The scramble for Nigeria’s power sector

In 2001, Chief Executive Officer (CEO) of Vodacom, Alan Knott-Craig, infamously said-when GSM licences were being auctioned in Nigeria- that he would not bid because he did not like doing business with those who are “smarter than we are” – a veiled reference to the stereotypical view of Nigerians as scammers.

Barely four years later in 2005 Knott-Craig was singing a different tune, when he said in an interview that “losing the investment opportunity in Nigeria was a real disappointment for us as a management team.”

Rival MTN had no such qualms, and today it is Nigeria’s leading operator with 43 million subscribers as at June 2012 and making $2.5 billion in core profit in 2010 and again in 2011.

The lesson learnt (by prospective investors) from Vodacom’s bad judgment of not investing in Nigeria is a reason for the current scramble for a piece of Nigeria’s power sector.

In spite of the difficult operating environment and numerous risks, investors clearly see the upside for gain in Nigeria’s power sector, which has the potential to dwarf the revenues made in the telecommunication sector.

Nigeria is currently the largest telecoms market in Africa.

The country’s four GSM operators MTN, Globacom, Airtel and Etisalat had a combined subscriber base of 90.3 million at the end of 2011.

With Average Revenues per User (ARPU) per month in Nigeria, hovering in the $10 range, it means the four operators had revenues of about $10.8 billion (N1.7 trillion) in 2011.

Telecoms contribution to Nigeria’s Gross Domestic Product (GDP), has increased from a negligible 0.5 percent in 2001 to 3.6 percent by 2009, according to data from the Nigerian Communications Commission(NCC), website.

English: Political map of the 36 States of Nig...

English: Political map of the 36 States of Nigeria (English) Deutsch: politische Karte Nigerias (Englisch) (Photo credit: Wikipedia)

Analysts say the telecoms success has raised hopes for Nigeria’s moribund power sector, if the government manages to successfully privatise it.

“Nigeria has often surprised on the upside, and the success in telecoms is a classic example. People are looking at power in the same way,” said Fola Fagbule, Vice President of Origination and Coverage at Africa Finance Corporation (AFC), a Lagos based investment bank.

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Nigeria-USA Chamber of Commerce Targets US$20bn foreign investments

Mr. Chuck Nnabuife is the Board Chairman Nigeria-USA Chamber of Commerce (NUSSAC). He talked to VANGUARD on how the Chamber has been luring American investors to invest in the country beyond oil and gas sector. Excerpt:

What informed the need for this International Trade and Investment Summit?

The need for the summit is that in the U.S, Nigerians are the most educated immigrants so we have a lot of Nigeria professionals-Doctors, people that works in NASA (National Aeronautics and Space Administration. NASA is a United States government agency that is responsible for science and technology related to air and space). When it comes to investment, Nigeria is still widely undeveloped.

So we decided that it is important to team up with those Nigerian professionals living in the U.S.A with American companies, bring them to Nigeria to develop business opportunities, trade and investment.  In doing that, we train people and we empower them to start their own businesses and then provide goods and services as a tool for development.

What do you want to

use the summit to achieve?

We want to use the summit to bring American investors to come to Nigeria and invest.  They have their own monies and training and a lot of American support systems through the U.S Export –Import bank, overseas products, investment cooperation, U.S. IT, and so many supports system that help  American companies to invest in other countries.

Nigeria has a bilateral relationship with the U.S whereby the U.S government supports investments in Nigeria but a lot of Nigerians don’t know about all these. So, we are looking for American companies to come to Nigeria and invest and although the government can say all they wanted to say, yet people have to connect to each other.  So we want to get Americans to connect  with Nigerians, to come together to trust each other, to break the cultural divide  so that they can do business together thereby,  creating trade and investment.

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The impact of govt intervention funds on economic development

NIGERIA’S quest for economic advancement has not gone beyond altering the structure of production and consumption patterns, diversifying the economic base and reducing dependence on oil, with the aim of putting the economy on a part of sustainable, all-inclusive and non-inflationary growth.

To realise this vision, the Central Bank of Nigeria (CBN) through the Bank of Industry (BoI) established a special intervention funds to transform the development of various sector of the economy.

Among the Federal Government’s intervention funds to the real sector are the N200 billion Small and Medium Enterprises Credit Guarantee Schemes (SMECGS), which was launched in April 2010, the fund was meant to fast-track the development of the manufacturing SME sector of the Nigerian economy by providing guarantee for credit from banks to SMEs and manufacturers.

The  Power and Airline Intervention Fund (PAIF), introduced in September 2010, was to provide the leverage that will motivate and stimulate private sector involvement in the power and aviation sectors as well as fast-track the development to both sectors of the economy.

Also, the N200 billion Restructuring and Refinancing Facility (REF) scheme was introduced to fast-track the development of the manufacturing sector of the Nigerian economy by improving access to credit by manufacturers as well as output, improve the financial position of the Deposit Money Banks (DMBs), generate employment, diversify the revenue bases and increase foreign exchange earnings.

The Commercial Agriculture Credit Guarantee Scheme (CACS) was established in 2009 to finance large ticket projects along the agricultural value chain.

Nigerian Incentive-Based Risk sharing System Agricultural Lending (NIRSAL). This scheme is  to provide farmers with affordable financial products and reduce the risks of such loans to the benefitting farmers. It was launched in 2009.

Good as these initiatives may be, the truth is that a recent survey carried out by Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA) has shown that only six per cent of industrialists in the country has been able to access the various intervention funds.

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World Bank: “Nigeria has most attractive investment environment”

Nigeria has the most attractive environment for investment despite the current infrastructure challenge facing it, Marie Francoise Marie-Nelly, Country Director, World Bank, Nigeria, has said.
Marie-Nelly stated this on the sidelines of the launch of the World Bank’s Investment Climate Assessment (ICA) report in Abuja on Thursday.

She, however, said there was need for the country to improve its business environment in order to maximise the hugely untapped investment opportunities that exist across the country.

Marie-Nelly said, “Nigeria has the most attractive environment for investment because Nigeria is a large market in the continent; it is the second largest economy in the continent. It is a market that any investor cannot ignore with over 160 million people and a gateway to ECOWAS. For me, while we say the country’s current investment climate could be better in terms of providing electricity, access to finance and other things, you should also look at the huge opportunities for investment in Nigeria.

“The basic lesson from the World Bank Assessment Report titled, ‘Nigeria, an Assessment of the Investment Climate in 26 States’, is that there are critical constraints in Nigeria that impede the development of the non-oil sector. Some of the critical issues include electricity, which affects the productivity and competitiveness of enterprises. However, the labour cost in Nigeria is actually lower than most of Nigeria’s competitors such as Brazil and South Africa. So, there is need for Nigeria to address some of the constraints in order to take advantage of the huge investment opportunities that exist in the country.”
English: Political map of the 36 States of Nig...
Corroborating Marie-Nelly’s views at the launch, governor of Anambra State and Vice Chairman, Nigeria’s Governors’ Forum, Peter Obi, noted that foreigners’ perception of Nigeria was at variance with the true situation in the country.
In his keynote address titled, ‘Reforming Nigeria’s Investment Climate’, the Minister of Trade and Investment, Olusegun Aganga, said that Nigeria’s domestic investment grew by 46 percent in 2011.

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Nigeria spends N635b on wheat yearly, says minister of Agriculture

THE Minister of Agriculture, Dr. Akinwumi Adesina, has disclosed that Nigeria spends an average of N635 billion yearly to import wheat into the country.

He, however, hinted that the Federal Government had taken practical steps to halt such wasteful spending by encouraging the use of cassava flour for bread and other pastries.

Adesina spoke yesterday while joining Ekiti State governor, Dr. Kayode Fayemi, to launch the Cassava Bread Initiative in the state. He said that the country must increase its productive capacity in agriculture and rely heavily on “Made in Nigeria products” for the Federal Government to be able to hit its proposed 20 million jobs for Nigerians in 2015.

Adesina disclosed that countries like the United States (U.S.) and Britain were making enormous progress in economic development because they export more of their finished products more than the importation of primary products.

Fayemi promised adequate funding for cassava growers in the state, noting that about 20,000 jobs would be generated under commercial agriculture before 2014, with special bias for the growth of cassava.

According to him, “as we launch this initiative today, Ekiti State has become the first state in the federation to tap into the many economic and nutritional advantages of cassava bread after the recent launch by the Federal Government.”

Fayemi hinted that the government would encourage cassava revolution in the state by funding cassava production to sustain the cassava bread initiative and ignite industrial growth in the state.

The governor hailed President Goodluck Jonathan’s support for agriculture in the state with the construction of 100,000 capacity metric tonnes silos in Ado-Ekiti, the state capital.

The governor urged the Federal Government to expedite action for the commencement of work on the Rice Processing Mill promised the state by the President during his electioneering.

He said: “We believe that consumption of cassava bread is healthy as it reduces to a large extent the injurious content which the white bread poses to certain categories of consumers, particularly those with diabetic-related cases. We have always believed that healthy people make a healthy society. The health of our people is of great concern to us as we consider them the plank upon which a developed state with all the indices of growth is built. The cassava bread that is being launched today will go a long way in this regard.”

The minister branded as arrant nonsense the rumour that cassava bread consumption would increase diabetes among Nigerians, saying it has low glycemic index compared to other brand of breads in circulation.

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Taxpayers to enjoy N.2m relief allowance, says FIRS

Taxpayers  are now entitled to a Consolidated Relief Allowance (CRA) of N200,000, a top official of the Federal Inland Revenue Service (FIRS), has said.

Coordinating Director, Field Operations of FIRS,  Samuel Ogungbesan, who stated this yesterday in Abuja at a workshop organised for Ministries, Departments and Agencies (MDAs) on the amended Personal Income Tax Act (PITA), 2011, said the allowance was a major highlight of some “radical changes’’ introduced in the new PITA.

The Act mandates the President, the Vice President, Governors, their deputies and other political office holders to pay taxes on their allowances with effect from April.

He listed other highlights of the amended PITA to include a penalty of N5 million or imprisonment for three years or both for failure to confirm Tax Clearance Certificate (TCC) from the tax authority that issued same, the introduction of Consolidated Relief Allowance of N200, 000 or 1 per cent of gross salary or whichever is higher plus 20 per cent of gross salary, and that all taxpayers are now mandatorily required to file self-assessment of their income tax returns.

Ogungbesan explained that the new law empowers the Accountant-General of the Federation to deduct at source from budgetary allocation to MDAs the amount of tax that they failed to deduct and remit to the relevant tax body.

“The Personal Income Tax (Amendment) Act, 2011 introduced some radical changes into the administration of PITA, hence the need for this sensitisation exercise, so that all stakeholders will be familiar with these changes, and nobody will be caught on the wrong side of the law,’’ he said.

FIRS’ acting Chairman, Kabir Mashi who declared the workshop opened, said the workshop will provide a unique opportunity for participants to seek clarifications on the grey areas of the amended law. “Feel free to ask questions and make this workshop as interactive as possible so that at the end of the programme, we shall be better informed to discharge our responsibilities under the law,’’ he said.

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How Nigerian Banks Rip off Customers

In a bid to meet revenue projections, some Nigerian banks allegedly fleece their customers by deducting illegal charges and fees from their accounts

As a young graduate of Computer Science, Emmanuel Anaba was filled with ambition and dreams of how to be independent. Left to cater for himself at 19, he hoped for the best and prepared for the worst even as he squats with five of his friends in a room along Ekenna Avenue, Aba, Abia State. Though, after a stint as a mobile phone repairer, the 25-year-old secured a job in a computer-assembling firm in Aba. But elated as he was, Anaba understood early that his future lies solely on the sacrifices he could make at the early stage of his life; thus he chose to avoid some pleasures and save about 70 per cent of his income in one of the first generation banks. Such culture was supposed to guarantee him a self-contained apartment in Aba.

However, the poor orphan has drifted away from his goal, no thanks to his banker. The bank dashed his hope of securing an accommodation last April when it sent a text message to notify him that the sum of N20,000 has been deducted from his savings account for an insurance scheme the financial institution claimed he subscribed to earlier. “I was stunned to receive such alert because I never subscribed to any insurance scheme with any firm. Is it not someone that has money in abundance that would consider subscribing to insurance?” he inquired. Three months after, all efforts to have the illegal deduction reversed have not yielded any success. After several visits to his Aba/Owerri Road branch of the bank, the front desk officer told him, “We are sorry for the inconvenience, they are working on the reversal from our head office in Lagos. Please bear with us; it will soon be rectified.”

Anaba is not alone. Many bank customers across the country complain of illegal deductions by their banks on a regular basis. While some are able to get the illegal deductions reversed after registering their complaints, many others are not so lucky. Akinwole Omole, a depositor with a new generation bank, belongs to the former category as he was lucky to get an illegal deduction from his account reversed within six days. The bank had sent a short message service, SMS, alert notifying him of a N10,000 withdrawal from the automated teller machine, ATM, of another bank in Ikotun, Lagos, which he never made.  According to him, he stormed his Ikeja, Lagos Plaza branch of the bank immediately and reported the illegal deduction to the branch manager who promised the deduction would be reversed within a week. “I intentionally restricted myself from making any withdrawal from the account for about six months because I needed to use the money to meet a particular need later in the year”, he said. Though his account has been credited, Omole is not convinced it was a mistake. “Whoever did that must have noticed that there was no transaction on the account for six months and thought the owner had died,” he said, adding that but for the SMS alert, he would not have known about the deduction.

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