Agric still in shambles as policy makers fail to tackle key problem

The informal sector’s overbearing influence on agricultural output is seen as responsible for Nigeria’s inability to diversity its export base through farm produce.

Budget: States to spend 5% less y-o-y as economic realities bite

The total amount budgeted by 35 states for the 2016 fiscal year is 5% less than what they spent in 2015. The states presented a combined appropriation of N5.77 trillion for 2016, as against the N6.07 trillion appropriation they presented in 2015 (Zamfara State is yet to release its budget,). 

Nigeria’s import, export dichotomy

OBODO EJIRO examines Nigeria’s international merchandise trade mix.

Legacy of Apapa roads

Two features are sure to be noticed on the roads leading in and out of Apapa, Nigeria’s premier port city. First, though both roads are generally in bad shape, the ones leading out of Apapa are far worse. Secondly, there is always traffic on both sides.

The first of the two features is a subtle indication that much more, in terms of volume and value, comes into Nigeria through the two ports in Apapa than goes out of the country through them. (The roads leading out of Apapa are under more pressure and consequently suffer more wear and tear.) 

Business leaders plan expansion drive in 2016

Obodo Ejiro

Findings from a survey conducted by BusinessDay Research and Intelligence Unit (BRIU), the research arm of BusinessDay, indicates that a high number of business leaders plan to invest more in the coming year.

The survey which targeted 7oo local large and medium size business owners/entrepreneurs was designed to fine out their assessment of business performance in 2015; and gauge their business confidence for 2016.

A tale of two sleeping giants

Obodo Ejiro

China and Nigeria are both giants on their different continents: Asia and Africa. Both were regarded as sleeping giants for decades; but while China has woken up and made remarkable progress, Nigeria lags behind.

Though Nigeria has attained the status of biggest economy in Africa, the truth remains that size matters less when there is widespread poverty, inequality, decomposing infrastructure and an economy that stutters small businesses.

A shot at greatness

China’s journey to economic ‘super-power-ship’ is a brilliant tale of long term commitment to development planning, reform, sweat and sacrifice. But there was a time when Nigeria was ahead of China on several economic indicators.

For instance, from 1960 to 1985, Nigeria’s per capita income was consistently higher than that of China. China’s per capita income was just 22% of Nigeria’s in 1980 (Nigeria: $871 versus China: $193) and that was the case for many year. But things have changed dramatically. Last year, Nigeria’s per capita income was 42% of China’s (Nigeria: $3,185 versus China: $ 7,594).

In recent times there have been fears that after three soaring decades of growth, China is on the decline.  However the rate of growth posted by the country in the last three decades has continued to fascinate economists.

China grew its economy by an average of 9.82% in the last 36 years, becoming the second largest economy in the world in 2010. The World Bank famously says China pulled 500 million people out of poverty in the last three decades. Already, it is projected that China’s economy will surpass that of the United States by 2025. But how did China attain this feat?

China’s ascent began in the late 1970s when it finally embraced on market reforms as opposed to pure central planning. This became necessary because in the 1960 and early 1970s, while China's neighbours were industrializing and making serious progress, its citizens could hardly feed or cloth themselves properly.

It was obvious that the country had to head in the direction of its more liberal Asian neighbours (including Japan, the Republic of Korea, Singapore, Taiwan, and Hong Kong). The way to do this was to reform.

Reforms in China did not immediately mean that it dumped communism; however, minor adjustments were made to the country’s development strategy. For China it was an experiment: New ideas were introduced in small localities and if they worked, the whole country adopted them.

Like most modern development successes, China made creative use of short and long term development planning.

The period between 1979 and 1989, which marked the beginning of the reform process, was designated the “period of readjustment.”  During that period, key imbalances in China’s economy were corrected and a foundation was to be laid for a well-planned modernisation drive.

The major goal of the readjustment process was to expand exports rapidly; overcome key deficiencies in transportation, communications, coal, iron, steel, building materials, and electric power; and redress the imbalance between light and heavy industry by increasing the growth rate of light industry and reducing investment in heavy industry.

In 1984, China made a significant move to designate fourteen of its largest coastal cities commercial and industrial centers. The aim was to create productive exchanges between foreign firms with advanced technology and major Chinese economic networks. These centers have since grown to become large export hubs.

Over the period of reform, plans were continuously reviewed where necessary and new projections and goals were set in line with realities. 

In this regard, China differs from Nigeria, where in the last twenty years; most leaders have preoccupied themselves with dismantling and discrediting their predecessors instead of acknowledging the progress that has been made and consolidating on them.

Also, the quagmire in which Nigeria currently wallows can be traced to some of the dislocations caused by military adventurers who took every opportunity to dislodge sitting governments so as to institute their looting campaigns.

On the other hand, China has enjoyed political and policy stability in the past three decades. One has to fathom the size of China in the late 1970s to fully appreciate the task the country accomplished.

Its 969 million people (in 1979) were distributed among 23 provinces (24 with Taiwan), 4 autonomous regions, 4 municipalities plus Hong Kong and Macau; 18 of those provinces had population number of between 90 and 35 millions.

At present, China has more cities of 1 million-plus population than the rest of the world combined. Among China’s stated-owned enterprises there are 500 that employ more than 100,000 people. It has been estimated that China creates 10 million to 15 million new jobs every year!

Nigeria’s untapped potential

A key lesson from the Chinese is that they never deluded themselves with visions of false riches as a nation. They saw themselves as a poor country and rectified the problem.

Nigeria has not done so in the past three decades. Nigeria is a poor country that is sitting on vast potential! It will remain poor if it does not tap into its power points. (Take away the oil sector, which is even shacked by archaic laws, and see how poor a country Nigeria is).

It must be understood that Nigeria’s major advantage lies not in the oil wells but the vast potential inherent in its teeming population, especially, its youth population.

These should be engaged in factories. But the factories will remain elusive if policies that make the Ease of Doing Business easier are not implemented.

Pay-television: Insights from consumers

Obodo Ejiro

There are a number of indicators that underscore the rising profile of television in Nigeria. For instance, last year, 1,115,985 flat panel television sets were sold across the six geopolitical zones. Also, in the first seven months of this year some 547,000 units have been sold already (based on data provided by GFK Nigeria).

What is even more interesting is that most of the television sets sold are of the 24, 32, and 42/43 inches range; confirming that the crop of Nigerians buying them have a preference for larger screens.

These days, the average Nigerian home has at least two television sets. There seems to even be a push to go beyond the second television set in most homes. (The trend is that when a flat panel TV set is acquired, it is placed in the living room. The cathode ray tube TV set which used to be in the living room is then moved to another room within the house.)

In the midst of this expansion in the number of television sets in use, there is evidence that more Nigerians subscribe to pay television services now than five years ago. Also, there are more pay TV service providers operating in the country now than half a decade ago.

HY 2015 TV and Smart phone sales fall short of expectation

Obodo Ejiro

Data released by GFK, a market research company, shows that compared to the first half of 2014, the number of Flat Panel TV sets and Smart phones sold in the corresponding period this year have been less.

By half year 2014, a total of 547,000 Flat Panel TV sets had been sold across Nigeria. In 2015 within the corresponding period only 462,000 were sold. On the other hand, while 3.23 million smartphones were sold in the first half of 2014, 3.41 million were sold this year.

Speaking on the development, the Managing Director of the company Kenneth Doghudje said the Flat Panel TV market in Nigeria is currently experiencing declining sales volumes when compared with the same period last year and growth in smart phone sales was marginal, around 6%.The elections conducted in the 2nd quarter of 2015 was a major determining factor of the market’s performance

Between seven and eight out of every ten Smartphones sold so far had an Android Operating System, this is expected because Android is the most prevalent Operating System, with several manufacturers churning out models while the Blackberry and Windows Phone operating systems are limited to Blackberry handsets and Nokia/Microsoft devices respectively.

“We expect to see more Android operated handsets with large screen sizes to continue to drive the market as these Smartphones meet the yearnings and aspirations of most Smartphone consumers in Nigeria. We are now witnessing more people carrying two Smartphones, compared to one Smartphone and one mobile phone in the recent past” says Doghudje.

On the other hand, in the Flat Panel TV market, sales are predominantly driven by 3 screen sizes – 32, 24 and 42/43. These screen sizes account for over seven out of every ten Flat Panel Televisions sold in the market. The 32 inch category has the highest demand.  Lower prices are thus an important factor in determining effective demand.

“We expect to see the market growth for Smartphone that are at least 4 inches and above continue to grow in the years ahead. Watching videos, browsing the internet and gaming are some of the activities people are increasingly using their phones for, and these require bigger screen real estate,” a statement from GfK indicates.