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What is a recession and is there way out?

Posted on: February 6th, 2017 by The Moderator 3 Comments

The Octagon: Welcome to the Octagon Room. Thank you for accepting our invitation. Let’s begin with some introductions before going into the discussion. Can everyone let us know who they are and share a bit about what they do ?

Gbane: I am Ojogbane Okolo. I live in Liverpool England, and I work in the Banking Industry.

Muyiwa: Hi all,  my name is Muyiwa Oni,  I’m an equity research analyst with standard bank

Seju: Hello everyone, Seju Mike – Financial Analyst & Creative Entrepreneur.

Seun: I am Oluseun Onigbinde, Lead Partner, BudgIT.

Wilson: My name is Wilson Erumebor – Economist. Research & Policy Analyst. I work with Nigerian Economic Summit Group.

Rijo: My name is Rijo Shekari, chartered accountant and financial analyst

Tola: I am Tola Onayemi, I provide technical advisory assistance on industry, trade and investment within the economic team of the Vice President

The Octagon : In september 2016 the National Bureau of Statistics (NBS) reported that the nation was still firmly gripped by recession. It published that in the last Gross Domestic Product (GDP) report for Q3, 2016  Nigeria’s GDP contracted in the negative in third quarter of 2016. In response to this, the Minister of Finance, Mrs. Kemi Adeosun, on Wednesday admitted that Nigeria was in its worst possible time with the GDP but went ahead to say there is a strategic plan that will take us out of the recession and make it as short as possible.

The president in his independence day speech further shared with the general public the challenges saying. “Economies behaviour is cyclical. All countries face ups and downs. Our own recession has been brought about by a critical shortage of foreign exchange. Oil price dropped from an average of hundred USD per barrel over the last decade to an average of forty USD per barrel this year and last… But this is only temporary. Historically about half our dollar export earnings go to importation of petroleum and food products! Nothing was saved for the rainy days during the periods of prosperity. We are now reaping the whirlwinds of corruption, recklessness and impunity.”

In line with earlier claims by the minister of finance, he goes on further to mention that plans are being made to diversify the economy and shift from a dependence on oil and also focus on developing infrastructure.

With seemingly no visible change in sight, the average Nigerian has gotten increasingly panicky and wonders if government can truly handle this challenge.The former CBN Governor Lamido Sanusi in a session today stated the recent moves by Government to salvage the situation was a wrong move. He says that borrowing was bad because Nigeria’s foreign exchange rates lacked credibility and the federal government should embrace private sector investments as a way out of its recession.The monarch said oil revenue cannot bring the country out of its present economic downturn.

What does it truly mean when we say Nigeria is in recession? How much of this problem is oil based? Is the way out of this the solely the responsibility of the government?

Gbane : Well as defined by in your quote from the NBS recession is two consecutive quarters of economic contraction. Now the main metric of economic growth is the GDP which is the measure of the value of all goods and services in country ( Nigerian this case) within a given time frame. From all the news and facts on ground I can say that Nigeria is in recession.

Rijo: Recession has to do with a decline in economic activities, with symptoms ranging from increase in the rate of inflation, businesses closing.

Wilson: A few years ago, the Nigerian economy grew by about 7% per annum and many believed this growth was “jobless growth” and non-inclusive. This year we are experiencing negative growth rates. If at 7%, growth seemed to be “jobless growth”, what happens we experience negative growth? For me, recession means that the life of the average Nigerian has become a bit tougher than it was last year.

Gbane: Wilson, you are absolutely right, and there are grounds for the belief that our 7% growth was  a jobless growth. it is simply because it driven mainly by the price of crude oil. we all know that the oil exploration industry is not labour intensive and as such not a big employer of labour so while the value of a high price of crude oil meant a higher GDP it did not translate to high employment. In answering the 2nd question, I will say that Oil has a lot but not everything to do with it. You see we had low oil prices under Obasanjo but we didn’t have a recession under him…i personally believe that the reason for that was the liberalization of the telecom sector among other steps taken back then. We what we see now as stated by many people is a statist approach to the economic headwinds caused by low crude oil price. We sadly have a president that does not believe in free markets and we have a CBN governor ready to kowtow.

Seju: No I don’t believe deliverance from the recession is the sole responsibility of the government.  The government is just one piece of the collective puzzle. In my opinion recovery is primarily driven by entrepreneurial responses to the change in the availability of capital. People and businesses need to innovate and find more creative ways to manage the now even scarcer resources.

Muyiwa: Oil is clearly a big part of the problem given that it is a key FX contributor. In terms of the role of government ill say it is critical.

Wilson: How much of this problem is oil based? Well, the recent economic crisis has made it clear that the fundamental strength of the economy or the lack of it, hinges on movement of crude oil price. The decline in crude oil price affected government revenues which limited the ability government to meet its financial obligations (including payment of salaries). It triggered an FX crisis, arising from limited dollar inflows, lower external reserves and huge outflows via imports. I do not think crude oil is the problem. It is our over-reliance on crude oil for revenue and FX that is the problem. Secondly, Nigeria has a weak productive sector. The manufacturing sector currently accounts for 9% of GDP and this has to be improved. We currently import of 50% of manufactured and processed goods while non-oil export accounts for less than 20% of export earnings. Nigeria’s low non-oil export capacity and continued dependence on imports was never going to be sustainable for the economy. So if you look at the Kenya economy,  the level of FX reserves and import cover has historical been materially lower than ours  but they have managed to keep the currency relatively stable. The central bank has been able to maintain credibility and keep investors interested in the economy.

Seju: Yes Oil is a major part of the problem. Relying primarily on one major export is ALWAYS a problem in the long run for any countries economic growth. Diversification as a key infusion into Nigeria’s export culture is the ultimate key. For example some of Nigeria’s most successful exports in recent times have originated in our creative spaces – retargeting our resources to building these businesses in these spaces and focusing on increased consumption of home grown goods by improving the infrastructure that allows us produce said goods (thereby also improving the quality of said goods)…this is a possible path to recovery.

Gbane: The way out for me is Government first and foremost realising that a statist approach to economics has always led to ruins. We need people who can influence the president and make him a believer in market economics. (Ok less jargon) – The Govt should simply make being an entrepreneur as easy as possible: A few steps will be to:

  1. stop trying to reduce prices of goods and services by fiat as it is being mooted and done at the moment(we shouldn’t even be having this conversation).
  2. Improve the easy of setting up a business(it takes about 3-10 mins to register a company here in the uk).
  3. We currently have a FX regime that has 5 different exchanges and SLS mentioned this as well. A foreign investor will find it difficult to invest his/her hard earned currency when there is a CBN rate, there is an interbank rate there is parallel market rate and to be fair this has always been the case, it didn’t start with this government. We need one exchange rate that inspire the confidence in all the market players. Now the Naira might suffer a sharp downward pressure but eventually things will stabilize. I also appreciate that it not palatable politically but it has to be done.

Seun: These are my thoughts –

  1. Over-dependence on oil revenues will keep putting us in recession. Our history of boom and bust since 1973 has always been linked to oil. From boom of 1973, oil bust in 1981 & 86, rise in 1991 and so on. We will continue this cycle until our exports are diversified and we fix our revenue challenge linked to inability to take taxes off a huge population (highly poor).
  1. Lack of fiscal buffers: oil price surge has always tricked Nigeria and our leaders fall for it with Udoji bazar, 2010 salary increase.. our ability not to rein on our import volumes during price booms, continually depleted our reserves. We just don’t save.
  1. Lack of focus: immediately, Buhari won, there was a market bounce. It was an expectation but delaying Ministers by six months did not show captive understanding of the emergency. Confidence was eroded. We still don’t have a clear cut stimulus plan.
  1. Interference with CBN: we all knew the path of Emefile to the CBN. A compromise after whistle blowing by Lamido Sanusi. Buhari “command and control” approach accelerated Nigeria’s run into recession. If he was more open in the early days to devaluation, we might not face our current FX woes.
  1. In 2015, Nigeria did not spend on capital projects, shutting off public contracting for one year. Jonathan was caught up in elections and Buhari had wasted six months to shopping for Ministers. In a country where public finance matters, that put critical sectors in recessions.

Tola: I’d answer in series of points. So that some things I intend to point out are clear.

  1. Technically, a recession is two consecutive negative growth trend in a country’s economy
  1. The figures by the NBS confirm we are in a recession
  1. We should pay mind to the latest Q3 2017 NBS statistics that point out that the non oil economy is out of a recession and at 0.3% growth. Solid minerals grew to 5% and agriculture to 7%.
  1. According to Q3 NBS figures, financial sector also grew by 2.85%. Inflation though still high at 18.3% on a year on year basis levelled out on a month on month basis to as low as 1.70% in September. Ratio of investment to GDP also improved rising by 7.6%
  2. There is a major difference between a recession and a cash (or credit crunch). Both are currently going on within the Nigerian economy and people are mixing the effects. A recession is negative growth, a cash crunch is not enough money to meet all operational needs. Now, the oil price means reduced income for government who is a major spender both for employment and even general spending within the economy. So because government isn’t spending as much not as much trickling down is occuring, and everyone says recession but it’s mostly just reduced government spending leading to less money for people who depend on it in the long term

Wilson: Getting out of recession is a collective responsibility, but I strongly believe that the government must play the important role of providing a clear direction for the economy in terms of policies, plans and programs. We must rejig investor’s confidence (local and foreign) on the economy

The Octagon: Based on your comments , What other things affect this asides oil and how free markets assist in solving this.

Tola: How much is this oil based? Well as a major oil revenue earner, oil price decline was the trigger of an even more incipient problem -that of non diversification. However, oil is as much the cause as one can say sugar causes diabetes. In that while type 2 diabetes is mostly hereditary, sugar can lead to weigh gain and increase chances of developing the disease. Oil is Nigeria’s main revenue and when there is no oil capital, and little diversification, a negative growth in the economy is the most natural. Is getting out of a recession mainly the responsibility of the government. Well, No, that’s why the l stated the Q3 NBS stats first, which should the non oil sector was technically not in a recession, mainly because of a joint effort of government and private enterprise.

Gbane: Right, it is the approach of the current govt that has not helped for example when you create a distortion in the Forex market by offering a select few players in the private sector $1=199 while the street value or black market value is twice that amount..you are already creating and uneven playing field to smes that need access to this funds. We all know that smes are the life of any serious economy…in the uk for example we have about 300k smes that hire about 5-20 people..just do the math and you will see what i mean. Also when people are able to make 100% profit by arbitrage they are not going to be incentivized to use the funds for productive purposes.

The Government has to lead the way. The Government has to deliberately put in place polices that will encourage people to produce more. we are not seeing that at the moment, even if the non oil sector is out recession the question is how can it be encouraged to grow.

Tola: Now, both are triggered by the decline in oil prices which reduced government revenue. But because a recession has a bigger global implication, govt tend to invest more in sorting out – hence devoting more resources towards such efforts, and even spending less as it would in its normal course do spending. Now, for the man on the street, the immediate effect He feels is a cash crunch. It’s a cycle of trickle down cash inadequacy (coined term). The contractor doesn’t get a contract, and doesn’t employ the labourer, who doesn’t eat food on site, which means that the food seller doesn’t sell, and doesn’t buy a bag of rice, and means the rice importer has so much rice not sold. So it’s a chain, all everyone knows is it’s hard. The cause here is mainly the cash crunch not really the immediate recessionary effects of negative growth. So both are connected, but the immediate impact felt by a everyday persons is that of a cash crunch.

I totally agree. Govt has a vital role to play but the private sector has an even bigger role.

Wilson: Absolutely. The 2016Q3 GDP data showed that compared to 2016Q2, the economy grew by 9%. This suggest that on a quarterly basis, activities improved significantly. At least, that is what the data shows.

Tola: Now let me be controversial, and say a very unpopular opinion. The truth is most businesses in the private sector are scarce to invest because in the past, we have benefitted from very simplistic business profit systems. Banks do not do any real intermediating for SMEs but focus on guaranteed business. People who focus on doing government contracts rather than real credible mass manufacturing. Just plain easy business with large Return on investments.

I say this because even for foreign investments, this is one of the best times to come in. If you really want to invest in infrastructure or expensive investment, because of the currency issues, you are paying half the price because of FX advantages (for a foreign business). But most of the foreign investments that have come to Nigeria in the past are majorly focused around not long term sustainable growth but quick ROI and exit. That’s why capital flight was so easy as the earliest signs of trouble. We can’t continue as an economy this way. We need deepened investments in real sectors. Agribusinesses, telecoms, mining, manufacturing, ICT. Deepened investment that creates real value and adds back to the economic growth. I strongly think that we need to start to think of nationalism as a core value for our business. Can we move past just plain profit to actually investing in Nigeria’s potential.

Wilson: But you would agree with me that the government (working with private sector) must take the lead and set the direction for the economy. Private sector investments is all about cost, benefits and risks. If the environment makes it risky for businesses to survive, why would people invest? The government should not leave economic planning in the hands of the private sector but the government MUST take the lead, working with the private sector.

Gbane: With all due respect sir as a foreign investor I will not come into a country that has multiple exchange rates. A country where the presidents view and CBN governor’s seem to be almost the same which is control so the sake of it. why should i invest my hard earned money when CBN is going to determine how much the value of currency is?

Tola: Well, that only applies if you are a portfolio investor. But if it’s direct investment in say a factory or a plant – this are usually investment s that take between 5 to 10 years and many times even more. The FX plays to your benefit actually, because you have double the currently strength in Nigeria presently.

Wilson: Look at ease of doing business ranking. Nigeria is not doing well at all. Why can’t we simplify the business processes, make it easy for people to start businesses, register property, reduce tax bottlenecks and so many other reforms?

Tola: I totally agree with you. I am always first to say Government has a great work to do. Communicating better. Predictable policy. Frameworks that work etc. But I’m saying even the measures put in place would crash if no support accompanies it. We had years of an oil boom, and when we all claim Nigeria was the next China. How much of other sector growth happened during that time? Was it commensurate to what other similar economies got?

Rijo: Private sector has a major role to play but the government must create an enabling environment, on devoid of too much and unnecessary uncertainty.

Gbane: Let me just use ICT for example. If not for the outcry on social media Nigerians would have been paying more to access data today. This Government seems to fixated on price pegging. This is dangerous on the long run sir. in Agriculture, Forex ICT in all these sectors you hear Government officials talk about pricing. The NCC has no business determining pricing. it is to regulate quality of service and breach of contracts.

Tola: I agree. And from the statements of the entire government. It is a priority. The president approved the establishment of a presidential enabling business environment council (PEBEC) all focus on the ease of doing business. But let me point out, that the world bank ranking indicators aren’t entirely skewed to reflect every issue a Nigerian SMEs faces. Hence the govt has stated that its  focus on serious business ease. So for instance, even the world bank recognised improvements in the CAC system for registering companies and even generally electronic payment to government as well as reduction in costs, as well as even the collateral registry.

Seju: True but part of the problem with foreign investment is the monies aren’t primarily directed to production. Investors come in with the intention of accessing our markets. They import and we spend and this only exacerbates the FX problem.  Not enough foreign investment is spent on putting in place sustainable production infrastructure. Let’s produce the same goofs they would like us to buy and then levarage the experience learning from them to start creating our own brands that can compete on the international scene. China did this…we can too.

Tola: I couldn’t agree more. Which is why private sector who are usually the counterparts to this transaction types must begin to help play their bit by focusing on such value chain that pays the country in the long term.

Gbane: No sir. In investments price of purchase is everything…why should one pay 50% more due to distortions in the Forex that is avoidable. The fact that is long is the more reason why I wont invest, and thats why like you said earlier all we have in as foreign investors are speculators. But the Government that must lead the way has shown that they can be trusted for long term plan. Let me give you an example: live in England and many large companies and banks(I work with one of them) are angry with the uncertainty over direction of brexit talks.

Tola: Like I said previously, that’s a portfolio investment type scenario. Let me use clear examples to Marshall my point. If you want to build a 100 billion naira factory today in Nigeria, that is an FDI investment. If you are a foreign company, that means that due when you would have spent about 500 million dollars some 18 months back. Today you would need about 208 million dollars. THAT PAYS another foreign investor. So you actually pay less in dollars if you are a foreign direct investor.

Gbane: Look..maybe due to the number of my years of living here I have become a bit of a cynic, but if we want to become like China we are going to have to make things a whole lot simpler for EVERYBODY not just Dangote. If we want to unleash the animal spirit of entrepreneurship in Nigerians SIMPLY make registration easier, Digitize taxation and create a one stop shop for SME Funding. see if we will not grow in leaps and bounds!

(PLEASE CLICK PAGE 2 TO CONTINUE)

The Octagon Session – Nation Building with Joshua Ajitena

Posted on: November 8th, 2016 by The Moderator No Comments

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Our first Octagon session which held on the 10th October 2016 was on Nation Building with Joshua Ajitena.

This 2 hour session which is the first of many consisted of a key note address and a breakout workgroup. Joshua Ajitena, a management consultant and speaker based, with this session passionately spoke on prospects, challenges and solutions. Here are some clips from the event.

Along side Adaora Mbelu Dania and Akinlabi Akinbulumo, Joshua facilitated a conversation amongst the 20 participants as they suggested a roadmap to achieving desired results. The group broke into three groups and focused on thinking through problems and solutions facing 6 sectors. Here are the results of the exercise.

EDUCATION
Challenges:

  1. Disconnect between curriculum and real life issues/challenges
  2. The gap between public and private schools
  3. Outdated curriculum
  4. Poor quality of teaches and lack of availability
  5. Lack of infrastructure
  6. Lack of parent/teacher inter-phasing around quality education

Solutions:

  1. Revised curriculums and inclusion of new fields in schools
  2. Internship should be focused on learning vs attendance
  3. Private schools and public schools mentorship program
  4. Training programs for teachers with certification
  5. Mandatory donations and scholarships by organization

GOVERNMENT
Challenges:

  1. Lack of transparency
  2. Lack of enabling policies for businesses
  3. Inadequate provision of infrastructure
  4. Disconnect between the levels of Government
  5. Disconnect between the leadership and the people

Solutions:

  1. Mandatory interactions between constituencies and mystery shopping
  2. Frequent measurement of public offices and a public declaration of assets and savings
  3. Portal to submit petitions and changes faced by businesses
  4. Training on leadership and policy formulation and governance

RELIGION

Challenges:

  1. Lack of tolerance
  2. Too much messaging focused on making the people lazy
  3. Lack of education and information

Solutions:

  1. Inclusion of mixed studies in early secondary education
  2. Society focused campaigns on the valve of hard work

MEDIA

Challenges:

  1. Accuracy of information
  2. Distribution and dissemination of information
  3. Quality of information
  4. Control of information

Solutions:

  1. Staff training and orientation
  2. A strong regulatory body that checks the media companies
  3. A body overseeing the education curriculum in this profession
  4. Less government control
  5. Passing the Freedom of Information Bill

SECURITY:

Challenges:

  1. Inadequate training/training facilities
  2. Welfare
  3. Education
  4. Abuse of power

Solutions:

  1. Provision of adequate training facilities and trainings
  2. Improved welfare/welfare packages
  3. Proper orientation for security agencies/public
  4. Checks and balances for misconduct

COMMUNITY

Challenges:

  1. Tribalism
  2. Religion
  3. Inadequate town planning

Solutions:

  1. Build up adequate infrastructure
  2. More community service from the public
  3. Re-orientation

ECONOMY
Challenges:

  1. Heavy reliance on importation
  2. Devaluation of naira
  3. Overdependence of oil and specific industries
  4. Issues with economic policy
  5. Wealth distribution

Solutions:

  1. The need for diversification
  2. Encourage SMEs, Local Businesses
  3. Price control
  4. Enforcement of regulatory bodies
  5. Influence economic policies

INFRASTRUCTURE

Challenges:

  1. Absence/lack of maintenance
  2. Under utility of historic buildings
  3. Review and evaluated projects
  4. Insufficient health insurance policies and providence
  5. Technology as a key catalyst

Solutions:

  1. Preservation policies
  2. Sensitization campaign to the public
  3. Independent body to manage review
  4. Health insurance (vast network)
  5. Expanding and maintaining our transport networks.

EQUALITY
Challenges:

  1. Intolerance for religious differences
  2. Tribalism
  3. Gender inequality/gender roles
  4. Class stratification
  5. Sexuality

Solutions:

  1. Education/sensitizing the public
  2. Level playing ground e.g. sports
  3. Influencing legislature

Meet Joshua Ajitena. Also known as Mr. Genero or Mr. Speaker. Poised with a passion for creativity and impacting the minds of his generation. Josh is the mind behind GeneroLiving, i-Rock Seminars, and The Genero Brand.
Joshua as stood on several podiums in the UK to address audiences of various sizes, his message is clear, ‘Life is to be lived curiously, only then can we explore the good things that are hidden with each creative endeavor’.
Joshua has spoken in over 250 schools & colleges, universities, startup networking events, churches, and many other gathering in the UK.
His passion is infectious, his delivery is powerful, one can describe Mr. Genero as a force on stage. With Tact and Witt, he is able to convey a message so complex or simple in the most clear and understanding way.
Josh is highly sort after in the UK, with sold out seminars and workshops, he is set to have a very eventful year ahead. Currently anticipating his acclaimed book ‘100’, set to be released in 2017. There sure is allot to expect and from him. In his words, ‘every opportunity to stand and speak is a
treasured moment, no audience is too big nor to small, it’s all about serving.
Joshua has had his eye and heart set on his motherland, Nigeria, for a while. Now, we hope Lagos is ready for the storm that is Mr. Genero.

Power – A painful, but defining factor for Nigerians Businesses

Posted on: October 3rd, 2016 by The Moderator 2 Comments

Welcome to the Octagon

We appreciate you taking time out to Join this Chat Session which will end in an hour. We have two moderators in the room who will only offer guidance where necessary. Please feel free to openly share your thoughts and experiences.

Let’s begin with some introductions before going into the discussion. Can everyone let us know who they are and share a bit about what they do ? Thank You.

Ade: Good afternoon. My name is Ade Dania. I’m a Director of Plethora Gas and Power ltd. One of the bidders for Ughelli Power station.

Dimeji : Good Afternoon All, My name is Dimeji Adeyinka. I work for Pacific Energy Co Ltd. My company owns Olorunsogo Phase One 336MW and Omotosho Electric Ltd 336MW and currently biding for Omotosho Phase 2 (NIPP) 500MW.

I am the Instrumentation & Control Manager at Olorunsogo Phase I, where I provide technical strategies, processes and services that reduces unexpected downtime, increase manpower efficiency and operation & maintenance cost.

I also volunteer as a lecturer on Gas Turbines and HRSG to NAPTIN trainees with over 200+ students till date.

Dare: I am Dare Aliu, a power Engineer.

Tunji: Tunji Kamson here. I am the Executive Director Sweet Group of Companies  comprising sweet sensation Restaurants, Sweet Farms and Sweet Foods Limited.

Obiora: Hi my name is Obiora Okoye, Project Director at General Electric. and leading the development of a 500MW greenfield IPP in Aba.

The Octagon: The ever increasing demand and meagre supply of energy in Nigeria has been a great challenge to her development. This situation is becoming critical, with increasing population not balanced by an adequate energy development programme. The incessant power generation failure has grossly affected the economy, seriously slowing down development.

Analysts observe that the privatisation of the power sector in Nigeria notwithstanding, the country has yet to provide steady power supply.

They note that steady electricity supply is crucial to industrial development of any country, especially Nigeria that is planning to become one of the best economies in the world by 2020.

Do we think there is any end in sight to the daily blackouts in what should be Africa’s largest economy? Is the current government doing enough to solve this issue? To what extent would steady supply impact mot just small businesses but the Nigerian economy as a whole? What should small businesses in Nigeria do to circumnavigate this challenge?

Ade: In response to your question I would like to give you food for thought. If Nigeria was to start generating 40,000 megawatts tomorrow you may not be aware that the end users would not see up 75% of that? The infrastructure in place to transmit and distribute the power is so dilapidated they cant carry the amount of power Nigeria needs. TCN currently asks the generation companies  at times to limit what they generate as the transmission network cant absorb the load.

Tunji: Steady Power Supply, not surprisingly will positively affect all businesses and the Nigerian economy. Energy Costs constitute a considerably large chunk of most businesses costs especially Retail businesses. Also demand for forex from Generator Importers will reduce with More power supply and this will likely result in less pressure on the Naira.

Obiora: We did an analysis that showed 12.5GW installed, 3.9GW operational, 3.6GW transmitted, 2.9GW billed and 1.9GW collected. So Ade I agree with your analysis most of that additional capacity  is lost. Transmission is often cited as the largest bottleneck but I also think that collections by Discos are very poor – Average default rate is 44%.

Ade: That said even if TCN was to become a reliable conduit of power to the DISCOs you have multiple issues in the power supply value chain. Starting with the fuel source required “Gas”. Then at distribution level you have tariff  issues and collection issues. One is a government issue setting unworkable tariffs. Secondly is that of the people unwilling to pay for power consumed.

Obiora: This is where the liquidity will ultimately come from the support the infrastructure development.

Ade: Obiora, i think the question of collection can be directed to a large consumer of power in this discussion. Tunji, In your various business do you get metered or estimated billing?

Tunji: Its a mix. At some locations we have MD meters. some others, entirely estimated (coded) billing.

Ade: Tunji you’re happy to pay the estimated billing charges?

Tunji: I’m not Happy to Pay estimated billings. As much as I understand from discussion with the distribution companies how current forex rates are affecting their ability to import meters, no business owner wants to receive an estimated bill every month.

Ade:  Tunji your view with regards to estimated billing is far kinder than most people. Most billed in such manner would have used expletives to describe their bills.

Tunji: Oh yes. The estimated bills are ridiculous (insert expletives here).

Ade:  Dimeji can i ask please of your installed capacity what are you actually generating?

Dimeji: Olorunsogo & Omotosho Power Plant phase one has 16 units @ total of 672MW (Iso condition), 626 (op condition). On our best days, We generate 70% of the op condition even with the bottlenecks we can control.

Dimeji: I will contribute from a generations plant point of view.

As at 23rd of sept. We have a total of 83 power generation units in Nigeria with a total installed capacity of about 8017MW with a capability of 7590.5MW but we have only 53 units actually generating 3561.5MW

The bottlenecks hindering full capacity generation are

  1. Grid instability due to dilapidated infrastructure that the govt failed to maintain optimally since 1972
  1. Gas constraints in regards to Quality, volume. This is because the govt failed to do their due diligence during the implementation of thermal power plants. We don’t have enough gas for the thermal plants in Nigeria.
  1. Inherited degraded infrastructure from PHCN. The investors are trying to rehabilitate these units but due to low forex accessibility to purchase capital parts and pay technical partners is a big burden.
  1. Delay in revenue remittance from govt is really affecting the generation investors as most of them took loans to buy and service the plants . Their ROI timeline is being delayed daily. They are forced to use their money to service loans, buy capital parts, pay owner Engr & technical partners salaries.

Dare: To add to Dimeji’s point,

5) we lack adequate technical expertise. We still import most plant high-level technical staff. This is due to the fact that our universities also aren’t any good.

6) Greed and corruption- the amount of monies that have been sunk into these infrastructure could have actually provided us with circa 30,000 MW of generated power and transmission lines that can conduit Circa 40,000MW. But all that money has been diverted since 1999.

7) Lack of knowledge on the part of the government. Every govt that has been sworn in since 1999 only play politics with the issue of power. They never actually allow those who know to handle the affairs autonomously eg the case of Dr Ransome Owan who was politically weeded out though he single handedly started NERC and knew what it took to get us out.

Yes one or two companies accessed a few billions but the impact was never felt because CBN always released the monies when the plans were dead. When you plan a project, it has a period after which it is dead and that’s when CBN usually wants to release funds. Basically if you ask me, I don’t see a way  out in the next decade. And that’s because these NDA folks just took us back another 12years by blowing up the few gas holes we have.

Obiora: Corruption has certainly been a major factor….still is. To what extent is this CBN power intervention fund helping? Has anyone actually benefitted?

Dimeji: I totally agree with Dare. The technical partners ensure that they don’t pass on their knowledge to remain on the market. ManPower training is very important, your staff (Nigerian) are your assets really.

Ade: I disagree. KEPCO have done a fair degree of knowledge transfer at Egbin.

Dare: When you transfer knowledge to 15 people in a country of 160million with over 1m Engineers then you can’t call that fair.

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The Need for more Young People in Politics

Posted on: August 15th, 2016 by The Moderator No Comments

Welcome to The Octagon.

See the profile of our guests in this Octagon room conversation.

The Octagon: We appreciate your taking time out to join this chat session which will end at 4pm. We have two moderators in the room who will only offer guidance where necessary. Please feel free to openly share your thoughts and experiences.

Let’s begin with some introductions before going into the discussion. Can everyone let us know who they are and share a bit about what they do? Thank you.

 

Kingsley: My name is Kingsley Ewetuya and I am a Project Engineer and Interface Manager in what’s left of the Oil Industry.

Ishan: Hi everyone. My name is Ishan. I’m a strategy and business development consultant. I have spent a good part of the last 11yrs working in the political sphere, more specifically in and around the presidency.

Seun: I am Oluseun Onigbinde, Lead Partner, BudgIT

Dare: Hello everyone, I am Dare Aliu, I am a power Engr. Team Lead of power at Honeywell group and EA to the chairman. I am passionate about the possibility of a Nigeria where things actually work . I have narrowed that passion to seeing the power sector work.

Banks: My name is Bamikole Omishore, better known as Banks. Special Assistant on New Media and Advocacy to Senate President. Strategist by volition . Been working with Senator Saraki for 5 years. I like to think of my self more as a serial investor.

Gbenga: I’m Gbenga Olorunpomi. A Digital Marketer and political animal. I currently serve at the pleasure of the Kogi State Governor as his Senior Special Assistant on New Media. I’m an incurable optimist and a lover of innovation and dancing.

Tega: I’m O’tega, a passionate Nigerian citizen who tries to know a bit about everything. I’m currently the Group Head for Corporate Communications at one of Nigeria’s largest homegrown conglomerates, BUA Group.

Mark Amaza: *

 

The Octagon: Thanks for the introduction.

Having been taught that democracy is “government of the people, by the people and for the people”, one of the major challenges facing democracy this century is how to translate citizen demands into responsive and accountable politics.

Young people between the ages of 15 and 25 constitute a fifth of the world’s population and yet decreasing levels of youth participation in elections and shrinking membership in political parties. Surveys have shown that whilst trust of government is low, trust in public services is generally high amongst young people.

Why don’t we have enough young people in Politics? Has Nigerian politics discouraged the inclusion of young people? Is It important to have more young people in government? How can we get more Young people interested in holding political office?

 

Banks: First we have to clearly define what group or who qualifies as young/youth. I honestly think Nigeria has a different definition for youth than the rest of the world.

Tega: By young people do you mean those aged 15 – 25 like you initially pointed out or are we expanding that to include those aged 25 – 35 years (or even 45 like some of our political parties’ youth reps)?

Dare: “While recognizing that member states use different chronologies to define youth, the United Nations defines youth as persons between the ages of 15 and 24 with all UN statistics based on this range, the UN states education as a source for theses statistics. The UN also recognizes that this varies without prejudice to other age groups listed by member states such as 18-30. A useful distinction within the UN itself can be made between teenagers (i.e. those between the ages of 13 and 19) and young adults (those between the ages of 18 and 32).The UN also states they are aware that several definitions exist for youth within UN entities such as Youth Habitat 15-32 and African Youth Charter 15-35.”

Gbenga: Young people will only participate in activities they find interesting, Profitable and appealing. I think the brand of politics and the quality of leadership before 2011 wasn’t exciting or inviting enough to attract the attention of young people. I don’t think we give enough credit to those who dreamt up and actualized Team Ribadu in 2010. That movement was built and sustained by social media. It had representation in every sate of the country and all the participants shared stories and encouraged each other. Many are still in touch today, 6 years after the launch of the movement. The perceived competence and incorruptibility of the man at the centre and the collective anger at the status quo ensured that young professionals gave up their time and resources to support a political cause. True, many had diverse ideologies and wanted different things but we all agreed that corruption had to go and professionalism had to return to leadership. I often imagine if we had allowed that group to grow beyond that man.

Tega: Haha. Gbenga, people must eat.

Gbenga: You’re right. Poverty and helplessness also play a role. So, what we need is a system that quickly empowers and educates the masses in the shortest time.

Seun: Poverty is a key challenge and politicians use it as leverage. This makes our politics more expensive.

Ishan: I agree with Gbenga. The short cut is a mass enlightenment campaign. The more people that are aware and knowledgeable, the more of a chance guys like you will be elected to office.

Kingsley: There are two institutional barriers to entry, that need to be uprooted.

  1. Financial: purchasing even the registration forms is independently unaffordable for most people. Even our President said he had to take a loan. We need campaign finance reform
  2. Political: Two subsets here: We have a policy of indigenization which makes it almost impossible for people to seek office in their state of residency rather than origin. That needs to go.

Also, there is no allowance for independent candidacy. This means that the political future youths are subject to the whims of party powers who simply aren’t ready to let go.

Dare: Kingsley, thanks for highlighting those two points. However I must reiterate that finance is the key factor that prevents the youth from engaging in active politics. The United States which represents the most advanced democracy has done its best limit the effect of finance in elections but still have a long way to go. Until we can reasonably separate entry into the political sphere and deep pockets, the youth will remain at the mercy of the older generation.

Seun: Our brand of politics is too expensive and does not appreciate ideas but slogan. This is why I think young people find it hard to enter politics.

Tega: Putting this issue at the doorstep of finance especially is one way we as young people ‘lie’ to ourselves and exclude us from the political process. Who says you have to be ‘elected’ to actually make your voice heard and impact felt in Nigerian politics – as an insider or otherwise?

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