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Lagos Okada ban, its Socioeconomic Consequences

If the Lagos State Government really wants to arrest the traffic situation in the state, it should look towards employing more sustainable avenues with less radical socioeconomic consequences.

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Lagos State bans Gokada, ORide, MaxNG, others from 15 local governments 

On February 1, 2020, the ban by the Lagos State Government restricting all forms of motorcycles (excluding those used for delivery services) and tricycles from operating in key commercial and residential areas of the state officially took effect. Though well-intentioned, the timing and blanket nature of this ban have left much to be desired.

Among the reasons given by the Lagos State Government for imposing this ban was the rising spate of insecurity in the state. The government has argued that criminality in the state was facilitated by the use of motorcycles, popularly known as Okada, as a getaway means by hoodlums.

Also blamed was the crippling traffic gridlock that most parts of the state have been forced to grapple with in recent times during the morning and evening rush hours. The state government also argues that commercial motorcyclists and tricyclists have contributed in no small way to the state’s traffic malaise due to their wanton disregard for traffic regulations.

[READ MORE: Okada ban makes business tough for us, Gokada boss laments)

If these were the issues, one wonders how the ban would provide a sustainable solution. For instance, these motorbikes often provide easy transportation for commuters in Lagos State, especially during those gridlocks, ensuring that they arrive at their destinations on time and save the economy man-hours that would have been lost in traffic. They also keep hundreds of thousands of low-skilled Lagosians away from criminality by providing them with a legitimate source of income.

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If the Lagos State Government really wants to arrest the traffic situation in the state, it should look towards employing more sustainable avenues with less radical socioeconomic consequences. These include the completion of the Lagos monorail project, expansion of road networks, ban on street trading, relocation of roadside markets and motor parks and construction of parks for articulated vehicles.

The real cause of the traffic nightmare currently being experienced in the Lagos metropolis is the population explosion. The state’s existing road networks can no longer cope with the daily influx of vehicles as more and more people continue to relocate to the state from other parts of the country.

Similarly, if it wants to tackle insecurity, it must beef up its security apparatus and change its modus operandi from reactive policing to proactive policing through intelligence gathering. It should also create more employment opportunities that will keep Lagosians gainfully employed by incentivizing the private sector. All these and more should have been put in place before the ban to cushion the socio-economic impact.

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[READ MORE: Okada ban makes business tough for us, Gokada boss laments)

Government policy is a major enabler of economic growth around the world, especially in developing countries like Nigeria. The government’s primary role in the economy is to create an atmosphere that enables the private enterprise to thrive through the formulation of business-friendly policies. More importantly, its ability to maintain a consistent and cohesive set of policies over long periods of time by formulating long-term policies rather than short-term, stopgap ones is key to buoying investor confidence.

Investors are attracted to stability, consistency, and predictability and they flee from instability, inconsistency, and unpredictability. Time and again, governments in Nigeria have demonstrated just how easy it is for one administration to overturn the existing policies of its predecessors overnight. The inconsistency of policies scares investors and accounts for the low inflows of foreign direct investment (FDI) and foreign portfolio investment (FPI) into the country.

Investors who backed motorcycle-based ride-hailing startups in the state like ORide (OPay), MAX and Gokada – who are also affected by the ban – would now be counting their losses.

What it means: Other startups operating in the state and the country at large, irrespective of the industries they play in, would now face an uphill task convincing investors to fund them. A trend that may emerge in the Nigerian venture capital space is a preference for small-ticket short-term investments and profit-taking over long-term investments.

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By Chinedu Nnawetanma

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Nnawetanma is passionate about private sector development in Nigeria. He has contributed to projects and conversions that revolve around improving the ease of doing business, financial inclusion and access to finance of SMEs and job creation in Nigeria. His works have been featured in several leading online and print news media publications within and outside Nigeria.

Abiola has spent about 14 years in journalism. His career has covered some top local print media like TELL Magazine, Broad Street Journal, The Point Newspaper. The Bloomberg MEI alumni has interviewed some of the most influential figures of the IMF, G-20 Summit, Pre-G20 Central Bank Governors and Finance Ministers, Critical Communication World Conference. The multiple award winner is variously trained in business and markets journalism at Lagos Business School, and Pan-Atlantic University. You may contact him via email - [email protected]

3 Comments

3 Comments

  1. Akerele Kehinde

    February 9, 2020 at 7:59 am

    Government had been consistence on it policy on means of transportation in the State.
    The law regulating okada operation was enacted in 2012, and revised in 2018.
    An investor should be mindful of rules guiding operations of area of interest before investing in it to avoid being on the other side of the law.
    No matter how we try to rationalize the use of okada for transportation, if we are thinking of developing, okada nor keke are not means of transportation in any major economy or urban city.
    The means of transportation under focus are rural means of transportation as well as inner roads or streets means of movement.
    It is an aberration moving on major roads with either of it.
    As for security or job loss, restricting operation of the model of transportation in less than 10% of road network can’t create job loss nor effect of job loss as painted. All the investors need to do is to change focus, strategy and operate with the law guiding the operation.
    The major arguement of the operators is the desperate desire to operate on the highway which you cannot deny is an aberration.
    The fact must be told.

    • 9jaRealist

      February 9, 2020 at 4:58 pm

      @ Akerele Kehinde, bless you!

      People act as if this is new law, when the only new development is that the government merely woke up to its responsibility of enforcing existing laws because most Nigerians apparently cannot self-regulate themselves (that is, abide by laws without coercive enforcement). And can we seriously be moaning about unemployment for able-bodied or unskilled/semi-skilled citizens in a nation that is not food self-sufficient (even though it has enough mostly unused or underutilized arable land to feed Africa) and a nation that has to rely on neighboring nationals for basic artisans?

      Meanwhile, the author is carrying on about “proactive” security and intelligence, when the scuttle is that these measures was a proactive measure following a meeting of the state’s security council (which includes federal law enforcement and military authorities). Eko oni Baje!

  2. Tunji Arojojoye

    February 10, 2020 at 9:47 am

    I am perpetually haunted by the awesome tragedy of blackman’s inability to govern without injustice. Hitler built railways within weeks to move materials to war front during the second world war. Why do the black politicians find it impossible to make life a little bit less stressful for their citizens. Work has already started on the Lagos metro in 198something this same Buhari stopped it. There is never money to provide the simplest essentials but the money to be looted by the politicians is inexhaustible. Do we need to bring in the Chinese to build what is more or less you trains. By 1/10/60 the British laid the foundations for a fantastic infrastructure lift off. Just look around you after sixty years. No water no electricity, no health care and so on. One of the achievements of Buhari is to assassinate Tinubu politically. Metaphorically speaking of course.

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Columnists

PIB; Will the jinx be broken this time around?

Many stakeholders hold strongly that new investments in the oil sector is dependent on the passage of the PIB.

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PIB; Will the jinx be broken this time around?, President Buhari may sign 2020 Budget tomorrow, President Buhari approves N37 billion for National Assembly renovation, President Buhari appoints Sarki Auwalu to head DPR , FG may stop interstate and inter-town travels, COVID-19: President salutes Elumelu, Dangote, Atiku, Banks, others for support, Naira export earnings, Covid-19: FG to set up N500 billion intervention fund, sovereign wealth, FG issues guidelines on implementation of gradual easing of lockdown nationwide, Electricity: FG approves one year waiver of import on meters

News reports say President Mohammed Buhari has finally sent the Petroleum Industry Bill to the Senate for consideration and passage. The Bill according to media sources among other things still proposes the restructuring of the Nigerian National Petroleum Corporation and the Petroleum Products Pricing Regulatory Agency. The NNPC will be replaced by a limited liability company, which shall be called Nigerian Petroleum Company (NPC Limited). The bill also proposes the establishment of an agency known as the Nigerian Upstream Regulatory Commission which will be responsible for the technical and commercial regulation of upstream petroleum operations alone.

READ: Nigeria to handover TAM of refineries to Indian companies

The Petroleum Industry Bill (PIB) was first introduced to the National Assembly in December 2008. A presidential committee set up in 2007 to look into the oil and gas sector came up with this bill, which aims to increase transparency at the NNPC and to increase Nigeria’s share of oil revenue. Drafts of the bill, however, became very contentious due to objections from the international oil companies (IOCs) and the Nigerian National Petroleum
Corporation (NNPC). Consequently, the bill was never passed into law. Towards the end of 2015, the PIB was amended to speed up its passage and was broken into different bills, one of which was the PIGB, to address the governance framework of the oil industry. The Senate President noted that the plan was to expedite the aspects of the old law that were not controversial while the controversial areas could be placed on hold. The two houses passed
the PIGB in 2018 but the President did not sign the bill till it ran out of time.

READ: FG projects $2 billion annual revenue from Escravos Gas project

In all the versions of the Bill, key themes that have constantly featured include; The ownership and management of petroleum resources, functions and powers of the Minister of Petroleum, the establishment of the Nigerian Petroleum Regulatory Commission (NPRC) to act as a regulator for the industry and the restructuring of the NNPC. According to the Minister of State for Petroleum Resources Timipre Sylva, this version that has been sent to the National Assembly is a harmonisation of all the existing versions from 2000 to date with necessary adjustments to address the concerns raised by the industry players. One of such concern was the recommendation of a single regulator for the entire industry as was stated in the PIGB which has been addressed in the current version of the bill.

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READ: FEC approves $40 oil benchmark for 2021 budget

With more than a decade of deliberations and revisions, it will be a great relief to all stakeholders if this version of the Bill is finally passed into law. Currently, Nigeria is said to have one of the least competitive Deepwater fiscal terms in Africa and is increasingly losing significant amounts of potential investments to other African countries. Many stakeholders hold strongly that new investments in the oil sector is dependent on the passage of the PIB which would take a more holistic approach in addressing issues around the fiscal terms especially following the passage of the Deep Offshore and Inland Basin Production Sharing Contracts (amendment) Bill, 2019 (PSC Amendment Bill).


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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Opinions

The game is changing, as entrepreneurs are thinking globally for their small businesses.

To be successful, entrepreneurs must see their companies from a global perspective.

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African american business woman by the window, Things to accomplish during COVID-19 lockdown

In today’s globally competitive environment, any business – large or small, that is not thinking and acting strategically is extremely vulnerable. Every business is exposed to the forces of a rapidly changing competitive environment, and in the future, small business executives can expect even greater change and uncertainty.

From sweeping political changes around the planet, rapid technological advances to more intense competition, and newly emerging global markets, the business environment has become more turbulent and challenging to business owners. Although this market turbulence creates many challenges for small businesses, it also creates opportunities for those companies that have in place strategies to capitalize on them.

To remain competitive, small businesses must assume a global posture. Global effectiveness requires entrepreneurs to be able to leverage workers’ skills and company resources and know-how across borders and cultures across the world. They also must concentrate on maintaining competitive cost structures, and a focus on the core of every business – the customer! Although there are no surefire rules for going global, small businesses that want to become successful international competitors should observe the following;

  1. Develop new products for the world market. Make sure your products and services measure up to world-class quality standards.
  2. Recruit and retain multicultural workers, who can give your company meaningful insights into the intricacies of global markets.
  3. Train employees to think globally, send them on international trips, and equip them with state-of-the-art communication gadgets.
  4. Hire local managers to staff foreign offices and branches.
  5. If you have never conducted international business, consider hiring a trade intermediary or finding a local partner to help you.
  6. Take time to learn about doing business globally, before jumping in. Avoiding mistakes is easier and less expensive than cleaning up the results of a mistake.
  7. Make yourself at home in all of the world’s key markets: North America, Europe, Africa, and Asia. This triad of regions is forgoing a new world order in a trade that will dominate global markets for years to come.
  8. Appeal to the similarities within the various regions in which you operate, but recognize the differences in their specific cultures. Although, the European Union is a single trading bloc composed of 26 countries, smart entrepreneurs know that each country has its own cultural uniqueness, and do not treat almost half-billion people in them as a unified market.
  9. Familiarize yourself with foreign customs and languages; constantly scan, clip, and build a file on other cultures: their lifestyles, values, customs, and business practices.
  10. “Globalize”. Make global decisions about products, markets, and management, but allow local employees to make tactical decisions about packaging, advertising, and service. Always remember that in business, you can’t have it all, and you can’t know it all. Engaging the strength and opinion of others for your businesses will go a long way in building a cutting-edge organization.
  11. Learn to understand your customers from the perspective of their culture, not your own. Bridge cultural gaps by adapting your business practices to suit their preferences and customs.
  12. Consider using partners and joint ventures to break into foreign markets you cannot penetrate on your own.

Companies lacking clear strategies may achieve some success in the short run, but as soon as competitive conditions stiffen or an unanticipated threat arises, they usually “hit the wall” and fold. Without a basis of differentiating itself from a pack of similar competitors, the best a company can hope for is mediocrity in the market. The goal of developing a strategic plan is to create for the small company a competitive advantage – the aggregation of factors that sets a small business apart from its competitors, and gives it a unique position in the market that is superior to its competitors.

To be successful, entrepreneurs can no longer do things in the way they’ve always done them.

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Becoming a global entrepreneur requires a different mindset. To be successful, entrepreneurs must see their companies from a global perspective and must instill a global culture throughout their companies, that permeates everything the business does. To these entrepreneurs and their companies, national boundaries are irrelevant; they see the world as a market opportunity. Learning to think globally may be the first, and most challenging obstacle an entrepreneur must overcome, on the way to creating a truly global business. The ability to appreciate, understand and respect the different beliefs, values, behavior, and business practices of companies and people in different cultures and countries, is known as Global thinking. Entrepreneurs are expected to “do their homework” in order to learn about the people, places, business techniques, potential customers, and culture of the countries in which they tend to do business.

Going global can be a frightening experience. Most entrepreneurs who have already made the jump, however, have found that the benefits outweigh the risks and that their companies are much stronger because of this decision.


Chukwuma Aguwa is a Lawyer

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Columnists

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.

Explore the Nairametrics Research Website for Economic and Financial Data

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.

READ: Hotels in Nigeria are on the verge of collapse

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.

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READ: DPR reveals 4 major areas of focus for downstream operations of oil and gas sector

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

READ: Six Modular Refineries billed to commence operation, FG says 

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