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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Lagos State plans N1.7b estate

The Lagos State Government  is  constructing an estate at  Agbowa in Ikosi-Ejirin Local Council Development Area (LCDA) of the state to accommodate evacuees from blighted areas.

There have been severe cases of flooding, which sacked communities along the coastlines and water belt, leading to loss of lives and properties.

As an interim measure, the government evacuated many of the affected residents to temporary sites until it is safe for them to return home.

But the state government seems to have found a solution to the challenge by building a large estate to accommodate those who may be affected in future.

Commissioner for Housing, Mr Bosu Jeje said the estate consists of 70 blocks of one, three and three-bedroom flats with 15 blocks of terrace building.

Flag of Lagos State

Flag of Lagos State (Photo credit: Wikipedia)

He said the government’s initial plan was to build the estate at Ado-Ikosi, but it had to change its mind to go to the present site based on the outcome of a test to ascertain its suitability.

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Investing in street youths, incubating bright ideas

Map of Lagos, Nigeria showing urban areas, lag...

Map of Lagos, Nigeria showing urban areas, lagoon, harbour, port areas (Photo credit: Wikipedia)

 

Generation Enterprise is an all-volunteer group of young community leaders working on four continents to realise one revolutionary vision:  Investing in street youths, incubating bright ideas, transforming communities. In 2009, it launched a pilot project in Lagos, the world’s fastest-growing megacity. Its business training and incubation programme, YouthBank, equipped homeless and unemployed youth to build viable, sustainable businesses that would allow them to leave gangs, prostitution, odd jobs, and criminal activity.

 

Developed by Wharton and Oxford business students, McKinsey Consultants and Nigerian youth leaders, the organisation adapts lean start-up methodology from Silicon Valley to Lagos’ bottom-of-the-pyramid markets. The goal is to foster new high-growth businesses, generate sustainable jobs, and get youth off the streets.

 

More than 80 million of the world’s young people are unemployed. Another 150 million youths are part of the “working poor,” eking out meagre and precarious livelihoods in the informal economy. This figure is the highest of unemployed youth ever measured by the International Labour Organisation (ILO), and represents the breeding ground for a global social crisis.

 

The young social entrepreneurs on Generation Enterprise’s team are fighting to defuse this “ticking time bomb” and help a “lost generation” find its way. They have descended on Lagos, the world’s fastest-growing megacity where population explosion, slum expansion, desperate poverty, but also entrepreneurial drive and a new spirit of civic engagement collide.

 

Shopping in Lagos

Shopping in Lagos (Photo credit: Wikipedia)

 

The GEN drivers came from Washington DC, Atlanta, Berlin, and New York City are here again to to join their Nigerian teammates in Lagos to follow-up on their Alimosho and Agege project started earlier. They are partnering with the Lagos State Ministry of Special Duties and the Wiseup Foundation to open incubators in Alimosho and Agege. The Elumelu Foundation has joined the partnership.

 

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NIGERIAN GOVERNMENT PUMPS N460M FOR CASSAVA VALUE CHAIN PROGRAMME

The Federal Government has committed the sum of N460 million for the implementation of the national cassava value chain programme , aimed at maximizing cassava industrial potentials.

Meanwhile, the Lagos state government has assured graduates of course I and II of its Agricultural Youth Empowerment Scheme, AGRIC-YES, that their empowerment fund would be ready soon for disbursement as its being delay as a result of due process.

On the cassava value chain programme, Minister for Agriculture and Rural Development, Dr. Akinwunmi Adeshina, disclosed the amount at the flag off of cassava value chain programme in Lagos held at Lagos State Agricultural Training Institute, Araga, Epe.

The programme which came under National Agricultural Transformation Agenda, ATA, saw the distribution of 25,000 cassava bundles to benefitting registered crop farmers in the state. About 200 out of 34,000 registered crop farmers received their cassava bundles at ceremony.

The flag-off was the second in the series of the intervention under the Growth Enhancement Support Scheme.  The industrial uses along the value chain include: High Quality Cassava Floue, HQCF, for the replacement of up to 20 percent wheat flour in bread with cassava.

Native and modified starches for industrial uses to replace corn starch imports. Dried chips for support and livestock feed production as well as external demand of cassava for industrial use such as large ethanol production
Sweeteners- High Fructose Cassava Syrup, HFCS: for sugar requirement for soft drink bottlers and juice manufacturers in Nigeria estimated at 200,000 tons of sugar per annum. A replacement of half of this by HFCS from cassava would create a 10,0000 ton demand.

Cassava bread

Cassava bread (Photo credit: IITA Image Library)

Fuel Ethanol, E10,policy in Nigeria; the policy of blending gasoline with 10 percent ethanol that represents a potential 1billion litres per annum market of fuel ethanol and, assuming 50 percent of feedstock comes from cassava, a new raw material requirement of 1.7 million tons of dried chips is required.

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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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‘Nigeria’s agric development potentials extraordinary’

NIGERIA has the capacity to be the agricultural hub of Africa and the continent’s leader in food security, the President of Rockefeller Foundation, Dr Judith Rodin, has said.

Rodin spoke after a session on financing agriculture with the Coordinating Minister for the Economy and Minister of Finance, Dr Ngozi Okonjo-Iweala and the Minister of Finance, Dr Akinwunmi Adesina in Abuja, yesterday.

The Ford Foundation boss stressed that his visit to the country was to explore areas of collaboration between Nigeria and his organization, given the nation’s potentials in agricultural business.

“We are here because we believe that Nigeria can take the lead in agriculture in job creation, production, processing, and diversification of the economy and overall contribution of the economy. The opportunities here are extraordinary. It is possible if the right things are done and we can see evidence they are being done”, she said.

Robin pointed out that the experience of the Rockefeller Foundation in helping to create the Green Revolution in Africa has convinced them that Nigeria has what it takes to take the lead in Africa.

Agriculture

Agriculture (Photo credit: thegreenpages)

The Interim Chair of the Alliance for Green Revolution, Steve Masiyawa also said that Nigeria has the capacity to to address the challenges in agriculture which it faces, emphasising the work being done to improve the country’s agriculture can dramatically improve the economy.

He urged young people to see agriculture as a viable career option because “there is money in agriculture.”

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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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