When it comes to policies and programmes that can potentially impact a vast majority of people’s livelihood and the economy of any nation, data, not sentiments, should drive the conversation and influence decision making.
The recent Central Bank of Nigeria (CBN) decision to restrict forex for the importation of maize has raised concerns and opinions from stakeholders standing for or against the decision. Irrespective of sentiments driving this debate, local farmers, processors, and millers want a deal that works for them – a fair market price for their farm produce and affordable raw material to create finished products from maize.
Maize is one of the most important cereal crops in sub-Saharan Africa (SSA) and a staple food for more than 1.2 billion people in SSA with more than 300 million Africans depending on this crop as the primary food crop. Maize in Nigeria is mainly produced by smallholder farmers. Each farmer cultivates an average of 0.65Ha of maize, which has become indispensable for food security in Nigeria, with much of the maize produced consumed by the commercial sectors. According to a USDA report, 50 per cent of maize is consumed by the animal feed sector, with poultry claiming 98 per cent of Nigeria’s total feed between 2005 and 2010. It is obvious why the CBN ban on maize import stirred up different reactions among stakeholders.
An analysis done by the research team at AFEX of a 15-year price trend of the Food and Agriculture Organisation (FAO) price data for the commodity reveals a three-year cycle of highs and lows. For instance, the prices of farm produce are usually high in year one; motivating farmers to produce more of that same crop in the following year and triggering a supply-demand imbalance leading to a fall in commodity price. When this happens, farmers’ natural response is to shift farming focus to another crop in the next farming season, a decision which then creates further scarcity and hikes in the price of the farm produce. This cycle continues.
Through interventions like the CBN maize aggregation scheme, a double-pronged solution to this imbalance is pursued. Funds and credit provided by the bank allow processors to buy commodities at a market-fair price, and soft loans to farmers create a balance in the supply-demand dynamics. A stable market enables farmers to produce crops that those who need them can afford them.
CBN’s timely decision to stop maize importation will avert an impending maize surplus in the market that could negatively affect the market price for local farmers – discouraging them from farming maize in the next planting season. If this happens, an impending maize deficit will be unavoidable, hence, the need for the hard call made by the regulatory body.
One of CBN’s roles as a policy maker in the agro-sector is to protect the farmers’ economy and livelihood. The regulator has to choose between protecting the livelihood of 20 million farmers or saving the businesses of corporate entities that are likely to make losses in a single quarter of their financial year as a result of the ban. Even though this may seem a difficult decision to make, protecting the livelihood of 20 million smallholder farmers is by far, a more proactive way to stabilise the economy.
As a commodity exchange, we recognise the temporary losses made by some stakeholders. We believe that putting the majority of everyday farmers first is of great importance, hence our support for the CBN intervention. We believe that the CBN ban is for the overall good of the economy and farmers.
The ban on maize has its attendant benefits as it will increase local production, place more money in the pockets of farmers, and create a more stabilised economy. Also, a data-driven approach is the only way to make informed and impactful decisions. As a country, the only way forward is to improve our capacity to obtain data and ensure data and not sentiments influence policies.
GPC Logistics turns 10, appoints new board Chairman
GPC Energy and Logistics, one of the nation’s logistics firms in the country, has revealed the company’s new brand identity. Confirming this in Lagos, the MD/CEO of GPC, Elvis Okonji, said that this move is reflective of the changes in the stature and personality of GPC as a “future forward” brand. Coming on the heels of the company’s 10th anniversary. Industry watchers say this development is strategic. Commencing operations with only 5 units of used Mack trucks and one client (Lafarge), GPC has metamorphosed into a major player in the logistics space operating a fleet of over 700 (brand new) trucks. Parading a team of thoroughbred and passionate professionals, the company leverages big data from market intelligence and historical records in its decision making, strategy formulation, product development, relationship, and employee management, to deliver value-added services to its clients.
As part of its repositioning, GPC Energy and Logistics has also announced the appointment of a new board Chairman, Dr. Mike Ozemhoka Asekome. The other new appointees to the board include: Oba Jimoh Rasak Ishola Famuyiwa, (the Onipapa of Papalanto in Owu Kingdom, Ogun State), Vivian Isioma Okwudike and Uzoma Francis Christopher. Asekome, an Associate Professor of Finance and Banking in the Department of Economics, Banking and Finance at the Benson Idahosa University, Benin City, holds a doctorate degree in business administration (specialising in financial management) and Master’s degree in business administration (MBA) from the University of Benin. He also holds an M.Sc. Economics and a B.Sc. Agricultural Economics from the University of Ibadan.
With over 15 years university teaching experience in the Department of Economics, Banking and Finance in Benson Idahosa University, Benin, he has served as consultant on various assignments sponsored by the World Bank, FAO, IFAD, IITA, FADAMA, RUFIN and Edo State SEEFOR providing training, capacity building and mentorship to SMEs on entrepreneurship projects. He is a banker, agricultural economist.
Airports concession: Contentious issues of FG, aviation unions can’t sidestep
The Federal Government’s plan to concession Nigeria’s major airports have since set it and aviation unions on a tortous war path with the Nigerian Labour Congress (NLC) fully in support of its affiliate.
On Monday, August 31, the unions had protested at all the airports across the country, vowing to shut down operations if the Minister of Aviation, Captain Hadi Sirika, goes on with the concession project. The protest beganshortly after Sirika announced at the reopening of the Akanu Ibiam International Airport runway in Enugu, that the facility had been listed among those to be concessioned.
At the heart of the unions’ grouse is the fear of job losses in National Union of Air Transport Employees (NUATE), Air Transport Services Senior Staff Association (ATSSSAN), Association of Nigeria Aviation Professionals (ANAP) and the Nigeria Union of Pensioners (NUP) which they believe would be inevitable if the concession goes on as planned. They had since accused the Federal Government of not being transparent with the programme said to be shrouded in secrecy.
Unions make case
As at June 30, the unions madebare their grouse in addition to some of the contentious issues they say must be addressed before further discussion on concession would be made.
The unions said: “The Minister of Aviation, Captain Hadi Sirika, on Thursday, June 25, 2020, brandished the Certificate of Compliance purportedly issued him by the Infrastructure Concession Regulatory Commission (ICRC) confirming that had complied with all needed requirements to proceed with the process of concession for the four international airports in Lagos, Abuja, Kano and Port Harcourt. Therefore, the Minister will now proceed to seek the approval of Federal Executive Council (FEC) for his proposed Outline Business Case (OBC) for the project.
“But it is highly regrettable that both the Minister and the ICRC are engaging in a ruse, and are indeed taking Nigerians for a ride. We can say with authority that everything so far about the issue of concession for the four airports have been single handedly decided by the minister himself and the ICRC has not carried out any due diligence on to the concession exercise. If it did, the Commission would have discovered wide gulfs of deception in the exercise.
“For example, while the Project Delivery Team (PDT) – which includes the ICRC – was still discussing the issue of Transaction Adviser (TA), the Minister of Aviation was on air announcing the approval of FEC of a TA and his fees. Both the TA and the fees were apparently decided solely by the Minister. Up till date, the PDT has not been allowed to take a position on the matter, its effort in that direction being frustrated surreptiously.
“Also, at the last meeting of the Project Delivery Team, in late 2019, it was decided that the airports concession issue be degraded to the bottom of the list of aviation priority projects while upgrading the national carrier, aviation leasing company, and the aircraft maintenance and repair organisation for quick delivery. In addition, the ICRC was requested to provide the required components for the OBCs for the upgraded projects which the Commission promised to provide at the next meeting. That next meeting is yet to be called till date. But now, the same ICRC has been said to have issued a Certificate of Compliance (C of C) to the minister for the Outline Business Case for concession of four international airports. So we ask, who is fooling who?
“For the records, the Project Delivery Team comprises about five Federal Ministries, including Aviation and Finance, and other agencies including FAAN and the ICRC itself, as well as two representatives of our Unions. Unfortunately, the minister completely sidestepped the team and has gone ahead with his own programs as determined by himself alone. Our Unions have decided that we shall have to review our membership of the PDT if this type of public deceit and shenanigan continue.
“For now, however, being a component part of the Team, we completely disown any false reports of the Team there might be, upon which the ICRC might have erroneously based the issuance of the said C of C. We avow hereby that the said Certificate is obtained on faulty grounds. Our Unions are vehemently opposed to the selective concession of Nigeria’s four major international airports. Privatisation, of which concession is a form, has turned Nigeria into a huge theatre of the absurd. The Nigerian experience in privatisation leaves a very sour taste in the mouth. Check it out: Ajaokuta Steel Complex, steel rolling mills, NITEL, PHCN, and so many more. All tell tales of squander and plunder, with nothing to recommend that method of business to any Nigerian government.
“The story of the failed privatisation of the then national carrier, the Nigeria Airways which took the airline’s life is still reverberating since 2004. The concession of MMA2 to Bi-Courtney remains the biggest example of how not to concession an airport. All ongoing concessions of economic activities of FAAN have only resulted in losses in revenue to the Authority.
“The decision to concession four out of 22 airports is the height of subterfuge. These four airports are the live wire of Federal Airports Authority of Nigeria (FAAN), and the rest of the airports depend on the four for sustenance. As a matter of fact, without the four, the other airports will die automatically. Therefore, to concession these four airports is to close up FAAN completely. But considering the basis of creating these other airports which is the public interest of opening up the entire country, even nationwide development, and national unity, one would wonder the rationale behind the idea of sacrificing these undeniably noble goals on the altar of a superficial notion of private investment.
“Of serious concern is the fact that the airports concessioning exercise is being directly carried out by the minister, whereas he does not run any airport, nor does the FAAN Act grant him any powers to concession FAAN assets. He has completely usurped the functions of the Management and the Governing Board of the Authority, as such, he has unlawfully arrogated to himself the powers to enter into agreements in the place of FAAN. This is a serious infraction; a travesty and an anomaly.
“The joint Senate and House of Representatives Committee on Aviation of the 8th National Assembly held a public hearing on the matter, and the Committee, based on the weight of several unanswerable questions, resolved to ask Senator Sirika to step down the question of airports concession. But their opinion was ignored by the Minister.”
Unions proffer alternatives to concession
The unions had given alternatives to concession, suggesting that new investors could deal on fresh ventures which includes construction of new runways, terminal buildings to be operated for a specified period of time and compete with the existing airports before handing them over to government.
A second option they suggested is that FAAN can be corporatised whereby the Federal Government shall retain 45 per cent equity share while the remaining 55 per cent is broken down for public acquisition. Another option is the complete autonomy of FAAN without interference from the Ministry.
Aviation ministry defends concession
In response to the unions letter, the Director, Public Affairs, Ministry of Aviation, James Odaudu, posted a lengthy statement on the official Facebook page of the ministry on July 16, saying the ministry does not approve infrastructure concession programme as the role is independently played by the Infrastructure Concession Regulatory Commission (ICRC Establishment Act 2005). It said the ICRC is Nigeria’s regulatory agency responsible for regulating all infrastructure concessions and Public-Private-Partnerships in Nigeria.
“The ICRC has approved and issued an Outline Business Case (OBC) Compliance Certificate for the further development of a concession programme focused on the passenger and cargo terminals in four airports only. These airports are Murtala Muhammed International Airport, Lagos, Nnamdi Azikiwe Airport, Abuja (International and Domestic), Port Harcourt Airport(International and Domestic) and Mallam Aminu Kano Airport (International and Domestic). These assets do not include airside assets such as runways, navigational infrastructure or ground handling.
“ICRC’s rigourous process requires all initiators of concession programmes to procure independent Transaction Advisors(TA) to provide expert advice on the viability of the proposed transactions, which is used to inform the development of an Outline Business Case review by ICRC. The procurement of these TAs is regulated by the Bureau of Public Procurement and guided by the Public Procurement Act 2007.
“This process led to the appointment of a team of reputable internationally recognised advisors that include Infrata, Denton, Proserve and Templars. The certification of the OBC by the ICRC means that the transaction is thus viable and has taken a myriad of factors into consideration. This OBC certificate, with all supporting documents, will then go to the Project Steering Committee(PSC) before the process moves into the public procurement phase which will involve a Request for Expression of Interest (RFQ and then a Request for Proposal (RFP). Throughout this process, all key stakeholders will remain engaged by the Ministry and the relevant agencies under it.
“The misleading press statement put out by some individuals and special interest groups purporting to be acting on behalf of the various associations wrongly ascribes approval powers to the PDT. This is inaccurate and intentionally misleading. The PDT does not have any approval powers or responsibilities. Its function is as an advisory and implementation support group.
“Concessions and public-private-partnerships differ from privatisation programmes. In a concession or PPP, the assets remain the property of the government and so are subject to the regulations and processes already outlined. Private programme, which is not at all what this programe is, are driven by the Bureau of Public Enterprises (BPE) and involve a full or partial sale of equity in the asset, thus a transfer of ownership to private parties,” Odaudu said.
COVID-19: Unlocking new opportunities for Nigerian airlines
It’s 5.30am Wednesday and the early morning bird perched on the apron of the General Aviation Terminal (GAT) of the Murtala Muhammed Airport, Lagos beckons on its passengers to come onboard.
In the months prior to the outbreak of COVID-19, its patience was often tasked by delays caused by long queues of guests wading through the GAT lone scanning machine to access seats allotted to them in its luxurious cabin.
But today, the queues have eased; passenger patronage for the local airline industry appear to have dropped drastically, especially on the not-so-lucrative routes, forcing most investors in the sector to demand that the government create the infrastructure for other business opportunities outside the airlift of passengers, like the resuscitation of the aggro-cargo airports project.
Without doubt, the absence of multiple gates and scanners at the Lagos MMA1 domestic terminal, has more than any other factor, led to flight delays, especially for early morning flights where hundreds of passengers have to squeeze through the single entry scanning point to meet up appointments in Abuja and Port Harcourt. Very often flights scheduled for 6.45am would not depart until 7am as pilots are forced to wait for trapped passengers inside the terminal building.
But this wet Wednesday morning was, however, quiet different. The airport terminal appeared to have slowed down on its once fast pace; less busy, less noisy, but more friendly was the ambience as passengers’ facilitation became faster for airlines and airports staff.
Queues vanishing with money
Settling down on the Boeing 737-500 aircraft emergency seat allocated to him, Alphonsus Isoh, a passenger on the Lagos – Abuja 6.45am Air Peace flight noticed a familiar face. It was a cabin crew he once complained about the notoriety of airlines not keeping to scheduled departure time to. He waits for him to finish the mandatory safety briefing for passengers sitting on the emergency exit and then quipped with a smile.
“We are keeping to time today; I should arrive Abuja on time to honour a 9am appointment.”
Indeed, the resumption of domestic flights in Nigeria has seen a reduction in the number of passengers flying. Where aircraft once had 80-95 per cent passengers onboard, it has dropped to 40 per cent. It is estimated that airlines, airports, regulatory establishments and associated business, could be losing about N200 – N300 million daily due to low passenger traffic following the resumption of flights after the forced shutdown to curb the spread of COVID-19.
“The queue has disappeared; but with our money,” the crew joked in response to Isoh’s question. “But we will be too glad to have it back.”
Resolving immediate challenges
According to Aviation Minister, Hadi Sirika, the government’s target is to grow the sector’s contribution to national GDP from the abysmal 0.6per cent to one per cent.
However, with the absence of a vibrant national carrier following the liquidation of Nigeria Airways, the only hope of the country’s aspiration to improve earnings from the aviation sector is through a deliberate government policy and support to existing private sector driven or flag carriers.
Sadly, these carriers, like Air Peace, Dana Air, Arik Air and Aero Contractors are weighed down by a myriad of problems, among them, high cost of aviation fuel, scarcity of forex for spares and maintenance, as well as multiple taxation to various agencies.
These challenges when added to reduced income due to low passenger traffic means the airlines are no longer running as profitable ventures. President of the National Association of Nigeria Travel Agents (NANTA),Susan Akporiaye, told Daily Sun that the industry was already facing redundancy and that most establishments were laying off workers, no thanks to the fact that the airlines are no longer flying at optimal capacities.
A proof it can be done
In recent weeks, the Federal Government has launched some protectionists policies to support local airlines against foreign carriers who fly into the country, but deny or stifle Nigerian carriers quest to operate into their airports. And the government has been commended for this move.
And there is no doubting the fact that the crisis that attended the COVID19 pandemic, offered at least, one Nigerian carrier, Air Peace Airline, the opportunity to showcase what the local industry can do if given the right government support.
Air Peace indeed put paid to the cheap blackmail of lack of managerial, technical and operational expertise of wholly-owned Nigerian airlines successfully operating in the international market.
Anselm Ukoh, a travel agent who had some of its clients stranded in Nigeria and seeking to depart for China to be united with families lauded the management of the airline for investing in the acquisition of the three Boeing 777 aircraft that boosted the its fleet size with the right equipment and capacity to operate long haul evacuation flights to China, Israel and India during the peak of the pandemic.
He recalled that it was the same aircraft that was deployed to airlift stranded and dehumanised Nigerians suffering xenophobic attacks in South Africa last year. One can only imagine what could have befallen these trapped Nigerians if there was no local airline with the capacity to undertake these long haul flights.
“To the pride of Nigeria, Air Peace rose to the occasion in fulfilment of its designation as a flag carrier. From moving the first batch of medical supplies from Istanbul, Turkey to freighting the second batch of medical supplies and medics from Beijing, China, to evacuating 301 Chinese, the Nigerian carrier showed it had all that is required to operate the 14-15 hours flight on its B777-200 between Lagos – Beijing – Abuja flights. The airline also successfully transported stranded passengers from Nigeria to Israel for the first time and then to India,” Ukoh said.
“Air Peace indeed made good use of the COVID19 challenge to prove what a Nigerian airline can do if given the opportunity. It is instructive to note how airfares on the lucrative Lagos-Abuja-Dubai route crashed since July 2019 following the launch of Air Peace Airlines operations on that route. During the COVID-19 operations, the airline also crashed fares on the London route, something considered impossible. We are also seeing for the first time a Nigerian airline making a firm order for 10 brand new Embraer 195-E2 aircraft valued at $2.1 billion which it plans to deploy to underserved and unserved domestic and regional routes under its no-city-left-behind project. This provides sufficient reason for government to support the local airlines in all aspects to grow and remain profitable. It is not the time to take steps to stifle, strangulate or kill any investment by Nigerians in the sector,” Ukoh added.
The giant strides of Air Peace certainly proves to doubting Thomas’s the capability of Nigerian airlines to weather the turbulent storms of the global aviation industry with quality service delivery to customers if the right support and opportunities are created by the government. Under the post COVID-19 era, more government support would be required to sustain the operations of local airlines within and outside the country.
This is not the time for government and regulatory establishments in Nigeria to take sides with foreign interests against its own airlines.
Unlocking dormant opportunities
Lagos based agro-econonists, Maxwell Etim said with the decline in passenger traffic for domestic and international flights, it was time the government resuscitated the perishable cargo airport project to create new business opportunities that local airlines can tap into.
The perishable or agro-cargo airport project was launched in 2013 as part of efforts to diversify the Nigerian economy, grow national earnings and boost GDP contributions from the aviation and agricultural sectors, but has been confined to the dustbin of history.
The target was for Nigeria to leverage the over N250 billion annual air freight export market out of Africa where the country was recording zero participation policy discourse around the project since after its launch have gradually gone down. But while countries like Kenya, South Africa, Benin, Cote d’Ivoire, Ghana, Senegal, Ethiopia, Tanzania and Egypt are heavily participating in trading in commodities like fruits, fresh fish, vegetables and flowers and earning millions of dollars annually from the trade, Nigeria, which also produces these produce in abundance lacks the requisite infrastructure to compete. So far, Nigeria has watched helplessly as European, Asian and American cargo aircraft continue to freight into country daily huge tonnes of cargo, but fly out empty with no cargo from Nigeria.
It was in a bid to stem this imbalance in trade, that the Federal Government designated 13 cities including Abuja, Akure, Calabar, Ilorin, Jalingo, Jos, Kano, Lagos, Makurdi, Minna, Owerri, Port Harcourt and Uyo as pilot schemes for perishable cargo airports. The airports in these cities which are in close proximity to communities considered as food baskets of Nigeria were to be developed with international standard perishable cargo storage and export facilities to enhance their operations.
Outside Lagos, the government abandoned the perishable cargo projects in the other designated cities that showed strong business prospects like Owerri, Benue, Akure, Uyo, Jos, Jalingo among others. But despite the inherent benefits to Nigeria and its huge farming population, the government of President Muhammadu Buhari has not considered it necessary to speed up the review or redesign of the project.
It is an ugly trend acknowledged by the Director General and CEO of IATA, Mr. Alexandre de Juniac, who at the 2018 Global Media Day held in Geneva, Switzerland called on the Nigeria government to put in place the right infrastructure and tax incentives that can grow the industry and allow local airlines make profits. And the perishable cargo airport is one of such critical infrastructure needed by airline operators in Nigeria’s post COVID-19 aviation industry.
Without doubt, the perishable cargo export industry can be likened to an untapped goldmine given the financial benefits it could offer to investors. Nigeria is richly endowed with lots of fresh goods currently in demand in Europe, which investors in the business can easily export and make money from. Products like pumpkin leaves, fresh ginger and garlic, white and red sweet potatoes, washed bitter leaf, water leaf, plantain, okra are in demand outside Nigeria.
The market has been created by Nigerians in the diaspora who continually yearn for these home grown foods delivered to them fresh and healthy. And in recent years, more Nigerian restaurants have sprung up in various countries across the globe, and Nigerian dishes and cuisines have become much more appreciated by foreigners. And airfreight appears to be the safest means of exporting these perishable goods to these markets. The successful implementation of the perishable cargo project would greatly boost the government economic diversification policy.
Experts have said Nigeria could be raking in an estimated $52 billion annually from the United Kingdom (UK) alone, if the full potential of the perishable cargo export industry is harnessed.
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