Business News
Tony Elumelu advises President Buhari on sectors to focus on
UBA’s chairman, Tony Elumelu, has listed sectors that President Muhammadu Buhari needs to focus on during his second term.
United Bank for Africa’s Chairman, Mr Tony Elumelu, has enumerated sectors of the economy that President Muhammadu Buhari needs to focus on during his second term.
Speaking to Sky News on the issue of economic diversification in Nigeria, Elumelu disclosed that the Private sector and the small and medium scale enterprises need government’s support through business-friendly policies and financial aid.
To this end, Mr Elumelu said that one of the best ways government can grow the economy and encourage business development is to fix the power sector. In other words, the power sector is the most important sector the President Buhari should focus on.
“Power is critical. I know that access to electricity and improvement in that sector would help to governance and grow the economy and I believe this government will do that going forward.
“Another sector that is critical and important is the private sector and the small and medium scale enterprises. We know that countries that prioritise their small scale and medium enterprises do very well in creating employment and alleviating poverty.
“So I believe that the government in the second term will continue and even do more in supporting our small and medium scale enterprises through policies and incentives that will encourage these people. We are extremely enterprising, and our people just need more encouragement to do great things.”
On President Buhari not being market-friendly
Recall that following President Buhari’s re-election in February, the stock market was said to have reacted in the negative. President Buhari had defeated the PDP presidential candidate, Atiku Abubakar, who was seen as being more market-friendly. Analysts, therefore, cited the re-election of President Buhari as the reason for the negative reaction of the stock market in Nigeria.
But the UBA Chairman disagreed. Reacting to the development, he said the market was unpredictable even before the election. Therefore, he doesn’t believe the outcome of the election caused the market’s negative reaction.
“The Nigerian stock market has been quite unpredictable. I don’t really think it fell as a result of the election. I believe with the election over now, the country is ready for business. I think things would even get better going forward.”
President Buhari’s close ties with China
Speaking further, Mr Elumelu explained why China and Nigeria’s trade relations have continued to grow amid despite the Asian country’s trade war with the United States of America.
According to him, Nigeria is a land of opportunity for anyone willing to do business or invest in businesses as Nigerians are enterprising, and the Chinese have identified the prospect in the country, even as Nigeria has opened its doors for the Asian tiger.
In recent years, China’s investments in Nigeria have increased, thereby solidifying the trade relations between the Asian and West African countries. And according to Mr Elumelu, more of such investments should be expected under President Buhari during his second term in office.
Note that Nigeria’s close economic ties with China have often been blamed for the US and the United Kingdom’s unwillingness to invest in Nigeria.
“I think nature abhors vacuum. Nigeria is up for business, Nigeria would want to attract investors. If the Chinese see Nigeria as a more hospitable and investment-friendly country, Nigerians are ready. The UK and US should show more interest.”
The motive behind the bank’s London expansion
UBA recently expanded its operations into London, with footprint already established in the United States. For Elumelu, the expansion is logical for an African bank looking to connect its millions of customers to the world.
He said the expansion into London was expected after making their presence in the US, stating that the UBA branch in the UK will support wholesale banking transactions.
“United Bank of Africa operates in twenty African countries, and it is the only African bank that operates and is regulated in the United States of America, and the natural and logical place to birth next is London.
“We are happy today because we’ve launched the United Bank of Africa in the UK to support wholesale banking transactions; there’s so much history that happened between Nigeria and the UK, between Africa and the UK, Africa and Europe, so we want to take advantage of our spread across Africa.
“Over 17 million customers to link them up with the rest of the world through our operation in New York and in London. So, as New York is going to sleep, London is waking up, all to make sure we continue to support our customers across the globe.”
Business News
Why households that engage in subsistence agriculture are poor – Yemi Kale
“We established the poverty line at N137,430 and any individual or family that spends below this on food in a year will be classified below the poverty line.”
Subsistence agriculture alone may never be able to sustain any household in Nigeria. This is according to Nigeria’s Statistician-General and CEO of the National Bureau of Statistics (NBS), Dr Yemi Kale, who spoke during the Rauf Aregbesola annual colloquium earlier today. The event had the theme — Government Unusual: Innovative Economic Solutions to Unlock Mass Prosperity.
Using insights from the 2019 National Living Standards Survey, Dr Kale explained that households that are solely engaged in subsistence agriculture appear to have the highest levels of poverty. This set of families are followed by households with more than twenty members.
“This doesn’t mean agriculture is a bad thing. It simply means the way we do agriculture in Nigeria has to be improved so that it does not become synonymous with poverty or we have to find other sources of income for farmers to supplement their standard of living,” he said.
Speaking further, Dr Kale explained that the living standards survey, which was conducted in collaboration with the World Bank, started in late 2018 and ended in 2019. The survey utilized data from all states in Nigeria except Borno whose data was not considered credible enough given the security situation in the state. Kale said:
“We established the poverty line at N137,430 and any individual or family that spends below this on food in a year will be classified below the poverty line.”
Given this yardstick, the survey established that at least 22.9 million Nigerians are living in poverty, with the bulk of this number coming from the rural areas and states with low indices on education, social welfare initiatives, employment, and income equality.
Formalising the informal sector
The informal sector comprises people who earn enough to keep above the poverty line on a daily basis, but not enough to sustain them in the event of a lockdown, as was seen recently in some states during the April COVID-19 lockdown. This is a problem that can only be solved if the informal sector becomes formalised, Kale said. In other words, formalizing this sector will help more daily wage earners stay above the poverty line. He made reference to the recent lockdown which incapacitated lots of daily wage earners in states such as Lagos.
Nigeria’s poor versus other African countries
Making a comparison, Yale also noted that Nigeria’s poor are poorer than their counterparts in South Africa despite the fact that the nominal size of Nigeria’s economy is much larger.
He attributed this to findings which showed that Nigerians spend three times more on foods and consumables than all other items put together, as against countries like South Africa and Egypt where less is spent on food items.
“Nigerian remains Africa’s largest economy, but per capita income is rather low for a country of this size, and the level of poverty presents a major development challenge” he noted.
Reducing unemployment – the fastest way out
According to Kale, the fastest way out of poverty is to reduce unemployment, as people will naturally have more to spend on their needs when they are employed. To support his point, Kalu cited five Nigerian states with the least poor people in comparison to the other states —Lagos, Delta, Ogun, Osun, and Oyo. Each of these states has fewer unemployment levels compared to the states with higher poverty rates such as Sokoto, Taraba, Jigawa, Ebonyi, and Adamawa states.
Other indicators which show similar trends across the states are education, and ease of doing business. The poverty rates are almost always higher where education is poor.
Increasing local production
Also making a presentation during the colloquium, Dr Joe Abah called for a review of the 1978 land use act which he said is limiting in its provisions. He also stressed that Nigeria needs to improve access to capital, raw materials, lands, and technological innovations so that production capacity can increase significantly.
“All of the richer countries simply produce more, and they produce more things that people want to buy and want to consume. It could be products or services. the higher your production capacity, the richer you are. if you cannot produce, you cannot develop your education or your health sector.”
According to Abah, the cost of governance cannot be reduced without adopting some of the suggestions of the Oronsaye report, and restructuring the system for productivity. He said that “there is also a need to link budget and funding to productivity so that public sectors begin to understand that the more funding they require, the more they are expected to produce as well.”
He also suggested that states should start focusing on their competitive advantage and use same to improve general productivity in their state.
Other panelists at the colloquium include Mallam Nasir El-Rufai, Governor, Kaduna State, Sen. Abubakar Bagudu, Governor, Kebbi State, Mrs. Hajara Adeola, CEO, Lotus Capital Limited, Mr. Bismarck Rewane, CEO, Financial Derivatives Limited, Dr. Joe Abah, Country Director, DAI, Dr. Yemi Cardoso, Chairman, Citibank Nigeria, with Boason Omofaye as the moderator.
You may watch the colloquium by clicking here.
Economy & Politics
Output cut: Nigeria leads in OPEC non-compliance with 50 unsold cargoes of crude
Nigeria and Iraq were reported not to have kept to their commitment to the huge production cut deal that had promised to reduce output by 9.7 million barrels of crude oil per day.
As opinions continue to differ on whether OPEC will extend its current oil output cut beyond June, available information has shown that not all members of the oil cartel complied fully with their agreed quotas for the month of May. This is despite the fact that the oil output by OPEC member countries reached its lowest in almost 20 years.
Available data from oilprice.com showed that OPEC members cut their output by 5.91 million barrels per day from the April level, producing 24.77 million barrels per day. This figure also showed a 4.48 million barrel per day of the agreed output cut, thereby representing a 74% compliance level.
Nigeria and Iraq were reported not to have kept to their commitment to the huge production cut deal that had promised to reduce output by 9.7 million barrels of crude oil per day.
Iraq was able to achieve just 38% compliance of its agreed output cut for the month of May, while Nigeria, which achieved a much lower compliance of the agreed output cut, recorded 19% compliance of what was agreed. Saudi Arabia showed the highest compliance, recording 96% of the agreed output cut.
Some have attributed the noncompliance of some members of OPEC to the agreed output cut, to the contractual obligations and commitment to buyers, given the short timeframe between when the agreement for the output cut was made and its implementation.
Meanwhile oil exports from Angola and Congo remained steady at high prices on Friday, while Nigerian oil fared lower amid huge inventory of unsold cargoes.
Nigeria continues to face some difficulty in the oil market, primarily due to sluggish demand from Europe; it has around 50 unsold cargoes of crude oil yet to be sold for the months of June and July.
Meanwhile, India has become one of the few buyers for the Nigerian oil. Indian oil firms bought about 5-6 million barrels of Nigerian crude oil last week and has bought about 2 million barrels as at Thursday this week.
Business News
President Muhammadu Buhari reshuffles NNPC’s board of directors
Note that the former board included the late Chief of Staff to the President, Abba Kyari as a member. Stakeholders have since expected the President to reconstitute a new board to take over.
President Muhammadu Buhari has approved the reconstitution of the board of the Nigerian National Petroleum Corporation (NNPC) after the expiration of the tenure of the current board.
The newly constituted board members are expected to serve for a tenure of three years, effective immediately. They will take over from the last board, whose 3-year tenure officially ended in 2019. Information about this development is contained in a State House press release that was published on the official twitter handle of the Nigerian Presidency on Saturday morning.
READ MORE: Construction of ICT Parks nudges Nigeria into digital transformation
STATE HOUSE PRESS RELEASE
PRESIDENT BUHARI RECONSTITUTES NNPC BOARD
President @MBuhari has approved the reconstitution of the Board of the Nigerian National Petroleum Corporation (@NNPCgroup), after the expiration of the term of the board members appointed in 2016.
— Presidency Nigeria (@NGRPresident) May 30, 2020
READ ALSO: CBN and NIPOST open pilot microfinance branches
The newly constituted NNPC board is made up of six members from each of the geo-political zones in the country. The members include the following individuals:
- Mallam Mohammed Lawal, representing the North West
- Dr Tajudeen Umar from North East
- Adamu Mahmood Attah from North Central
- Senator Magnus Abe from the South-South
- Dr Stephen Dike from the South East, and
- Chief Pius Akinyelure from the South West geo-political
READ MORE: Boko Haram: A protracted battle yet to be won?
Of the six members, three are returning members on the board – Chief Pius Akinyelure, Mallam Mohammed Lawal, and Dr Tajudeen Umar from North East.
Note that the constitution of the new board is considered a welcome development, as it balances the representation of the six geo-political zones on the board. The previous constitution of the board was faulted for not being “balanced”.
READ ALSO: Full text of President Muhammadu Buhari’s 58th Independence day broadcast
Note that the former board included the late Chief of Staff to the President, Abba Kyari as a member. Stakeholders have since expected the President to reconstitute a new board to take over.
Get the Nairametrics News App
Why households that engage in subsistence agriculture are poor – Yemi Kale
Output cut: Nigeria leads in OPEC non-compliance with 50 unsold cargoes of crude
Brent crude up by 40% in May, strongest monthly bounce since March 1999
