Wednesday, 25 February 2015

Nigeria’s economic outlook in 2015

By Ayo Teriba, Managing Director, Economic Associates

The year 2015 is likely to be a year of contrasts in which a difficult and uncertain start will most probably give way to a promising end, as renewed post-election economic reform efforts to address fiscal, structural, and financial challenges highlighted by low oil price and weak capital inflows on the eve of election will open up new growth and investment opportunities, thereby brightening the outlook.

Thus, while the twin external shocks on the eve of general elections had imposed short-term challenges and created significant uncertainties about the economic outlook in 2015, they have also beneficially elevated the place of economic and fiscal reforms in the pre-election conversation. A strong consensus for reforms has fortuitously been built among the populace that it makes sense to expect a high pace of reforms after the election. This will brighten the outlook for the second half of 2015 and beyond.



Tuesday, 10 February 2015

For The Undecided Voter: Determining the Lesser Of the Two Evils

by Ugochukwu Onuoha

There are 14 candidates vying for the post of president at Febuary 14th polls. On the surface it seems the electorates are spoilt for choice on who to elect as President, but upon critical analysis - separating the pretenders from the contenders - we are left with only two real options: PDP's incumbent President Goodluck Ebele Jonathan and the APC's candidate Major-General Mohammadu Buhari.



Monday, 2 February 2015

Politics, corruption, oil price top business leaders’ worries in ‘15



INTERGENERATIONAL WEALTH MOBILITY IN ENGLAND, 1858-2012: New evidence based on rare surnames

Source: Summaries of six research reports in this month's issue of the Economic Journal (EJ)

Descendants of the wealthy people of England in 1850 are still wealthy. They also have longer life spans than the average person; they are much more likely to attend Oxford or Cambridge; they still live in more expensive neighbourhoods; and they are more likely to be doctors or lawyers.

The Americans are coming, the Americans are here

For the first time in 22 years, an American Secretary of Commerce visited Nigeria in 2014. The primary aim of the visit was to foster a stronger, more strategic trade and investment relationship. But America’s involvement in Nigeria spans several fruitful decades.

The country has been involved in Nigeria though, the aid it provides, foreign direct investment (FDI) by its privately owned corporations, and military co-operation. And FDI by American corporations has had the biggest impact on the way Nigerians live.


Friday, 28 November 2014

Odi, a decade and half later


While drawing attention to the gross human right abuses that occurred in Odi at the close of the 20th century, OBODO EJIRO x-rays key developments that have taken place in the community a decade and half later. 

As day breaks on this sleepy town, the cool breeze makes it impossible to believe that this was the theatre of two massacres that claimed some 2,495 lives just a decade and half ago. The massacres, along with oil exploration that occur in communities it borders, make this town standout on the Nigerian map.

This is Odi, a town inhabited by some 60,000 people, deep in the rain forest of Nigeria. Located a few kilometres from Yenagoa, the Bayelsa State capital, Odi is the second largest Ijaw town in the state. At the close of the 20th Century, it stood as the clearest symbol of human rights violation in Nigeria.

The weekend of November 19 – 20, 1999, remains indelible on the minds of those who witnessed it in the community. The scares are even more visible.

Now 30, Ereinbaifa Rebecca says “I was 15 when the army came. I was an apprentice learning to make earthenware pottery. “Everyone was under siege from some notorious criminals who had infested our community around August of that year. The leaders in the community even wrote the commissioner of police to help us flush them out,” she says, as she tried to establish her community's innocence.

“When the army eventually came, we thought they would restrict their operations to the trouble makers. But when they began shooting everyone in their path, we all had to run into the swampy forest for safety, I broke my leg in the process.”

She was taken to Yenagoa (through bush paths), by relatives, where she received treatment, but still limps till this day. Rebecca’s partial disability notwithstanding, she is one of those who made it out alive. Her mentor’s husband was not so lucky; he was hit in the head by a soldier’s stray bullet, he died instantly.

Though, at present, the Federal Government is in the process of compensating those who were alive during the crisis; little was done to help them during the Obasanjo and Yar’Adua's eras.

A landmark judgment by Justice Lambi Akanbi, 14 years after the incident (that is, last year, 2013), upheld the illegality of the action of the army in Odi.

In the words of Justice Akanbi, whose court sits in Port Harcourt, “what happened to the people of Odi was is a brazen violation of the fundamental human rights of the victims to movement, life and to own property and live peacefully in their ancestral home.”

He awarded the community N37.6 billion, but the Federal Government’s counsel resisted the judgment. The judgment came after years of suffering and offered a ray of hope to families whose rights had been so violently infringed.

“When the military pulled out of our community, we came back to meet it sacked to the ground,” says Tinowie Sortie, whose grandfather was killed in the attack.

“Only the Anglican Church, the health centre and the First Bank building were standing after the intense shelling. Most of the buildings had been destroyed. Houses which did succumb to shelling were set ablaze.” Most people had to build thatch huts to live in when they returned. Over time, some molded block and slowly began to erect more permanent structures.

“My grandfather's house that was completed with his gratuity was completely razed to the ground,” says Sortie, as he held out the photograph of the building whose roof caved in as a result of the inferno.

“At the end, all we heard from the state government were speeches. There was no assistance from them in the rebuilding effort,” he moaned, as he fought back tears. “My grandfather didn’t kill any policemen or soldier, you know, why did he have to pay so high a price.…”

After the crisis, a petition signed by 12 of the community’s foremost citizens demanded a withdrawal of the troops, emergency assistance for the displaced, payment of reparation and restoration of Odi to its former state.

The state government made cosmetic effort at ameliorating the suffering of the people. It paid enrolment fees for senior school certificate examination, and starting a water project in the community. Otherwise, nothing more concrete was done to restore the community. The Niger Delta Development Commission (NDDC) made some effort to improve roads, but the roads it built have been criticised for their low quality.

“We cannot begin to praise the construction of roads as reparation for the damage done in Odi” says Mr. Godwin Ojo, a research analyst with the Non-Profit Organization, Environmental Rights Action (Friends of the Earth). He was part of a team which assessed the toll of the conflict on life and the environment beginning from December 8, 1999. “Can it be said that Odi has received more attention than other communities, even though it has suffered immensely,” he asks.

“In relative terms” Ojo argues, “whatever has been done in Odi, in terms of road construction, is not different from what has happened in any other community in the Niger-Delta.”

The road to justices

It was not until five months after the attack that anyone had the courage to challenge the action of the Nigerian troops in court. The final verdict was reached late this year, almost 15 years after the tragedy. The court decided that the sum of N37.6billion be paid to the community, based on resistance from the defense counsel, a settlement of N15 billion was agreed.

Currently, the central working committee of Odi community is on the verge of concluding the process of compiling the names of beneficiaries who are entitled to compensation. The exercise, which involves collating names of all those who were residents in 1999, or above 15, will also identify the loss each victims suffered.

“It was like a dream come true” says Sortie, who is now a secondary school teacher in the community. “Even though compensation does not bring back the dead, at least, those whose homes were destroyed can now erect new ones.” The legal consultant who fought the case gets 40 percent of the funds, while the community gets 60 percent.

But, like most people from Odi, Ojo thinks justice has not been done. “We are not satisfied with financial compensation. In addition to money, we need to bring the perpetuators to justice. The innocent should not be made to suffer for the crimes they did not commit,” he says.

Ojo is pained that “at the end of the day, no police investigation was done to determine what actually happened in the community, no soldier was held accountable and government continues to maintain a ghost presence in Odi.”

Prelude to a catastrophe
Understanding the conflict that engulfed Odi is quite knotty. But the crisis itself was a culmination of events that began with the general elections of 1999 (those elections ushered in the current democratic dispensation).

A number of thugs were used to perpetuate the federal and state elections in Bayelsa State. The thugs were not properly settled by their principals at the end of the elections and therefore remained and constituted a nuisance at Yenagoa.

When they were eventually driven out by the police, they settled in small communities across the state, including Odi, where they continued their nefarious activities.

This period coincided with the time a pan-Yoruba group, the OPC, clashed with some Ijaws living in Lagos. It was rumoured in military circles at the time that the thugs at Odi, were preparing to avenge their people who were being assaulted by the OPC in Lagos. Therefore, policemen were sent to Odi with a mandate to make arrests and foil the intended march on Lagos (some of the policemen sent were among those who drove the thugs from Yenagoa earlier in the year).

Unfortunately, the policemen were kidnapped and killed by the thugs. In response, Olusegun Obasanjo, president at the time, ordered the state governor to arrest the perpetrators or face imposition of emergency rule on his state.

He gave the governor an ultimatum to do this, but five days clear of the November 24 ultimatum, Obasanjo lost his patience and invoked his emergency powers. He ordered troops into Odi with a mandate to “protecting lives and property, particularly oil platforms, flow stations, operating rig terminals and pipelines, refineries and power installations….

The troops were ambushed and faced resistance from the thugs as they tried to get into Odi, but in the end they gained access. Then began the shelling, some sources say the military went into Odi with 27 five ton vehicles loaded with troops, 4 armored personnel carriers, 381mm mortal guns, 2 pieces of 105mm Howitzer artillery and conventionally equipped machine guns.

 At the end of the operation, government sources put the casualty figures at 43 (including eight soldiers). But a comprehensive research report by Environmental Rights Action (Friends of the Earth) titled “The Blanket of Silence,” put the death toll at 2,483 civilians (1,460 males and 1,023 females drawn from 109 families).”

According to Ojo, who was part of the team that visited Odi, “we moved among the people, from compound to compound conducting interviews. Families volunteered the names of relatives who were either killed or missing.” The reactions that followed the operation attest to the degree of carnage.

Reactions and counter reactions
On a tour of the community, the Senate president at the time, Chuba Okadigbo, was too shock by what he saw and heard that he could not make a statement. Senator Sulaiman Ajadi, who was in Okadigbo’s entourage, was aghast. “I don't see the reason for hitting an ant with a sledgehammer," he bemoaned,  "even a foreign invasion would not have been more devastating."
Wole Soyinka lamented the heavy high-handedness. “Nothing justified the murder of policemen, and in the same vein there is no justification for the revenge mission.” “Obasanjo,” he said, "had no reason for laying a human habitation to waste... because a crime was committed."

But government officials were not perturbed, Doyin Okupe, Special Adviser on Media and Publicity to the president, TY Danjuma, minister of defense, and in recent times, Femi Fani Kayode, a former aviation minister, all hailed the action of the military pointing to it as the panacea for peace in the region. But clearly, it did not end restiveness in the region.

Some analysts point to the massacre as deliberate and calculated. According to this school of thought, “the agenda was to make an example of Odi and have it stand as a reference point to those from the region who had plans to dare the government on resource control.”

“The graffiti, which the soldiers left on the walls of burnt buildings, left us wondering if all they were really interested in was restoring order,” says Sortie.

With bold inscriptions like “Odi don’t play with fire soldier go burn you o!, Bloody Civilian, Next time there will be no trees left, Who burnt this house? No be me na you, Shame to the Ijaw people, Odi people, no be our fault na una government, Where is Egbesu, Odi people come and leave in your community let us see, Don play with soldier, Bayelsa will be silent,” the invading army left a lasting signature of how brutal their revenge can be.

Will anyone be held responsible?
Though Ojo believes that “true justice will only be served when those who carried out the killings are brought to book,” when asked if this is possible, he simply says, “yes”.

 When he is confronted with the fact that most people who supported the action have either found their way into power or are too powerful, he says “power is transient but truth is constant. The final judgment which was passed on the Odi conundrum does not indict anyone for murder or the use of excessive force.

Beyond Odi
The events that played out in Odi have reoccurred repeatedly in Nigeria since the past 14 years. In 2001, the Nigerian army invaded and killed several hundred men, women and children in Hundreds of residents in Vasae, Anyii Iorja, Ugba, Sankera and Zaki-Biam, communities in Benue State following the abduction and killing of 19 of its men.

Early this year, seven unarmed civilians who were protesting the near fatal shooting of a villager, in Gboko, Benue State, where massacred by soldiers. One of the first victims, a woman, was allegedly shot in the leg first, as she crawled to safety, it is reported that her assailant ran up to her and shot her in the head.

Last week, some protesting students at the University of Jos were allegedly killed by soldiers, a charge the military denies. There seems to be no end to extra-judicial killings in the country and justice does not seem to catch up with perpetuators. This has served as an incentive.

Ojo believes that “to nip the major causes of the conflicts in the bud, communities should be allowed to control major development parameters.” Also, he says “those who have assumed the position of oppressors should be brought to book.” This will serve as disincentive to military bravado that is not guided by rules of engagement.”

Thursday, 9 October 2014

Nigeria’s retail: Major successes, minor challenges


by Obodo Ejiro

 

Based on data compiled by GFK, a global market research consultancy with office in Lagos, 239,292 units of audio home theater systems were sold between January and June 2014 in Nigeria. This figure supersedes the 180,391 units sold within the same period last year.

 

In the same vein, 44% more flat panel TV sets and 30% more smart phones were sold in the first six months of this year, than within the same period last year.  

 

This trend in increased consumption plays out across several product lines and has given the country the status of Africa’s retail Mecca. There is evidence that more consumables, including toiletries, packaged food, and personal care products are sold in Nigeria, than anywhere else on the continent and the projections remain robust. 

The current state of the retail market and projections of its growth are responsible for the optimism of global retailers who have pitched their tents in the country.

 

Among other things, the average amount devoted to consumption plays a major role in elevating Nigeria to the status of a retail powerhouse. According to data provided by the National Bureau of Statistics (NBS), the country’s over 28.9 million households expended circa N15.67 trillion on food in 2009/10 alone. By 2012, food worth N2.3 trillion was imported; apart from other consumables used by thousands of households.

 

There is therefore research evidence that points to the fact that Nigeria has capacity to support more malls across its major cities. A Rand Merchant Bank report released two weeks ago pointed to Nigeria, Egypt and Ethiopia as countries that offer “some of the best opportunities for retailers looking to invest in Africa.”

 

Underscoring the place of Nigeria on the continent, the report states that “with about 173 million people, Nigeria is Africa’s most populous nation and has the continent’s biggest economy.” Also, McKinsey & Co. said in a July report that “the West African nation [Nigeria] could be one of the world’s top 20 economies by 2030 with a consumer base exceeding the current populations of France and Germany.”

 

But it takes more than a cursory view to identify where the opportunities really are. For instance, in 2008, Mr. Samuel Ejeh, fresh from business school in the United States, ventured into retail.  He established Grocery Bazaar in Akesan, a large sleepy neighbourhood near the main campus of Lagos State University.

 

Today, Grocery Bazaar is one of the most successful start-ups in local retail. “At the beginning I planned on starting the business at Ilupeju, which is a more developed part of the city of Lagos, but the rent was just too high, my research pointed to Akesan as an equally exciting opportunity, and it worked”.

 

In its first month, the 650 square-meter store made about N15 million in revenues. Currently, another branch has been opened, not too far from the first, while Mr. Ejeh plans to expand operations to a third branch as soon as possible.

 

But not only indigenous retailers are taking advantage of what Nigeria offers. Shoprite, the South African retailers, has perhaps the most aggressive expansion footprint among foreign retailers. It has already set up shop in the key cities of Kwara, Ibadan, Kano, Lagos etc. It currently operates 11 mega stores, and plans to have outlets in all major cities in the near future. Shopite plans to open another outlet in Warri later this year or early 2015.

 

Some foreign retailers specialises on specific products. An example is Cash ‘N’ Carry which is a major player in the electronics section of the market. Cash ‘N’ Carry plans to extend operations to Apapa, Festac, Lekki, Ajah, Abuja, Port Harcourt, Kano, Owerri, and Delta State. But these are not the only major players.

 

Equally important are outlets like Best Choice which currently has 260 small outlets, Addide with 23 outlets, Park ‘n’ Shop with 8 outlets and the Everyday Supermarkets with 6. But these are just a few of the many thriving retailers, which all have ambitious expansion plans.

 

Also equally growing is the ecommerce trend, which is fashionable among the young and the middle class, such brands as Jumia and Konga have make a reputation for themselves delivering services across Nigeria.

 

The most successful outlets in Nigeria are those that have identified their niche markets and set up shop. In which case, Nigeria has over 10 cities which have population figures in excess of one million people. The opportunity areas are those that have high population densities as well as individuals who have high purchasing power.

 

The first tier cities of Lagos, Abuja, Port Harcourt, Ibadan, Kano, Warri, Benin, Illorin and Onitsha are such. They are composed of a rising middle class whose lifestyle favours western values. And with improvement in Nigeria’s economic fortunes, projections for sustained consumption are ubiquitous.

 

Retail and the macroeconomic environment

 

Apart from militancy in Nigeria’s north-east, Nigeria’s stable political and macroeconomic environment in the past decade has deepened retail. Stability (and to an extent, democracy) has meant that investors are more confident about Nigeria.

 

The economy has grown consistently, sometimes surpassing projections. Real GDP growth rate was 6.21% in Q1 2014, higher than 4.45% in the corresponding period of 2013. In the past decade growth almost averaged 6.8% annually. The economy has also fared well across some other parameters.

 

While similar economies on the continent have exhibited negative vagaries in key macroeconomic indicators, Nigeria’s case has been different: in part because of the stance the country’s central bank has maintained on exchange rate and inflation.

 

A report by Renaissance Capital, a global investment bank, states that, “since 2009, the Naira has depreciated by 9% against the dollar while the Kenyan shilling fell 17%, South Africa’s Rand fell 45%  while the Ghanaian Cedi lost 166%.”

 

On the inflation score, inflation in the country fell from 14.3%, in January 2010, to 8.5% in August 2014 but the opposite was the case for most of the country’s peers in Africa. In Ghana, inflation climbed from 10% in January 2010 to 15.9% in August 2014, in Kenya it leaped from 4.5% in January 2010, to 8.36% in August 2014. South Africa’s inflation numbers have also headed north in recent times.

 

The challenges

 

Given the development and opportunities in the sector, it still faces a number of important challenges that have prevented it from attaining its potential.

 

Some of the challenges emanate from government policy while others are imposed by market mechanisms. On the government front, retailers face challenges from double taxation, poor clearing practices and unnecessary delays at the ports, security challenges at shopping centers and poor property right laws.

On the other hand, there is a dearth in key employees that are trained to manage retail floor, therefore retailers often have to train staff from the scratch. But perhaps the biggest challenge is the high cost of mortgage for retail business.

Over the past ten years, since more investment has flowed into retail in the country and more players have joined the fray, there have been efforts to solve many of the problems which ail retail.

Expectedly, government related challenges have been more difficult to tackle because of stringent bureaucratic processes. In reality, most thriving retailers have worked round these problems and recorded tremendous success in spite.

According to a report released by BusinessDay’s Research and Intelligence Unit (BRIU), “in the next decade, it is expected that the retail industry in Nigeria will further expand.” Already, the data corroborates this assertion, but those who will succeed in the market are those who are resilient and quick at recognizing the opportunity.