Delivering value through strategic partnerships

RECENTLY the Nigerian Export-Import Bank, NEXIM Bank, embarked on a deliberate programme of building partnerships designed to deliver value to its stakeholders and target public as the Nigeria’s sole Government Trade Policy Bank.   This development has been applauded by both players and watchers in the Nigerian SMEs, especially those operating in the manufacturing, agro-processing, solid minerals and services sectors.

The world today has gone past the era of the lone-star performer onto the era of coalition building and strategic partnerships. Today, both open and crowd sourcing are becoming major drivers of global commerce; meaning that business networks are increasingly becoming more cross border and more virtual in nature.

It is against this background that stakeholders have described the strong collaboration and interfaces among the NEXIM Bank and such institutions as the Nigerian Export Promotion Council, NEPC, the National Directorate of Employment and Crown Agents Nigerian Ltd as the way forward.

The MD of NEXIM Bank’s, Mr. Roberts Orya and the Executive Director of NEPC, Mr. Olusegun Awolowo, have over the period established a strong working strategic partnership – sharing ideas, valuable contacts, etc. These have resulted in beneficial synergies that have linked Nigerian exporters in the non-oil sector with buyers of same abroad further creating jobs and boosting forex revenue for the country.

This initiative indeed, is a major step in the effort towards the diversification of the economy from the dependency on crude oil for exchange earnings. It is also a clear evidence that the crucial nature of their respective mandates is not lost on them.

NEXIM Bank’s recent Corporate Transformation initiative has indeed improved its operations and positioned it as a world class institution that can hold its own among its peers in other fast growing economies, especially among the MINT Nations of Mexico, Indonesia, Nigeria and Turkey.

The plan of the NEPC to increase the level of non-oil exports by at least 30 per cent in the next four years cannot be fully realised without a dynamic credit institution that will supply the needed financing as well as moderate the shocks that are usually attendant upon the vicissitudes of the export market. This partnership is sure to shore up market confidence and improve the level of trade flows and revenue earnings.

It is remarkable that in 2013 the annual earnings from informal trade was $12 billion (N1.9 trillion), a figure which is higher than the contribution from the formal trade sub-sector, which was valued at $3 billion (N477 billion) within the same period. NEXIM Bank and NEPC are concerned that most of the transactions that yielded this revenue did not go through the banking channel and were not adequately captured for statistical and ‘market indicator’ purposes. There is, therefore, cause for optimism that the continued collaboration by both institutions would help leverage their huge potentials.

Experts agree that both agencies are now better positioned also to boost Nigeria’s chances of exploring other avenues of trade promotion, especially the African Growth and Opportunities Acts, AGOA, designed to provide a leeway for selected African products to access the US market without the encumbrance of trade tariffs.

From the time of his appointment as the MD NEXIM Bank in 2009, it is remarkable that Mr Orya has since led a strategic transformation of the otherwise moribund institution and returned to a path of sustained profitability by refocusing its objectives to key sectors- manufacturing, agro-processing, solid minerals, and services, known as MASS Agenda.

Industry watchers are particularly optimistic that the NEXIM Bank-facilitated Sea-Link Project, designed to build regional maritime networks to connect West and Central African ports with a fleet of 3,000 to 5,000-tonne ships, is one of those longed for initiatives that will boost trade within the West and Central African sub-regions. It is also anticipated that it will boost Nigeria’strade and revenue benefits beyond the shores of ECOWAS where our products and services already hold sway.

Another equally strategic move is the Bank’s partnership with the National Directorate of Employment, NDE. This is designed to build capacity beyond its Corporate Transformation Initiative. Under the arrangement, both agencies are cooperating to train and empower a new crop of entrepreneurs who will become acquainted with SMEs and export of goods and services early in life.

After the training, successful participants are given loans upon fulfilling some basic criteria such as registrations with the Corporate Affairs Commission, CAC and the NEPC as well as the provision of minimal guarantees, among tohers.

Without a clear and deliberate effort of this nature, the gains the country is making in transformation of the economy would ultimately prove unsustainable. It is all too well known that Nigeria’s educational curriculum is not where it should be in regard to training employable graduates. Young folks leave schools only to discover that skills and experiences they have acquired do not effectively equip them for engagement or work in most of the sectors and industries. Opportunities, such as this, being provided by the NEXIM Bank and the NDE will re-skill the beneficiaries, bridge the skill gaps and provide opportunities for fresh graduates to build capacities in the given areas.

Another significant evidence of its passion for progress and growth is NEXIM Bank’s partnership agreement with Crown Agents, an international development agency that specialises in strengthening operations of various corporate organisations to position them appropriately to deliver on their mandate.

Through this arrangement NEXIM has strengthened its internal capacity and is re-engineering its service delivery architecture for greater effectiveness. Crown Agents is particularly renowned in providing  consultancy  and  training  in trade and growth,  public private partnerships,  public financial management,  governance, etc. Partnerships of this nature would greatly assist to reinforce NEXIM’s human and technical capacities towards greater efficiency and productivity.

The relentless drive and strategic leadership focus to transform NEXIM Bank into a world class export credit agency has shown that Mr. Orya is on course to take the financial institution even to greater heights.

For Nigeria to fully exercise its position as the largest economy in Africa, this is the next necessary step that must be taken. This will also afford NEXIM Bank the opportunity to consolidate on the gains of its strategic transformation.

Mr. Orya observed, and rightly so, that without a sound and technically competent workforce, there is no way NEXIM Bank would be able to remain on track towards becoming the lead export development bank in Africa. Mr. Jagger and his team re-emphasised the commitment of Crown Agents to helping governments to reduce poverty, improve health and increase prosperity for sustainable development.

Indeed, as government’s sole trade policy bank and export credit agency, NEXIM Bank is at a vantage position to generate the critical mass and synergy with relevant institutions to harness the huge opportunities available for economic prosperity in Nigeria’s non-oil trade space.

Such agencies include the Nigerian Export Promotion Council, NEPC; Nigerian Shippers Council, NPC; Small and Medium Enterprises Development Agency of Nigeria, SMEDAN; Chambers of Commerce, Industry, Mines and Agriculture and Manufacturers Association of Nigeria, MAN, among others.

The relentless drive and strategic leadership focus to transform NEXIM Bank into a world class export credit agency has shown that Mr. Orya is on course to take the financial institution even to greater heights. What is now left is for NEXIM to be strengthened and given the necessary fillip to aggressively begin to offer buyer’s credit facility as an essential product to its customers. This is in line with international best practice and would provide an avenue to Nigerian exporters to overcome issues of cash flow consequences or the risks of extending long-term credit by helping an overseas buyer to secure a long-term financing with a lender.Normally, with this arrangement,a Nigerian exporter would be paid as if he has a cash contract, whilst the overseas buyer has time to pay on the contract through the financing secured from the lender, which would be backed by NEXIM Bank’s guarantee.

For Nigeria to fully exercise its position as the largest economy in Africa, this is the next necessary step that must be taken. This will also afford NEXIM Bank the opportunity to consolidate on the gains of its strategic transformation.

 

Mr.  Nduka  Nwaede, a public affairs commentator, wrote from Lagos.

NIGERIAN STOCK MARKET -22/05/2015–EQUITIES MARKET SUMMARY

NSE-STOCKS SCREEN: 22/05/2015

ASI	34,272.09
DEALS	3,259.00
VOLUME	202,045,012.00
VALUE	2,063,599,837.79
CAP	11,644,301,964,599.77

 

 Top Traders

Company (By Volume)	Volume	Value
MANSARD	35,451,663	102,854,888.32
ACCESS	26,121,583	164,481,452.11
FBNH	21,064,908	194,589,181.46
NEM	15,675,333	14,188,094.64
GUARANTY	11,234,368	327,002,616.33

 

All Share Index: 34,272.09   - 0.54% May 22nd 2015

DPR wants stakeholders to invest on small refineries

Abuja – The Department of Petroleum Resources (DPR) on Thursday urged stakeholders in the oil and gas sector to invest on small size refineries to enhance national refining capacity.

 The DPR Deputy Director, Engineering and Standard, Mr Alfred Ohiani, gave the advice at a sensitisation Roadshow on Modular Refinery Initiative in Nigeria in Abuja.

According to him, modular refinery is mini or small size refineries that are able to handle or have refining capacity between 10,000 and 30,000 barrels per day.

 He said it had a small footprint and the relatively low technology involvement makes it easy and inexpensive to operate.

“Nigeria has a total refining capacity of 445,000 barrels per day that is why it imports petroleum product to meet users’ demand,’’ he said.

Ohiani, who said Nigeria needed a total refining capacity of two million barrels per day, said Dangote Group of companies was building a modern refinery that would have a total refining capacity of 500,000 barrels.

 He said the modular refinery initiative was to encourage the investors to build small size refineries in every part of the country, to meet national refining capacity of two million barrels per day.

The DPR deputy director said it was imperative for investors to site modular refineries where crude oil could be easily transported for processing.

“We are not saying you should site refineries only in Niger Delta, you can site them in the north and source for crude oil in neighbouring countries,’’ he said.

Ohiani, who said the DPR was saddled with the mandate of licensing process and approval, said the licence fee was 50,000 U.S dollar. He said the processes through which the modular refinery could be established was between 18 and 24 months.

Ohiani stressed the need for investors who were interested in modular refinery investment to involve the hosting communities in the business to prevent pipeline vandalism.

Mr Nnamdi Ejiogu, the Managing Director, Stella Resources Energy Ltd., in Warri, who commended the DPR initiative, urged the Federal Government to make Nigeria Content fund accessible to investors.

He said this was because modular refinery was capital intensive. (NAN)

Chinese firm to establish meter assembly plant in Calabar

ABUJA: A Chinese company, Skyrun Meter Solution, said it has completed plans to establish an electricity smart-meter in the Free Trade Zone, FTZ, in Calabar, the Cross River State capital. This development was one of the fruitful results of several Memoranda of Understanding, MoUs, signed between the Ministry of Power and some Chinese companies since the successful privatisation of the power sector by the outgoing administration.

The Permanent Secretary, Ministry of Power, Amb. Godknows Igali, disclosed this while receiving the company’s management team in his office last week.  He expressed delight that establishing the metering company in Nigeria would enhance revenue generation for distribution companies thereby curtailing the incidence of estimated billing as being experienced by the electricity customers in many parts of the country.

Igali urged SkyRun, which has been in Nigeria for 10 years to collaborate with Distributions Companies, Discos, to meet their specifications as the Discos are distributors to the end users. He also directed the company to get appropriate license from the Nigerian Electricity Regulatory Commission, NERC, and the Electricity Management Service for safety standard and specification as dictated by law.

He decried the situation where about 60 per cent of customers are not metered, noting that manufacturing meters in Nigeria will significantly close the metering gap and create employment   opportunities for the teaming youths, while also enabling investors re-coup their investment as planned.  He further revealed that this administration will give more incentives to local manufacturers, so as to encourage them to establish more companies for the production of meters in the country.

He expressed appreciation for the invaluable contribution of the Nigerian Embassy in China for wooing investors into the Nigerian power sector, saying that posterity will acknowledge their patriotism in this regard. He also commended the Nigeria – China Business Council, NCBC, for its efforts in establishing the meter company in Nigeria.  Earlier, the Nigerian Deputy Chief of Mission to China, Amb. Patrick Onadipe, said Skyrun Meter Solution are also manufacturers of water dispensers, fans, fridges and other home appliances.

Onadipe recalled that the company had earlier signed a Memorandum of Understanding, MoU, with the Ministry in January 2015, for the manufacturing of electricity smart meters in the country, adding that the visit to the Ministry is therefore to build on the gains already recorded in their relationship.  He said the plant would be commissioned in the last quarter of 2015 and that the company will collaborate with the Enugu Electricity Distribution Company, as a test-run for the planned pilot study.

He also revealed that the company employed more than 500 indigenous workers on its site in Calabar, and is currently manufacturing a single- phase and three-phase smart meters, and would boost the revenue base of distribution companies in Nigeria

By Chris Ochayi

Nigeria, Indonesia, Mexico to displace UK, France out of top 10 largest economies

Ngozi Okonjo-Iweala

Emerging economies of Nigeria, Indonesia and Mexico could push the UK and France out of the top ten economies of the world by 2050 provided they are able to build their institutions to global standards, diversify their economies and sustain growth friendly policies. This is one of the key findings of the global report from PricewaterhouseCoopers’ (PwC) economists titled ‘‘The World in 2050:

Okonjo-Iweala Will the shift in global economic power continue?’’ This presents long-term projections of potential GDP growth up to 2050 for 32 of the largest economies in the world, covering 84 per cent of total global GDP. According to the report, the current global economic power shift away from the established advanced economies in North America, Western Europe and Japan will continue over the next 35 years, despite a projected slowdown in Chinese growth after around 2020.

The world economy is projected to grow at an average of just over 3 per cent per annum from 2014-50, doubling in size by 2037 and nearly tripling by 2050. But there’s likely to be a slowdown in global growth after 2020, as the rate of expansion in China and some other major emerging economies moderates to a more sustainable long-term rate, and as working age population growth slows in many large economies.

Nigeria, Vietnam and the Philippines are notable risers in the global GDP rankings in the long term, reflecting relatively high projected average growth rates of around 4.5-5.5 per cent per annum over the period to 2050.

According to Mr Andrew S. Nevin, PwC Nigeria’s Chief Economist and co-author of the report, “Over the past decade, Nigeria has boasted superior economic growth and, with the right reforms and investments, Nigeria could become one of the world’s leading economies by 2030, with further progress by 2050.

Nigeria’s potential advantages for future growth include a large consumer market, a strategic geographic location, and a young and highly entrepreneurial population’’. He continued, ‘‘however, at the same time, we are all aware of the significant headwinds (adverse trends) created by the rapid drop in the oil price, putting pressure on the fiscal and monetary systems, as well as reducing economic growth in the short term.

 To achieve its long-term economic potential, Nigeria will need to manage the oil price decline effectively at all levels of government and create a sustainable platform for diversification into the sectors that we know will drive the economy in the future – including power, agriculture, manufacturing, telecoms, hospitality and real estate’’.

Nevin concludes, “according to our long term projections, Nigeria could sustain average growth of around 5-6 per cent per annum in the long run, following projected growth of around 6-7 per cent in the rest of this decade, assuming broadly growth-friendly policies are pursued. While foreign investment has in absolute terms long been focused on the oil sector, portfolios are becoming increasingly diversified, moving towards the power, agriculture and mining areas of the economy that have demonstrated a comparative advantage in emerging markets vis-à-vis the West’’.

Recent experience has however underlined that relatively rapid growth is not guaranteed for emerging economies, as indicated by recent problems in Russia and Brazil. It requires sustained and effective investment in infrastructure and improving political, economic, legal and social institutions.

Overdependence on natural resources, according to the analyst, could impede long-term growth in countries such as Nigeria, Russia, and Saudi Arabia unless they can diversify their economies over time. Nevin further concludes that ‘‘while our analysis confirms that emerging markets have huge potential, they can also be an institutional minefield – both managers and investors need to tread carefully.

Overall, Nigeria continues to be an attractive place to invest not because it is an oil producer, but because of the immense size of its domestic market and the extraordinary commercial energy of its people, which remains largely untapped.”

Beyond Nigeria, the PwC Report projects that China will be the largest economy by 2030 on any measure. However, it also expects its growth rate to slow markedly after around 2020 as its population ages, its high investment rate runs into diminishing marginal returns and it needs to rely more on innovation than copying to boost productivity. Eventual reversion to the global average has been common for past high growth economies such as Japan and South Korea and we expect China to follow suit.”

The report also contains projections based on GDP at market exchange rates, without this relative price adjustment. On that basis, China is projected to overtake the US in around 2028, while India would clearly be the third largest economy in the world in 2050, but still some way behind the US. Other highlights from PwC’s projections are: India has the potential to sustain its higher growth rate for longer and become a $10 trillion economy by around 2020 in purchasing power (PPP) terms, or around 2035 at market exchange rates.

But this relies on India making sustained progress on infrastructure investment, institutional reforms and boosting education levels across the whole population. Emerging economies like Indonesia, Brazil and Mexico have the potential to be larger than the UK and France by 2030, with Indonesia possibly rising as high as 4th place in the world rankings by 2050 if it can sustain growth-friendly policies. Malaysia is also projected to grow at around 4% per annum on average in the period to 2050, which is higher than China’s projected average growth rate of around 3.5% per annum over this period, and an impressive performance for what is already a middle income country.

Colombia is also an economy that PwC projects to grow at a relatively healthy long term rate of around 4% per annum over the period to 2050, noticeably faster than its larger Southern American neighbours like Brazil and Argentina. Japanese growth is projected to be the slowest of all 32 countries covered in total terms, driven in part by a steadily declining population; as a result Japan is projected to fall from 4th to 7th place in the global GDP rankings over the period to 2050. European economies tend to slide down the rankings, with growth rates in the major Eurozone economies projected to average only around 1.5-2% per annum to 2050.

Poland is projected to have the highest average growth rate of the large EU economies, and also to outperform Russia in terms of long-run growth. These projections assume, however, that emerging markets will follow broadly growth-friendly policies. In practice, not all may do so and therefore not all of these economies will fulfil the potential indicated by the PwC growth projections, although some could also exceed the projections if they can accelerate their investment rates and institutional reforms.

 By Emeka Anaeto, Economy Editor