The World Bank has disclosed that the growth of Nigeria’s agricultural sector is being pulled by the incessant attacks perpetrated by Boko Haram and herdsmen.
The global lender explained that insurgency undermines the policies of the Central Bank of Nigeria (CBN) which are intended to uplift farmers and help the sector attain its full revenue potential.
It was also stated that the Agricultural sector in Nigeria is vast but the country experiences low production, affecting its returns. According to World Bank in its Nigeria Economic Update, crop production in the first half of 2019 was negatively impacted by attacks insurgency in the North-East region.
Insurgency affecting output: This attack is significant because crop production is responsible for 90% of agricultural output.
“Agriculture, which constitutes a quarter of the country’s Gross Domestic Product and employs about half of the labour force, picked up slightly but remains below its potential.
“In the first half of 2019, crop production, which is responsible for 90 per cent of agricultural output, was affected by the ongoing insurgency in the North-East region and by farmer-herder conflicts in the North-Central region.
“Together, those regions produce a significant share of the country’s main crops, particularly grains (sorghum, millet, maize, and rice), beans, yams, cassava, potatoes, groundnuts, sesame, and soybeans.”
It added that, “Agriculture is Nigeria’s largest employer, accounting for 40 per cent of its workers, but contributes just 25 per cent to GDP. Nigeria’s agricultural sector is vast, but productivity is low.
“Nigeria’s agricultural sector is unusually large by sub-Saharan Africa standards, but the productivity of its labour is below the average for peer countries (South-Africa, India, Brazil and Indonesia).”
Other factors dragging Agriculture down: The World Bank also indicated the contribution of poor infrastructure, inefficient land markets, limited access to finance.
“For the past 20 years, agricultural value-added per capita has risen by less than one per cent a year, and marginal yield is far below its potential.
“Most Nigerian farms are small, rain-fed rather than irrigated, with minimal physical capital.
“Agricultural value chains are underdeveloped due to poor infrastructure, inefficient land markets, limited access to finance, unreliable policy, and inadequate market information.
“These conditions discourage investment and inhibit the uptake of new technologies, slowing productivity growth.”
Attacks affecting CBN intervention: Insurgency is preventing the intervention of the CBN to yield positive and necessary result. The CBN has tailored its policies to favour the farmers in order to aid their growth. One of the measures taken by CBN is preventing access to foreign exchange from Nigerian forex windows for agricultural commodities such as rice, vegetables, poultry, meat, and tomatoes.
The CBN has also financially intervened through Commercial Agricultural Credit Scheme, the Nigerian Incentive-Based Risk Sharing in Agricultural Lending programme, and the Anchor Borrowers Programme. However, these policies have been negatively impacted by the Boko Haram and herdsmen attack.
What World Bank report means: In all, the Federal Government’s Economic Recovery and Growth Plan to achieve production self-sufficiency for some imported commodities, including rice, wheat, sugar, and palm oil seem unattainable with the incessant attacks.
This means President Muhammadu Buhari’s plan to diversify the economy and provide substitutes for imported goods and food items would gradually fall apart except the insurgency is curbed.
Insurgency attack increasing poverty rate: The World Bank report also disclosed that the rate of poverty was increasing in Nigeria due to the insurgency. It was made known that 49% of households in the North-East were affected by conflicts – more than 66% of which were reportedly caused by Boko Haram between 2010 and 2017.
World Bank also reported that activities of nomads and insurgents also affected 25% of households in the North-Central region in the same period from 2010 and 2017.
“The vulnerability of those living below the poverty line is worsened by the adverse security situation in the North, which has displaced a large population that has amplified the high incidence of poverty in the North-East.
“Nine million Nigerian children are out of school, especially in the North-East where families were displaced by the Boko Haram insurgency.”
Just in: Lagos approves resumption of full services for churches, mosques
Resumption of full services in churches and mosques has been approved by the Lagos State Government.
The Lagos State Government has announced the approval of churches and mosques to resume full services in the state. This disclosure was made by the Lagos State Governor, Babajide Sanwo-Olu, during a press briefing on Saturday, September 19, 2020, in Lagos.
According to a monitored media report, the government said mosques can hold their prayers 5 times daily, while churches can also resume weekly services. This is against the initial announcement, where worship centres were restricted to just one gathering weekly, after they were allowed to reopen on August 7, 2020, following the lockdown to contain the spread of the coronavirus disease.
Sanwo-Olu, however, warned that all safety protocols that had been announced by the government must be strictly adhered to.
COVID-19: Transcorp Hotel loses about N1 billion every month – CEO
Transcorp Hotels has seen its revenues ravaged by COVID-19 induced lockdowns and implementing measures to save itself from further losses.
Transcorp Hotels, owners of one of Nigeria’s largest hotel Transcorp Hilton reports it loses about N1 billion every month due to the Covid-19 pandemic.
This was disclosed by the Managing Director/CEO of Transcorp Hotel Plc, Dupe Olusola, during an interactive session on Thursday. According to her, the management of the hotel met and decided to ensure that it kept costs down by restructuring its business strategy, diversifying into asset-light business models, and reducing the workforce, among others.
Olusola further disclosed that the company had suspended further commitment to buy fixed assets and operating equipment, as well as reduced its energy consumption and maintenance costs. She also confirmed Transcorp will be cutting back on all capital investments this year and in the foreseeable future until the outlook for the economy improves.
The hospitality sector has been one of the hardest-hit since the Covid-19 broke in late February. Data from the National Bureau of Statistics also reveal the sector contracted by as much as 40% in the second quarter of 2020, officially falling into recession.
Nairametrics participated in the stakeholder’s session and noted a few critical remarks from the interview.
Below is the excerpt of the interview session:
How much has COVID-19 eaten into the fabric of Transcorp Hotels?
We had a drastic decline of over N9 billion. In March alone, we witnessed a N456 million loss. We have to remember that in March, there was a partial lockdown when everyone was trying to figure out what was happening. We were at N1.03 billion loss in April alone and this has continued to be the story every month. In June, we dropped by about N840 million.
How will this development (loss) affect your staff strength?
We struggled to ensure that we would not ask people to go initially, that was our priority. We paid staff that did not work during lockdown 50% of their salaries and the ones that worked then were paid full salary. To keep the business running, we definitely have to let go of at least 40% now.
We engaged the staff Unions, both the Junior and Senior staff, before the implementation of that. We will ensure that employees are properly taken care of. The occupancies we have now are below 30% and with that, it’s impossible to have everyone around.
What is important to us is that we must ensure we are able to keep the hotel running as a national asset, because it has been in existence for over 30 years.
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We have ensured that we keep as many jobs as we can within this time frame, so this is an opportunity for us to engage the media and carry you along before such exercise. We have engaged actively with our employees and other key stakeholders. At the occupancy level that we are seeing, it is impossible for us to sustain the employees that we have to keep our doors open.
Precisely, how many will you lay off?
It is definitely a great burden to even consider a lay-off but we don’t have a choice but to keep the business afloat. We have over 1,000 staff and it appears we will not need more than 400 staff to ensure we keep the hotel running. What is happening is beyond everybody and it is just a situation we have found ourselves in.
What is your outlook for 2020, any hope of returning to the pre-COVID era?
We expect to get to the pre-COVID era by 2024 globally, because it requires the gathering of the people in preparing for events, etc. The new normal is real. We expect things to go back to what they used to be in Nigeria by 2024 also. We are not expected to do more than 30% of our occupancy this year and that is significantly low, and by this time next year, we don’t expect to see anything more than that. So, this is our trying time.
Strategy to sustain Balance Sheet before the end of 2020
We are a hotel business, the food, room and the events we hold are our sustainers. We are definitely going to end at a loss in 2020. As I said, COVID will still be around in 2024. We will try as a business to be innovative, to look at different ways. We are reporting losses of almost N1 billion on a monthly basis and this is significant to us. We hope they can come up with some vaccination to help reduce the impact of the pandemic so that businesses can begin to pick up.
Any palliatives from the government to hotels?
Governments across the world have given palliatives to hotels, but here there is no such package for big hotels in Nigeria. We have engaged at all levels of government on payroll support, tax rebate, support for employees, actively and widely as possible. Yet, these have not yielded any support, unfortunately. This is really why we have gotten to the point of disengaging our own staff. We have not seen any support from the government to actually help us.
How do you aim to restructure your loans and are there plans to raise funds?
This year is really just about losses. We have met with our stakeholders and lenders to work out how we can restructure our loans, considering some palliatives CBN brought on board like interest rate of 5%. We met the Bank of Industry (BOI) to get interest rates on our loan reduction. Some of these got a couple of positive responses. We are also considering raising funds through the right issues. We are raising N10 billion in order to pay off some of our existing obligations.
How will virtual tools affect your business model and future plans?
We are working round the clock to bring in solutions in line with the new normal to our guests and customers. How do we provide what they are looking for? How do we provide physical and virtual conferencing? We have also come up with Drive-in Movie Cinema, among others. We are going to ensure we run asset-light strategies to bring in new initiatives that can continue to help us remain standing in the business.
On our future plans, we have suspended our expansion plans. For instance, we initially planned to set up hotels in Port-Harcourt, Rivers State, which has been suspended for now. Also, we suspended further commitment to buy fixed assets and operating equipment as well as reduced our energy consumption and maintenance costs.
Bottom Line: The hotel faces a tipping point and as things stand survival is what is its priority.
- To do so the hotel will have to make tough decisions some of which as job cuts, reduction in overheads, and suspension of capex related activities.
- This will be a very painful restructuring process for the hotel group but it appears this is the only way it can survive.
CBN grants Greenwich Trust Limited operational license for merchant banking
CBN has upscaled Greenwich Trust Limited to the status of a merchant bank.
The Central Bank of Nigeria (CBN) has upscaled Greenwich Trust Limited and granted it, operational license for merchant banking in the country.
According to an official statement released by the firm, the entity would be known as Greenwich Merchant Bank Limited. This license allows Greenwich Merchant Bank to upscale and offer such diverse services as corporate banking, investment banking, financial advisory services, securities dealing, treasury wealth and asset management, etc., making it possible to provide increased value to stakeholders beyond its previous scope.
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Recall that the minimum capital requirements for establishing a merchant bank according to Merchant Banking Licensing Regulations in 2010 are N15 billion
With the addition of Greenwich Merchant Bank, Nigeria now has six merchant banks. The others are; FBN Quest, Coronation Merchant Bank, DSH Merchant Bank, Nova Merchant Bank and Rand Merchant Bank.
About Greenwich Trust Limited
Greenwich Trust Limited is an investment banking firm duly registered with relevant authorities such as the Nigerian Securities and Exchange Commission (SEC). It is a diversified firm with subsidiaries such as Asset management, GTL Properties, GTL Securities Limited, Cedar Express Limited and Meyer Plc.