted by Mckinsey on Nigeria's Infrastructure requirement threw up the need for the investment of well over 31 Billion Dollars investment annually, well over a 10 year period for Nigeria to bridge her huge infrastructure deficit. Given the huge amount required therefore, it is near impossible to expect government to foot the entire bill, neither will traditional project finance models essentially leveraging medium to long term funds from Banks and Development Finance Institutions do much, given huge of funds required for infrastructure projects and the mirades of needs that DFI's contend with on the African Continent. So projects such as the 2nd Niger-Bridge, the East West Road, Dredging of the River Niger to allow Sea-going Vessels to Dock at in-land Ports, a Standard guage rail line connecting the State capitals and economic centres of Nigeria from North to South, Power Dams, Electricity Transmission Lines, Electricity Distribution Infrastructure and other critical infrastructure are not attended to, affecting the quality of Economic growth, the creation of jobs and the enhancement of the economic well-being and standard of living of Nigerians.

Furthermore given the fact that in government, there are competing needs and limited resources,  the projects needed to jump-start Nigeria's industrial revolution become mere pipe-dreams. So how do we move forward? Where are the risk-takers who will partner with government knowing the risk involved with Community resistance to Tolling and all other forms of payment for access to public infrastructure once concession-ed?  Apart from these, there are also other encumbrances to Public Private Partnerships, which should otherwise have helped unlock the required funding for economically viable public infrastructure projects, chief among such obstacles confronting private participation in public infrastructure provision is funding! A project such as the Lagos Ibadan Expressway will require well over one billion dollars to remodel the road and without a good Financial Model, how will Financial Institutions come together to fund such projects?

DRIVING PPP's THROUGH STRONG REGULATIONS AND BUILDING AN ALTERNATIVE FINANCIAL MODEL FOR INFRASTRUCTURE PROJECTS

Its been said that government cannot be left to go it alone with regards to bridging infrastructure deficit, but we all know the political risks as well as Financial model risks involved in putting together a Public Private Partnership deal? Hence, you find the failure of PPP projects the like of the Lagos Ibadan Expressway, the Lagos Local Airport and lately the Lekki Link Bridge. But we cannot allow that to frustrate the delivery of economic infrastructure which have potential to create jobs as well as leapfrog growth and development. So we need to think through a proper financial model and a strong regulatory platform for delivering PPP's - one that ensures that projects time horizons are shortened, project partners reap benefits derivable from such projects, with minimum resistance from users of such economic infrastructure, citizens, local community and politicians.

BRIDGING THE FUNDING GAP - HOW CAN PENSION FUNDS HELP?

With the Nigerian Pension reforms, we suddenly have a situation where we have trillions of naira sitting with Pension Custodians which are deployed to all manner of investment which do not add much value. For a while, the CBN under its Financial System Strategy -  FSS2020 - has been trying to help unlock Pension Funds for infrastructure Financing with very little success thus far. I reckon that government needs to throw its weight behind this initiative as it will have multiplier effects in the sense that once we are able to develop critical economic infrastructure such as Roads, Bridges, Rail as well as Power and Energy Infrastructure. it will automatically reduce the cost of doing business, create more jobs, lead to output gains with consequent impact on our Gross Domestic Product.

THINKING OF AN ALTERNATIVE INFRASTRUCTURE FUNDING MODEL - ONE THAT OFFERS A WIN-WIN PROPOSITION FOR GOVERNMENT AND ITS PRIVATE SECTOR PARTNERS

I reckon also that in terms of gains accrual to Pension Custodians and Administrators, Infrastructure Financing will have very positive impact as it will help value addition and risk diversification. Also from the Infrastructure Project Owners and Off-takers, the deployment of patient capital will lessen the burden of having an investment-mismatch and limit defaults. My take therefore is that government should throw its political weight behind birthing an alternative funding model for infrastructure projects - one that meets  Nigeria's economic target, makes  us competitive in terms of the ease of doing business and delivers quality growth which creates jobs and enhances the living standards of Nigerians.

BOKO HARAM AND THE ALMAJIRI SYNDROME: WHAT'S THE WAY OUT?

Thank God the Sallah celebrations are over with no major security skirmish in the North or around Nigeria. It seems to me that the State of Emergence declared by President Jonathan is actually working, but at the risk of speaking too soon I reckon we should look at a more sustainable solution to these security challenges rather than imagine that the brute force of Military power can continue to lead the way in the quest at having a safe, peaceful and harmonious society where people can live their lives without fear of losing it to mindless causes and where business can flourish and grow unhindered. Thank God, the Sallah passed without any bombs exploding or without some hoodlums going into a school to shoot at innocent students, however, we must use this period of respite to critically re-examine and reassess the security situation in Nigeria with specific focus on the North.

BEFORE BOKO HARAM, THERE WAS A CULTURAL PRACTICE:

Before the coming of Boko Haram, there exist an archaic practice up North where people willingly firm out their male Children to Religious Clerics to be trained in Arabic and the Doctrines of Islam. Over time, these Clerics took on more Children than they can care for, leading to a situation where the Children are left to go into the streets in search of food and alms. This situation continued over time,creating a mass of uneducated, ill-bred and ill-prepared people who lead a desperate, destitute and despondent life which makes them vulnerable to indoctrination and puts them at the disposal of mischievous Clerics and Politicians alike. A manifestation of  this cultural practice are the incessant religious uprisings in the North starting from the Maitasine Riots to its later day devious and dangerous transmutation - Boko Haram.  Ofcourse, some have blamed the Boko Haram uprising on the Arab spring which suddenly liberated potent energies and weapons that had hitherto been held bound by Dictators like Moamar Ghadaffi, my take has always been that behind every fire, is a fuel which had seemed harmless until there came a flicker of fire romancing the seemingly harmless fuel and giving birth to death and destruction. In the case of Nigeria, there was already an Army, willing and able to start a crisis and suddenly arms came pouring in, and with it, the spirit of death and destruction. Unfortunately, years of irresponsible and careless leadership up North as with everywhere else in Nigeria, had failed to see this coming!

WHAT'S THE SOLUTION?

Although I am not one of President Goodluck Jonathan "cry till your voice becomes hoax" supporters, I none the less acknowledge that the problem was not caused by him and that the solution actually lie far from the ambit of his influence because the problem stems from an archaic cultural practice which has created an army of ill-informed and ignorant mass that are usually willing sparks for religious or political fire. I do not mean to denigrate anyone or lay the blame at anyone's table because indeed inimical and antediluvian cultural practices exist in every culture - from the sacrifice of human beings as penance for communal sins in parts of Yorubaland,  the Osu Caste system in Igboland, to the killing of Twins in Calabar;  cultural practices which bear no place in modern societies had existed in our various communities, but what shows an indication of progress in any society, is the ability to rethink the route that  society must take in order for there to be peace, progress and prosperity under a changing order. This fact become more glaring when one notes the fact that Europe did indeed pass through the dark-ages long before the coming of the Industrial Revolution and America actually fought a war of liberation in 1776 and a war between the Industrial North and Agrarian South before settling to the ideals which today makes them a model for democracy and free-markets. What this points to is that any situation can turn around for good depending on how it is managed.

THE SOLUTION IS NOT IN MILITARY BUT SOCIAL SECURITY

Although, I supported and still support the idea of State of Emergency declared in volatile States in the North by President Goodluck Jonathan, I believe however that Military putsch is not a sustainable solution, rather the solution lie in Social Security:

1. A resolve by Northern Elites, working with government, to rein in the inimical Alamajiri tradition and create a vent for everyone who is born in the North of the Niger to have access to education (inspite of the fact that Boko Haram preaches that education is a sin).

2. The creation of Welfare camps for existing destitute and despondent Almajiri's with soft infrastructure such as Mobile Clinic, Skills Acquisition Centres and Farm Settlements. This is in keeping with the need to positively engage the Mass of the Almajiri's.

3. The creation of a social safety net built around trade and guild systems such as credit and thrift systems which can free up their productive energies and consequently raise SME's in traditional Northern trade and businesses such as Pasturing, Hides and Skin, Tie and Dye and Farming with a possibility of moving from primary production to secondary production as the society settles on a growth and productive part.

4. Decentralisation of Nigeria's Policing system in order to allow for local intelligence and a better understanding of cultural nuances which often lead to unrest.

All of the above may seem simple, but it does demand firm introspection not blame trading, a sense of sincerity, a willingness to concentrate on the big picture rather than chasing shadows and above all, it will require a lot of political will on the part of the Nigerian power elite to achieve.