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Census and its import to National growth

The population determines how much each state and local government gets from the Consolidated Revenue Fund/FAAC. The population is 30% of the horizontal allocation formula for states. The population in an LGA also carries a 30% weighting to share.

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Census and its import to National growth

According to the Nigerian Population Commission (NPC), there were 140 million Nigerians as of 2006, with 71.7 million men and 68.3 million women.

However, Festus Odimegu, former Chairman of the NPC, said no census in Nigeria’s history had been valid and that trying to count Nigerians was “impossible”. Note impossible. He continued, “These figures are just guesstimates; nobody knows whether the population is 120 million, 150 million, 200 million – no Nigerian, not the NPC, the UN, the World Bank. “Unless you conduct a proper census, which has never been done without political interference, it is not possible to know.”

Census

The 2006 census said Kano State had 9.4 million inhabitants, followed by Lagos State, with just over 9 million. Lagos State rejected this result, conducted its own census, and announced it had 17.5 million inhabitants. Case closed?

Africapolis – the African arm of e-Geopolis, a global study of urban populations – which is supported by the Agence Française de Développement – provided population estimates. The organization believes that 2006 census numbers for Lagos of around 9 million were reasonable and that the state’s own estimates of 17.5 million are overblown. However, the group found the 2006 census figure for Kano city at 9.4 million inflated.

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In Nigeria, censuses are controversial: The country has even gone as far as annulling two of them (1973 and 1991). From the 1953 census done by the British to the 2006 census done by Nigerians, all censuses have ended in controversy. Why is census so important to Nigerians? After all, it’s just a simple headcount, is it not?

[READ MORE: Economy: Will the FG tax reforms support revenues in 2020?)

Well in Nigeria, the population determines how much each state and local government gets from the Consolidated Revenue Fund/FAAC. The population is 30% of the horizontal allocation formula for states. The population in an LGA also carries a 30% weighting to share. The population figures also determine how many seats a state has in the House of Representatives. Other criteria are basic equality of states 40%, Landmass & Terrain 10%, Internal revenue effort 10%, Education 4%, Health 3%, Rural Portable water 3%.

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So, the number of people in a state or local government is very important. I will call it the most important “asset” a State or Local Government has in Nigeria.

But let’s look critically at the Nigerian population figures from four 4 census figures – 1952, 1963, 1991 and 2006.

Summary

From 1952 to 1991, the Northern region has maintained a 54.1% average in all censuses in Nigeria.

From 1952 to 1991, the Western region has maintained a 18.7% average in all censuses in Nigeria.

From 1952 to 1991, the Eastern region has maintained a 22.7% average in all censuses in Nigeria.

Let me be clear. According to the data, in 39 years (1953 to 1991) ALL regions, North and South, have grown at about the same pace. Rural to Urban drift had not occurred in Nigeria in 39 years! The relative proportion has remained the same! Nigerians don’t migrate.  I did not say so; the Nigerian Population Commission said so.

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So, what about the 2006 census? Maybe the figures had been relatively the same because they were not done under a democracy.

Ok, 2006 census, SW retained 19.65%, North retained 52%, East 26.7… Again, no change.

Census in Nigeria is an exercise in allocation. The global number can be 300m; that’s immaterial. The regional allocations are known and applied. These allocations seem to follow the desire to maintain a share of FAAC. The World Bank reports 168 million people were living in Nigeria in 2012, which on the basis of a 3% growth rate, would suggest a population of around 178 million in 2014.

This 174m really makes no sense if all Nigeria will do is allocate to maintain a cast iron population distribution. How can Nigeria dynamically plan if the census figure per state and region are known?

[READ ALSO: ABCON warns FG on France’s involvement in ECO currency)

Are the census figures correct?

Should the population determine how much a state should get from the Consolidated Revenue Fund/FAAC? More than portable water, roads, health & education, derivation?

If a population is a key criterion for attracting Federal taxpayer money, will any state adopt family planning? If education and health care are 4% and 3% determinants in sharing revenues, will any state provide them?

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What can Nigeria do, going forward? Nigeria surely cannot plan if she doesn’t know how many people live and earn in Nigeria, in every state. I mean, can Nigeria count a proper census, devoid of politics? The realist in me says that’s impossible.

It’s much easier to redefine what population means than to take away the population from the revenue sharing calculations. So, can we define the population to mean population in primary school as evidenced by education budget spend per child by the state for instance? We can also define the population as the number of kids vaccinated. Point is tying that population figure to something, and so it would not just be a figure given to a state to spend at will.

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Census

Also, if a state claims a 9m population figure, it should first make a budgetary commitment to that figure by allocating to education and health a figure appropriate to her population numbers as stated.

These are structural changes that touch on the existing structure, but what about changing the entire structure of revenues to entitlement? Population per state will always remain a key determinant in any decision-making matrix on how to allocate and spend public funds. The challenge for Nigeria is how to deploy the population as a positive number for growth, not for entitlement.

Why allocate revenues based on population per state if the state Governor would simply use those same funds to build airports or political billboards, and not spend on the same people? The population funds must be for the population, by spending on education, health and general wellbeing of the citizens.

Without a census there can be no national plan, without a national plan, no nation can develop…

It’s our problem, we can fix it.

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Local refining; A panacea for Nigeria’s reliance on imported refined products

The start up of refineries will attract , enhance employment opportunities and conserve the foreign exchange earnings of the country.

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Analysis: NNPC and its refining losses 

News reports earlier this week say the Vice President, Prof. Yemi Osinbajo, speaking at a virtual meeting noted that the problems associated with Nigeria’s refineries will persist if the Federal Government continues to own and run them. According to him, the government should have no business running refineries as they should be in the hands of the private sector. He further noted that the government’s focus currently is to assist the private sector develop modular refineries. He listed a few private refineries coming on stream which include a 100,000-barrel capacity refinery located near Portharcourt, the Niger Delta Petroleum refinery in Delta state and six modular refineries that should come on stream soon.

About 90% of the refined petroleum products consumed in Nigeria are imported. The nation’s refineries located in Kaduna, Warri, and Port Harcourt with a combined nameplate capacity of 445,000 bpd have long operated at low levels due to many years of underinvestment and poor maintenance. Despite continuous talk of revamping the
refineries, in 2019, combined capacity utilization of Nigerian refineries fell to 2.5%, an all-time low annual activity level since 1998 when NNPC started providing the data. Last year, Pipelines & Product Marketing Company (PPMC) reported that it imported 9,158,528mt of refined products (PMS, HHK, AGO & ATK) while it evacuated only 963,302mt of refined products from Nigerian refineries, implying local production was just at 10.5% of total refined products available for distribution. Going by the historical performance of these refineries, it is safe to agree with the Vice President that the Nigerian government has no business running refineries.

Asides the modular refineries mentioned by the Vice President expected to come on stream soon, the country is also patiently awaiting Dangote’s 650,000 barrels perday capacity refinery. The BUA group also recently announced plans to commence a 200,000 barrels per day refinery and petrochemical plant in Nigeria to be located in Akwa Ibom State. Although it is widely believed that the local refining operations will reduce the nation’s reliance on
imported refined products, the question in the minds of many Nigerians is how local refining of petrol will impact the pump price. In this regard, the Minister of Finance, Budget and National Planning, Zainab Ahmed, stated that refining petrol locally will not significantly reduce the price of petrol since the refineries will sell at the international price, noting that the only expected savings will be freight or shipping.

That said, Nigeria as a country has a lot to benefit from being a net exporter of refined petroleum products. Nigeria is the second largest producer of oil in Africa. The combination of rising shale production in the US, continued oversupply in the export market and weak demand, means the market for Nigerian crude is quite uncertain and a shift from export of crude to refined products bodes well for the country. The start up of these refineries will also
attract investment in warehousing and storage facilities, enhance employment opportunities and conserve the foreign exchange earnings of the country


CSL Stockbrokers Limited, Lagos (CSLS) is a wholly owned subsidiary of FCMB Group Plc and is regulated by the Securities and Exchange Commission, Nigeria. CSLS is a member of the Nigerian Stock Exchange.

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Key ‘side-hustles’ Nigerian Bankers supplement their income with

The need to meet up with their financial obligations has forced some bankers to adopt side hustles.

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bankers, How much banks pay, Key 'side-hustles' Nigerian Bankers supplement their income with

The headline above seems a little inappropriate given the earnings of Bankers, vis-à-vis statistics on salaries and wages in the Nation.

The average Nigerian Banker earns at least four times the poorly implemented National minimum wage of N18,000; gets his pay promptly without being owed arrears, and enjoys other employment benefits, such as healthcare, without hassles.

Why then would these privileged few, whose wage bill cost the 13 NSE listed banks, a whopping N178b in the first three months of 2020, lockdown notwithstanding, need to supplement their already impressive income?

READ: 3 major ways COVID-19 will affect Banks’ 2020 profits

Simple, because they need to meet up with their financial obligations.

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The expectations are high for anyone with a decent job in a country where the unemployment rate is currently 27.1%, and where 28.6% of its population are underemployed.

The expectations are even higher for those whose work is in the banking sector, of whom it is erroneously believed, have access to unlimited funds, and an endless flow of credit facility, because they facilitate the consummation of volumes of such transactions daily.

(READ MORE: Naira expected to be under pressure until backlogs for FX payments are cleared )

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The peculiarity of HR policies in Nigerian banks does not allow for ‘helping’ of relatives into the same system, as is obtainable in the Nigerian Civil service. Hence, the basic assistance which Bankers can offer their ever-expanding network of dependants is direct financial aid, forcing them to engage in moonlighting activities to meet up the ‘hype’.

The activities below are from close observation and interactions with Nigerian Bankers.

Forex dealings

The existence of different exchange rates, coupled with the scarcity of FX for most sectors of the economy has given rise to opportunities for arbitrage and round-tripping. Most bankers, who by virtue of their jobs have become privy to their customers’ FX needs, are able to broker deals; matching the demand of FX with supply, and earning handsome margins in the process. Gratitude, loyalty, and referrals from their customers are an added bonus for flouting their Bank’s internal policies on staff participation in FX dealings.

Such dealings have in recent times expanded to include transactions in cryptocurrencies.

Personal professional practice

Nigerian Banking industry is a melting pot of various first degrees, with some using their bank jobs as a stop-gap for their employment problems, as they seek to improve on their chosen professions. Hence, it is not uncommon to see bankers start and run their startups in other fields, while still in paid employment of their banks.

Although, the Banks are likely to frown on not getting 100% commitment from their employees; they continue to provide a rich base of potential clients for these startups and have been their customers too.

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Sports betting and Mobile Money agencies

Sports betting in Nigeria has opened up a new world of investment possibilities for sports enthusiasts and shrewd businessmen. Since 2009, when the first online sports betting site launched in Nigeria, over twenty more have joined to compete for the market in Africa’s most populous black nation, and they all seem to be thriving, as each sports competition sees the unveiling of another sports betting site in Nigeria.

(READ MORE: Bank like a hero with the Stanbic IBTC Super App “Voice Banking” feature)

Bankers, with their knowledge of the industry figures, have had a first mover’s advantage in being agents of these sport betting firms.

The same holds true for Mobile Money agencies, where Bankers have been known to use the influence of their office to expedite mobile money agent approvals and secure POS terminals, which have consequently become inaccessible to the common man.

READ: Analysis: UACN, is the dividend worth it?

Other activities

As with most business endeavours, Bankers generally indulge in businesses, in which they have a comparative advantage. Bankers in big cities use their cars to run shifts under popular cab-hailing services; some moonlight as real estate agents, because they can match customers with their real estate needs. A few others have become millionaires, by investing in their customers’ businesses. The possibilities are endless, as Bankers seek to make ends meet through their ingenuity, while staying relevant in their careers.

Explore the Nairametrics Research Website for Economic and Financial Data

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Cyprian Ekwensi in his classic novel ‘Chike and the River’, made popular the phrase of a man who lives by the bank of the Niger, washing his hands with spittle. Sadly, this has become the lot of most Nigerian Bankers, as they live from paycheck to paycheck, exploring one loan option to pay off a previous loan, even as they condescend to their customers in volunteering financial advice, that they are better off implementing in their personal finances.

No one is immune to the economic squeeze our double-digit inflation has brought on fixed income earners, especially not our beloved bankers.

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Emerging concerns on crude oil price dents economic recovery

The economy continues to face severe dollar shortages due to lower oil receipts which continues to pressure the nation’s FX reserves.

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Crude Oil prices, oil

Yesterday, Brent crude oil price settled at US$41.44/bbl, down 10.7% from 6-month high of US$45.86/bbl. We note rising emerging concerns on the outlook for oil price in the global market. Cases of coronavirus are now rising faster in many European countries that had earlier taken gradual steps to open up their economies. For example, in the United Kingdom, Prime minister Boris Johnson stated the possibility of another lockdown to curtail the recent resurgence in new cases of infections. Furthermore, Libya (who has not been producing crude) announced the lifting of the force majeure on some oilfields & ports where fighters no longer have their presence. This implies Libya would resume production soon which may lead to a glut in the crude oil market particularly as the country is exempted from all OPEC cuts. The fear of increased supply comes amidst fragile demand for jet fuel.

The renewed concerns around crude prices is an unwelcome development for Nigeria considering the fact that hope of an economic rebound is largely hinged on sustained rebound in crude prices. Last week, the Minister of Finance highlighted that the country has suffered a 65% slump in revenue largely due to weak oil revenue. Furthermore, the
economy continues to face severe dollar shortages due to lower oil receipts which continues to pressure the nation’s FX reserves. In addition, external trade condition continues to worsen with a trade deficit of N2.2tn in H1 2020. With oil prices still down by c.30% from 2019 levels amidst the nation’s pledge to OPEC cuts, we do not expect any significant improvement in external conditions. However, we believe news of a decline in crude prices may provide succour for the Nigerian consumer given that lower crude price is expected to translate into lower petrol prices following the deregulation of the downstream sector.

That said, we reiterate our position that the diversification of the economy from oil remains the key strategy in reducing the vulnerability of the Nigerian economy to volatilities in oil market. The non-oil economy (which accounts for c.90% f GDP) remains crucial and its potentials can be best exploited by the private sector.


CSL Stockbrokers Limited, Lagos (CSLS) is a wholly owned subsidiary of FCMB Group Plc and is regulated by the Securities and Exchange Commission, Nigeria. CSLS is a member of the Nigerian Stock Exchange.

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