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Tag: Deal Breakers

  • TNG Deal Breakers: The 2023 election budget and spending deal

    TNG Deal Breakers: The 2023 election budget and spending deal

    By Ifeanyi Ugwuadu

    It is often confusing to pin down the government’s expense figures or differentiate budgets from actual spending. The Nigerian government, like most African countries, especially enjoy the distinction of either having zero accountabilities or at best presenting opaque accounts on their spending. It is rather a well-known secret that unspent budgets that are cash backed are never returned to the treasury. 

    For once, let us look at the basis of the N305 billion budgeted for the 2023 general elections that were held on February 25 and March 18, 2023, against the deliverables promised by INEC. First, it was the excitement built around new registrants that swelled the voter records to nearly 100 million voters. Alongside this was the promise of an election never witnessed in Nigeria in terms of its transparency, technology deployment, and human and other material assets. Nigerians were treated to a new tech lexicon; IREv, BVAS, and so on. “This election can never be rigged” became the epitaph and the signature rhetoric of both the President, Muhammed Buhari and the INEC leadership spearheaded by the chairman, Mahmood Yakubu.

    At the mention of the tech-driven process, the youth and enlightened population revved with subdued expectations and surged forward. Suddenly, the PVC acquired a new currency waxing a larger life image. Every eligible voter charged into the melee for a new Nigeria. At the same time, the budgeting funding and the earlier queries on the colossal figure paled into insignificance. The consensus among Nigerians was that if INEC could deliver an election that would be unable to be rigged, altered or tampered with by politicians, then any amount is worth it, just to establish a clean process for electing political leadership.

    All this while, preparatory to the election, my rabid mind continued to evoke the memories of one of Nigeria’s ex-international footballers that bears the same first name as the INEC chairman. Placed in front of him was the ball at the penalty spot. The entire nation watched in great anticipation and anxiety at the kick that was to give Nigeria victory. But….in one moment, it was blown away!

    Staged against the heroic defence of the Osun and Ekiti States elections and the robustness of the new technology, the deceit and hubris were total and the voting population swallowed it hook line and sinker. At the Chatham House, in London, the grand plan to hoodwink was escalated to international believability.

    INEC Deliverables

    In their budget defence, INEC claimed it was investing in “top-notch cyber security systems to ward off attacks by hackers against its servers, website and database” and in line with this, it would require N117bn to deploy the Bimodal Voter Accreditation System and the Result Viewing Portal. 

    The Commission was to develop tighter protocols to ward off attacks from hackers like the one in the Osun governorship elections based on the ’fundamental principle that elections must be efficient and cost-effective to deliver better value for money.’’

    Thus, the 2023 elections were built around technology and clean results. There was no difference between what happened in 2019 and this year. If anything, it worsened and exposed the Nigerian system and population to further ridicule.

    The 33-member Election Project Planning Committee inaugurated on June 10 2021 with the mandate to undertake a review of the 2019 EPP, develop the 2023 EPP and the required framework for its periodic monitoring and evaluation alongside the implementers are answerable for the apparent failure of this project.

    On face value, the 2023 election cost 61.37 per cent more than the 2019 elections. Compared to the consumer price index, forex and other macroeconomic variables, the real terms figures may only differ slightly. Yet, in terms of the number of votes recorded, it was a dismal outing. 

    The N305billion binge and wasteful budget

    The highest budget item gulping 34.51 per cent of the entire election budget was spent on the procurement of “Accreditation Devices” at a total of N117 billion. Other key budget items included; Honoraria for Adhoc Staff put at N23.77 billion, or 7.79 per cent of the budget. Election Logistics Expenses (Movement, Deployment and Retrieval of Men and Materials for Election) gulped N23.01 billion representing 7.54 per cent. 

    Surprisingly, “Printing of Ballot Papers” cost INEC N20.68 or 6.78 per cent of the budget while another printing heading, ‘printing of result sheets’ cost the country N9.58 billion. This is indeed aggravated wastefulness. Anyone who witnessed the last election would objectively conclude the same in terms of the volumes of papers that were wasted. Hardly would anyone adduce the argument that voter turnout was the reason for the wasted bundles of ballot papers. Take for instance where the so-called number on the voter register at a polling unit was 1,800 and 3000 ballot papers or more were allocated to the Returning Officer. Some voters who waited after voting would have noted hours spent defacing the used ballot papers. 

    The other item is both the combined N46.78 billion supposedly spent on ad-hoc staff as honoraria and ‘retrieval of men and materials.’ The process for this was simply shambolic– at least in my polling unit and the majority of the Ward where I monitored right up to the collation centre, the whole process was chaotic. A significant number of the ad-hoc staff protested the nonpayment of their honorariums and that caused a delay in the arrival of materials and deployment. In most cases, private vehicles belonging to members of a particular party brought in the materials with the INEC team. So much was budgeted and it failed to impact the process positively. I will leave out other key budget items because they follow the same pattern.

    INEC’s general election budgets, runoffs or even staggered State elections are usually based on the number of people who registered for the election. Against this background, N139 billion was spent in 2011 on the 73.5 million registered voters for that year and this comes to N1,893 or $9 per voter. In 2015, N116.3 billion was budgeted at N1,691 or $8.5. The obvious decline in the 2015 budget doesn’t follow familiar patterns considering that it was planned based on higher voter registration. However, in 2019, the figure spiked to 84 million registered voters and N189.2 billion was spent to execute it. Budget based on 100 million registered voters. 

    According to Dataphyte, of the N444.5 billion spent on general elections in 2011, 2015 and 2019, N255 billion was lost due to low voter turnout. Even so, the fact that ballot papers and result sheets printing come under separate budget heads, shows the level of sleaze and reckless spending that government allows ever again in this badly hampered economy. Combined with its 2023 budget of N50 billion, which increased by 20% from the annual figure of N40 billion, a total of N355 billion would have been spent on this year’s election.

    Three States to complete the route and future budgets

    The off-cycle election in Bayelsa, Imo and Kogi States on November 11, 2023, 2023 would complete the waste so that the remaining budgeted monies can be justifiably pocketed. If the country fails to resolve the money, process, confidence and many other issues of this election, it would be difficult to imagine how we take the next steps if there are indeed steps after this.

    A good deal would have resulted in Nigeria winning: Nigeria would have won if the voice of its youth had been allowed to resound in victory. If the political elite had allowed the future of this nation – the youths and women, to win and restore confidence to nation building. The cost will be greater if the spate of ‘japa’, hopelessness and lack of belief in one’s own country spreads. They wanted a country that they wanted to devote their youthful zeal and energy to build. But the political class wouldn’t see the deal and seal it.

  • TNG Deal Breakers: The Decade of the Ocean and World Meteorological Day

    TNG Deal Breakers: The Decade of the Ocean and World Meteorological Day

    In two days, the event marking World Meteorological Day will hold worldwide. Precisely, March 23, 2023, is this year’s meteorological day. The short form is WMD! Certainly not Weapons of Mass Destruction (WMD). But our mass ignorance about the nature of this planet, Earth has weaponized against humankind in such proportion that our own devised destructed weapons can hardly achieve. The simple analogy about how we have lived on this planet so far is to imagine oneself being gifted with a beautiful edifice, and the one gifted starts a willful destruction of the home.

    Science endeavours are aimed mostly at attempts to “recreate nature”. Nature according to the same science, existed before man started living on earth. So, how do you recreate what you did not create in the first place? The incapacity of science to place itself under the tutelage of natural phenomena is the reason for the mass deaths and destruction of large proportions of the assets he has built over time. 

    The verdict delivered by World Meteorological Organisation (WMO) is that “half of the countries globally do not have early warning systems and even fewer have regulatory frameworks to link early warnings to emergency plans.  Coverage is worst for developing countries on the front lines of climate change, namely Least Developed Countries (LDCs) and Small Island Developing States (SIDS)”.

    This holds true of our Nigeria Meteorological Agency (NiMET), its hydrological counterpart and the emergency response agency. No framework exists to coordinate the policies of these federal agencies and coalesce them into one system.

    Although huge technological advances have been recorded, “fundamental gaps remain in the global observing system. Far too many people in vulnerable countries lack even rudimentary early warnings that bad weather is heading their way”, the WMO admitted.

    Fortunately, under an UN-backed initiative, “WMO is spearheading a new Early Warnings for All initiative to ensure that everyone in the world is protected by early warning systems in the next five years. The initiative embraces the entire WMO community, the wider UN family, development banks and the private sector, including Big Tech companies. 

    Early warning systems are widely regarded as the “low-hanging fruit” for climate change adaptation because they are found to be relatively cheap and effective in protecting people and assets from weather and climate extremes, including storms, floods and heatwaves to name a few.  It is estimated that they provide a tenfold return on investment. 

    The most important revelation ahead of this year’s WMD is that “the Global Commission on Adaptation found that spending just US$800 million on such systems that would advance early weather warning across developing countries would avoid losses of $3 to $16 billion per year.

    Nigeria’s hydrological services agency launched with fanfare the annual ritual of publishing an 82-page 2023 flood outlook for the country. Almanack-like pictures adorn the publication which apart from a few insertions of 2023, it reveals nothing new. This is the only advisory they can offer the farmers. “This year’s annual flood outlook publication serves as a measure to sensitize the populace and create awareness on the inherent dangers of flooding in order to minimize its negative impact,” the report stated. It is not clear whom the report’s target.

    Science and innovation are also key tools to protect ocean health, which is why 2021-2030 is the Decade of Ocean Science for Sustainable Development. This decade will be the decisive period for the realization of the 17 United Nations Sustainable Development Goals. Climate change threatens the achievement of many of these goals.

    Red Flags

    WMO’s State of the Global Climate reports has tracked changes in the climate system over the years. The reports show how key climate change indicators – greenhouse gas concentrations, surface temperature, ocean heat, ocean acidification, glacier melt, sea ice loss, and sea level rise – are all at record observed highs. We are getting ever closer to the 1.5° C lower temperature limit of the Paris Agreement on Climate Change. 

    Climate change is leading to more extreme weather and climate events such as longer and more intense heatwaves, heavier rainfall, and more severe droughts. Our vulnerability to the adverse impacts of weather events is increasing in many areas. More people than ever live either in megacities or in high-risk zones such as low-lying, exposed coastal areas and flood plains.

    In times past, we read about earlier human communities being evacuated to safer areas whenever the likelihood of catastrophes threatened. They moved and continued living in harmony with the natural phenomena around them. However, in modern times with avaricious claims to pieces of land and the inability to read natural signals, communities stay put, rebuild the devastated assets with a display of uncommon stubbornness and ignorantly set traps for the next generation.

    The early warnings our modern science has copied are vastly inaccurate. Where the predictions are precise, it falls short of the necessary action – moving people away from danger zones in collaboration with the government. The only sensible thing course of action is to use science to determine from time to time, zones under danger and ensure that communities under threat know early enough that erecting permanent residences at such places is unsafe.

    National Efforts

    The National Agency for the Great Green Wall (NAGGW) was legislated in 2015 as an offshoot of the AU initiative to curb land degradation, drought and desertification which have been worsened by extreme weather conditions. The singular objective is to boost processes that will improve the livelihoods of the affected communities and reduce poverty including building the resilience of the communities in flood-prone areas

    The African GGWSSI protocol targets 2030 to restore 100 million hectares of currently degraded land and create 10 million green jobs. It is envisaged to transform the drylands of Africa from a threat to livelihoods to a provider of livelihoods. “It will transform the lives of millions of people living in poverty and suffering the effects of the climate crisis while breaking the cycle of migration and conflict prevalent in the Sahel.

    Nigeria’s Great Green Wall Agency which ought to act as the focal point to supervise and coordinate the implementation of “National GGW priority actions” is certainly one of the least priorities of the government.

    Newer Efforts

    The WMO believes that significant new observation and modelling technologies are helping to develop and advance understanding of the “Earth’s complex global weather and climate system and translating to huge economic gains. The Integrated Global Observing System (WIGOS) can be credited with real-time access to local weather forecasts.

    Key sectors such as agriculture, health, water, transport and energy depend largely, on meteorologists and climate scientists for much of their activities.

    Every day, “more than 30 meteorological and 200 research satellites, 10 000 manned and automatic surface weather stations, 1 000 upper-air stations, 7 000 ships, more than 1 100 buoys, hundreds of weather radars and 3 000 specially equipped commercial aircraft measure key parameters of the atmosphere, land and ocean surface every day. transmit observations seamlessly on World Information System (WIS).

    The future

    Although progress has been recorded in the predictability of weather incidences and thus aiding better planning, this advancement is clearly evident only in developed countries. In terms of human casualties during disasters across the world, the least developed countries have suffered the most. Both the early warning and emergency response systems lack advancement similar to the developed world. 

    Weather trends and predictions have so far been revolutionized by new technologies. Investments from the private sector have also been enormous.  However, if we must continue to live the same old way without a clear unlearning of the old system and learn from earth’s geology and topography in the planning of our living and economic activities, natural events will appear to be merciless in their effects on humans and economic assets.

    With appropriate investment in science and technology, and through better Public-Private Engagement, the weather and climate enterprise will meet increasing demands for tailored and seamless weather and climate forecasts. Such improvements will provide significant value to all nations. 

    “Science and innovation are also key tools to protect ocean health, which is why 2021-2030 is the Decade of Ocean Science for Sustainable Development. This decade will be the decisive period for the realization of the 17 United Nations Sustainable Development”. Whether this portends a more science-led future in weather and climate prediction for all countries will be determined by how much commitment the WMO extracts from developing nations.

  • TNG Deal Breakers: How Nigeria can incentivize agriculture for food sufficiency

    TNG Deal Breakers: How Nigeria can incentivize agriculture for food sufficiency

    China, India, Indonesia, Thailand and a host of other Asian countries with large populations produce enough grains like rice for local consumption and ship the rest – perhaps of doubtful quality, to Africa, with Nigeria as the main destination. The government of the day and in the past appear just satisfied with this situation. Otherwise, how could one explain that in a country with a population of 200+ million, nearly 1 million square kilometres of land, almost half of it cultivable, arable land would depend on larger populations to supply it its food needs?

    Beginning from the period of one’s childhood when Operation Feed the Nation (OFN as it was then called) turned into a sort of nursery rhyme to the Green Revolution era, Nigeria has travelled a long, wieldy and unyielding distance towards feeding its population. It is rather painful that nobody can account for this serial failure except to blame corruption. How long can we maintain this trajectory of catering only to our patronizing and transactional system?

    The New Alliance for Food Security and Nutrition formed in 2012 and driven by the G8 targeted to lift 50 million Africans out of poverty by 2022. The 10-year programme ended last year recording absolute failure. The so-called alliance between African leaders and G8 aimed at accelerating investment in agriculture did not lift anyone out of poverty. It has been said repeatedly at various fora that Africa can feed its populations. 

    Africa is an important destination market for the export of foods and other finished products from developed countries with over a trillion dollar bill. It is illogical to expect these same G8 countries to fund your self-reliance in food production. Even the best morally-driven philanthropy would not destroy its own market and source of revenue.  

    The AfDB’s investment of US$520 in a Special Agro-industrial Processing Zones (SAPZ) in Nigeria should be driven by an urgent need to start reversing the colossal amount being spent on food alone. This could be seen as an emergency intervention in the face of food shortages worldwide. This investment is targeted and has the sufficient commitment of the investing entities. The component commitment of the Nigerian

    Import Bill 

    At about US$50 billion, it is estimated that the African continent’s food import bill could rise to US$110 billion in the next 7 years. Nigeria’s actual food import bill varies from various sources. Bloomberg puts Africa’s current 100 million metric tons of cereal import bill at US$75 billion while projecting an annual loan of US$ 65 billion to curb the high import bill.  Some sources put Nigeria’s food import bill at US$22 billion and US$20 billion while CBN put the figure at N1.2trillion or US$2.71billion. Whichever is correct, the high import bill for consumption is unsustainable and requires an urgent and Marshall-like plan to save the economy and feed the growing population.

    On the other hand, while food imports are rising, capital importation to agriculture fell to worse levels in 5 years by 2022. 

    How to reconfigure investment in agriculture 

    From the military rule era to the intervening years of civilian federal governments and now to full-blown civil rule, policy inconsistency, and corruption leading to the diversion of incentives and insufficient investment and oversight have robbed the country of the attainment of food sufficiency. For maximum impact, the incentivizing modalities need to be revised to focus more on large-scale farmers while still supporting smallholder farmers. This could be the game changer because up till now every government’s agricultural and farming incentive has targeted small farmers. However, their combined output has always fallen short of meeting the targets required to attain food self-reliance. 

    For large-scale farmers, it is easy to track investments and tally them with results while the prevailing emphasis is on supporting the small-holders from farm to market. In this scenario, the overall objective of attaining high food production is subsumed by the sentiment of not allowing the small farmers to lose their output either to the vagaries of weather, poor harvest, and distribution loss.  

    Of the nearly N200 billion Credit Risk Guarantee (CRG) NIRSAL exposure to the agricultural sector, only a small fraction is viable owing to the obviously large targeting of smallholder farmers. Certainly, it is absolutely imperative for the federal government to organize and fund small-holder farmers, agriculture cooperatives and the small and medium-scale agro-allied industries in the value chain. However, inputs in this area have in the long-term not matched output. The reason for the poor performance is that they are not enabled to upscale their output, but to aid corruption and diversion of funds by the agencies

    Unlike the large-scale agriculture investors, the small-holder farmers and cooperatives almost beg their way into being included in these portfolio disbursements and thus, are weak to negotiate firmly for the right loans or grants and conditions. It is almost perceived as a share of the national cake and lacks the full evaluation and profiling that ought to go into each of these small groups.

    The Bank of Agriculture, Bank of Industry, Nigeria Incentive-Based Risk Sharing System for Agricultural Lending and other special purpose agencies for the agricultural sector may consider a review of their support and lending template if the nation is to pull out of food import dependency.

    Proposal for viable investment targets

    Aside from the Special Agro-industrial Processing Zones (SAPZ) launched by AfDB in the last quarter of 2022, other special interventions by the federal and state governments are required.

    Universities of Agriculture in Nigeria are currently academic institutions for the award of degrees. This should change to be predominantly research institutions and training grounds for agriculture entrepreneurs, innovators and agriculture academicians. There are currently about 10 federal institutions dedicated to agriculture. College of Agriculture, Jos; Federal College of Agriculture, Ibadan; Federal College of Agriculture, Ishiagu Federal College of Animal Health and Production Technology, Vom. Others include the Federal College of Fisheries and Marine Technology, Federal College of Forestry, Jos; the Federal University of Agriculture, Abeokuta; Michael Okpara the University of Agriculture; The Federal College of Agriculture, Akure and the Federal University of Agriculture, Makurdi.

    There are dozens more federal and state universities offering agriculture as an academic course. It would be wrong for the university authorities to accredit a university for the purpose of awarding certificates only. The 21st Century conditions demand that graduates leave school to set up or work for establishments and start adding value to the economic system. The framework for this should take as exemplars, the universities of agriculture and the proposed real farm settlement environment.

    Acquisition of farmland, technology systems

    A minimum of 20 hectares of land must be acquired by all universities of agriculture and the necessary technology deployed. They should not only serve as practical preparatory farms but as profitable ventures run professionally. The difference from other farm ventures is that they are attached to universities for hands-on training of agricultural entrepreneurs.  Dozens of other universities that offer agriculture as a course should make use of these farmlands in their catchment areas as extension studies. Students should be acquainted with modern technologies. Biotechnology students should also collaborate with these institutions to integrate practical knowledge of synthetic biology ecosystems into their curriculum. These farmlands need not buy non-essential tools. Tractors for harvesting and tilling the soil if purchased may be rented out to small farm-holders in the community of agriculture universities for more impact.

    Upgraded Curriculum 

    The curriculum of agriculture universities should be aimed at making entrepreneurs, academics and innovators in this field. They can be well organized to attract foreign funding aside from government and local finance. Alongside this, a grading system oriented towards agricultural innovation may be developed by the universities so that before graduation and youth service, the best graduates are ready for the market in terms of their marketable and implementable solutions. 

    The work rate and grading component for agriculture university students should include the number of successful smallholder farmers they have helped with their knowledge.  

    Consistent awareness of the skills-oriented school curriculum should naturally attract the utmost attention worldwide so that students would already be armed with the knowledge of preparing their own business plans and can attract funding as undergrads. The principle of cooperation between departments and among students should be the basis of the academic community. For instance, an agricultural entrepreneur could expose his plan to an accounting/finance student to get appropriate financial modelling for his business.

    The Heifer exemplar

    Heifer Nigeria is aiming to support “one million families, predominately women and youths, to reach a sustainable living income by 2030”. The multinational is investing in “priority value chains critical to the country’s food security, leveraging innovation and emerging agricultural technologies to reach impact at transformational scales”. The program components reach out to all stakeholders in the agricultural value chain. However, its activities are heavily inclined to run along the smallholder farmers which for a long has not produced the right results. At best, it can only support the subsistence of its target groups. Heifer and similar portfolio investors can expand to embrace large-scale farmers in their investments to achieve significant results. The school programs enunciated in this piece can serve as incubator hubs for agricultural entrepreneurs.

    We can start making our systems work for this and the next generation!

  • TNG Deal Breakers: AfDB’s US$520m Agriculture funding and Priorities of Export Processing Zones

    TNG Deal Breakers: AfDB’s US$520m Agriculture funding and Priorities of Export Processing Zones

    The figures peddled by Nigeria’s export processing zones regulator are quite exciting. On the face of it, one could conclude that Nigeria has made landmark milestones on its economic development frontiers. However, the underlying ratios in terms of well-known Nigeria’s comparative advantages – or yet-to-be-developed advantages – do not give a picture of commensurate progress compared to other countries EPZs.

    Officially, Nigeria’s 40 Export Processing Zones have attracted over US$30 billion in Foreign Direct Investment, though the net value is not stated, and over N620 billion in local investment.  These are milestone achievements when added to more than 25000 jobs created by 580 enterprises operating within the zone corridors.  However, viewed from the perspective of sectoral investments in the zones and the nature of activities of operating companies, the country is certainly, not creating any advantages for its economy. Whereas agriculture contributes about 24% to GDP, it attracted only 1% of investment to the trade zones.

    Though government targets a US$100 billion export from the special economic zones, the figures of current export earnings from the zones, as the second major policy thrust, are visibly absent from statistics rolled out by Nigeria Export Processing Zones Authority.

    Impressively, the manufacturing sector attracted the largest investment at 45% followed by services at 30% while Oil & Gas and trading have 11% and 10% investments respectively. Logistics at 3% is followed by agriculture. This is the picture of the federal government’s EPZ policy so far. And when drilled further down, the nature of manufacturing activities driven by kinds of pasta, biscuits and so much else that are not export-oriented but inward market-driven, the position becomes clearer.

    With weak infrastructures and lax labour practices, the zones have only conceded the competitive advantage to certain foreign players who among other economy-hurting practices, import labour that could have been supplied locally. The immigration waiver on expatriate quota, duty-free imports and other incentives for zone enterprises are to be blamed for the influx of foreign nationals into the zones. Therefore, when all these are discounted, it may be glaring that job creation and exports, the main accruing net values for the zones and country are lost.  

    Agriculture and agribusiness as priorities for export-driven zones

    Agriculture is largely most African countries’ mainstay and including Nigeria. Nigerian exports consist mainly of raw materials to developed countries. In return, the country imports the finished products at a cost which surpasses the earnings from its exports. Hence the huge trade deficits it records Year-on-Year against its trading partners. For instance, Nigeria’s 4-year (2016–2019) cumulative agricultural imports at N3.35 trillion were four times higher than the agricultural export of N803 billion within the same period.

    Since African leaders discovered that their countries would continue to rely on finished products from developed countries and remain disadvantaged and remaining competition minnows in world trade, they came up with African Continental Free Trade Area (AfCFTA) to increase trade amongst themselves and thus transform their economies for bloc competitiveness.

    The AfCFTA business is one major transformational initiative that can strengthen the trade negotiating powers of the continent and the individual countries viz-a-viz other supranational trading groups. For this piece, the focus in on Nigeria’s export processing zones which incidentally, is the incubation lab for its continental competitiveness.

    Nigeria adopted Free Zones in the country to create an “enabling environment aimed at enhancing economic growth and development of export-oriented manufacturing in the non-oil sector of the economy, as well as the propagation of the Nigerian content policy in the oil & gas sector”. The overall benefit of the policy is to diversify the economy, “attract Foreign Direct Investment (FDI), generate employment, increase foreign exchange earnings, enhance technology transfer, skill acquisition and upgrade as well as create backward linkages.”

    The Nigeria Export Processing Zones Authority (NEPZA), an agency under the supervision of the Ministry of Industry, Trade and Investment is the major implementer of this federal government’s initiative to diversify the Nigerian economy. It focuses on attracting investors with attractive investment packages which include tax havens and 100% profit repatriation.

    Typically, the export zones are located in the vicinity of seaports and airports, thus making the import and export process more convenient. The main lure for developing countries is the possibility of increased foreign exchange and job creation. However, without clear oversight by the regulator within the zones, investors take advantage and make the objectives unrealizable. On this, the World Bank warns that the adoption of EPZs should not replace sound economic reforms.

    Rethinking incentives, AfDB interventions

    It is still possible to rethink the investment priorities in the export-free zones through a balanced waiver and tax incentives regime for companies investing in economic growth sectors like agriculture and manufacturing. For the manufacturing sector, the export-import ratio of the zones enterprise should determine the incentives to be offered. A blanket offer of incentives without any clear match to the export orientation of the zone enterprise will continue to weaken the policy objective and to a larger extent, the economy.

    With a declaration that “there is no reason for anyone to go hungry in Nigeria,” Nigerian-born President of African Development Bank (AfDB), Dr Akinwunmi Adeshina flagged off late last year, an investment of US$520 to a Special Agro-industrial Processing Zones (SAPZ). This could be seen as an emergency intervention in the face of food shortages across the world.

    Faced with the stark realities of vastly impoverished and starving populations worsened by the disruption of grain supplies from Russia and Ukraine, urgent action became imperative to save lives in Africa. About 30 metric tons of wheat, soybeans and maize have been short-circuited due to the war in both countries.  For this reason, the AfBD and other participating institutions, IFAD and the Islamic Development Bank launched the SAPZ programme aiming to empower “100,000 direct beneficiaries including smallholders, small processors, traders and service providers with a strong focus on youth and women.

    To achieve its overall objective, SAPZ will “develop value chains for selected strategic crops in Nigeria, including maize, cassava, rice, soybean, cocoa, poultry, and livestock products. They will also create millions of quality jobs, especially for youth and women.

    “Our empowerment strategy aims to equip farmers and smallholders to take advantage of the markets created by the SAPZ to sustainably enhance their income through income-generating activities, household food security and nutrition, and resilience to climate change,” states Meighan of Islamic Development Bank. 

    The AfDB envisages that “SAPZs will help feed Nigeria, transform rural economies, expand fiscal space, fully unlock Nigeria’s agricultural potential, and create millions of jobs.”

    The first phase of the program will include seven States of Nigeria namely, Cross River, Imo, Kaduna, Kano, Kwara, Ogun, Oyo, and the Federal Capital Territory, Abuja. On paper, this looks too good, but hitting the ground running in view of the near-crisis situation in food supplies is another matter because of Nigeria’s lethargic response to the implementation of programmes such as this.

    Reversing the high food import bill

    Five major crops – maize, cassava, guinea corn, yam, beans, millet and rice – possess the highest yield opportunity for a quick turnaround to a productive economy from the prevailing consumptive economy. With some 70.8 million hectares of agricultural land area holding highly competitive cultivable landmass for the crops as mentioned earlier, the country can become a net exporter of these crops while also satisfying its local demands.

    Africa accounts for the world’s 64% cassava production with Nigeria leading with 63 million metric tons in 2021. It is estimated that the country also suffers a shortfall of about 3 million metric tons in its rice consumption requirements. As a staple food, this holds an advantage for large-scale farm investment. The Nigerian government needs to seize the massive agricultural investment opportunity offered by AfDB and its partners for improved production in the crops identified as high-yield revenue earners.

    We can also learn from the past mistakes of crude oil dependency which weakened the productive capacity of palm oil and other agricultural produce some decades ago. Today, Nigeria is not a leading producer of palm oil it was number one in the 60s and early 70s. The same may happen in maize, cassava and other crops which it has a comparative advantage if it does not pick the gauntlet and rev up. Economic intelligence shows that some Asian economies are studying and experimenting with the potential of cassava and maize economies and may one day dump Nigeria by the wayside in producing these crops.

    The Government has implemented several initiatives and programmes to address the situation including the Agriculture Promotion Policy (APP), and Nigeria–Africa Trade and Investment Promotion Programme. The Presidential Economic Diversification Initiative, Economic and Export Promotion Incentives and the Zero Reject Initiative are other initiatives that suffered the same poor implementation and priority failures. In addition, Reducing Emission from Deforestation and Forest Degradation (REDD+), Nigeria Erosion and Watershed Management Project (NEWMAP), and Action Against Desertification (AAD) Programme count among numerous other initiatives that are only alive in reports.

  • TNG Deal Breakers: Earthquakes: Today’s Turkey, Syria and elsewhere, but it cannot happen in Nigeria?

    TNG Deal Breakers: Earthquakes: Today’s Turkey, Syria and elsewhere, but it cannot happen in Nigeria?

    Every day we read about the phenomenal human lives wasted since the massively destructive earthquake hit Turkey and Syria, a country that has recorded large-scale calamities from wars it waged on itself. The death toll was 34,000 at the beginning of this week and hopes are gradually dimming on possibilities of digging out more survivors. Destruction of lives and property was at a larger scale in Turkey than in Syria. Though the countries are still counting losses in both human lives and property, yet one important takeaway from the outcome of the 7.9 magnitude quake is Turkey’s lax policing of building codes, according to experts.

    Pictures emerging from the worst-hit areas like Hatay Province show high-rise in residential buildings that are similar to what can be mapped in some of Nigeria’s urban areas, particularly in the southern part of the country. Experts say that this pattern of buildings, very close to each other was the major reason for the high number of deaths recorded. Like Turkey, Nigeria’s perennial occurrence of building collapse has been attributed to weak regulations in the compliance of standard building ethics in the quality and quantity of materials.

    In addition, the world’s top insurers and reinsurers are not fretting over Turkey and Syria’s insured losses because in both countries religious beliefs inhibit insurance choices as a risk transfer mechanism. The same can also be said about Nigeria in respect of the overall weak insurance environment, poor emergency response system and absence of economic and city resilience measures.

     Is an earthquake possible in Nigeria?

    The answer is yes! Researchers have established that Nigeria is prone to earthquakes but claimed that it is of a low seismic proportion. This finding is contrary to the preponderance of opinions by the vast majority of uninformed Nigerians that earthquakes of the magnitude that happened in parts of Turkey and Syria cannot happen in Nigeria. Many more also hold the view that Nigeria’s geological condition cannot give rise to earthquakes, either of low or high magnitude. 

    In the article, Review of Earthquakes in Nigeria: An Understudied Area”, published in the International Journal of Civil Engineering and Technology, the authors posited that earthquakes of a magnitude of up to 7.1 is possible in Nigeria. There is more to this finding that should jolt the government sufficiently enough to act. It was not until the second half of 2019 that the federal government established the Center for Geodesy and Geodynamics in Bauchi State, perhaps after the tremor that shook Abuja and miles within the country.

    In 2005, NASA scientists using data from the Indonesian earthquake calculated that it “affected the earth’s rotation, decreased the length of the day, slightly changed the planet’s shape and shifted the North Pole by centimetres.” These are incredible findings that humankind should follow up on closely.

    The earthquake that created the huge tsunami on December 21, 2004, also “changed the Earth’s rotation” concludes Dr Richard Gross and Dr Benjamin Fong Chao of NASA’s Jet Propulsion Lab, Pasadena, California and Goddard Space Flight Center, Greenbelt, Maryland respectively. Although they imputed that the changes are barely noticeable, still such changes come with yet incalculable but certain phenomenal events in life on earth and of the Earth itself. “Any worldly event that involves the movement of mass affects the Earth’s rotation, from seasonal weather down to driving a car”, said Chao.

    The NASA pronouncement put together with the 1998 8.1 magnitude earthquake in Antarctica a region previously certified with low seismicity in the world shows that Nigeria, despite being a low seismic country can experience earthquakes of higher proportions as forecasted by the researchers. 

    Globally, 2,206 earthquakes with a magnitude of 5.0 upwards were recorded globally in 2021. A total of 23,679 earthquakes happened across different regions of the earth from 2009 up to 2021. It would seem that the phenomenon spiked again in the past two years and with the current devastation in Turkey and Syria early in the year, it could be a warning to brace up for an uncertain year of possible aggravation of natural disasters.

    In light of the vulnerabilities and increasing certainty of a massive earthquake occurring from 6% probability to over 90%, it is imperative that the CGG leadership take its task seriously so that early sensitization of the Nigerian people and awareness of the dangers can be created.

    Recall that in 2001, e detonation of bombs at the Maryland Ordinance depot of the military rocked Lagos and its outskirts so massively that thousands of men and women, young and old ran to their death because there was no forewarning about the nature of that military activity. When compared to what might likely happen in the event of a serious earthquake in the country, the ‘Ikeja bomb blast’ will pale into insignificance. Though significant insured losses were recorded, the estimated thousands of Nigerians who died had no insurance coverage.  

    Seismic Faults in Nigeria

    According to Oluwafemi, Olufuyatan, Ede, Oyebisi and Akinwunmi of Covenant University, “some geophysical studies have established that there is the existence of an active seismic fault in Nigeria. The fault was named the Ifewara-Zungeru fault due to the bearing of the line of the fault as it trends through the Ifewara zone of south-western Nigeria”. Any future earthquake in predicted to occur within the existing fault lines”, they stated in their report cited earlier.

    Indeed, Federal Capital Territory residents and Abuja have experienced tremors a couple of times. The last officially reported episode was on November 1, 2018. An earlier event on September 5, 2018, which lasted three days in Mpape and some parts of the Maitama district in FCT kept the entire country in panic mode.

    Records also counter the dismissive optimism that Nigeria would not witness serious earthquakes. In the past many earthquakes have been dispersedly reported across the six geopolitical zones namely the North-Central Zone (NC), North-East Zone (NE), North-West Zone (NW), South-East Zone (SE), South-South Zone (SS) and the South-West Zone (SW) as follows;

    North-Central:  Benue,  Kogi,  Kwara,  Nasarawa,  Niger, Plateau, Abuja

    North East: Adamawa, Bauchi, Borno, Gombe, Taraba, Yobe

    North West: Jigawa, Kaduna, Kano, Katsina, Kebbi, Sokoto, Zamfara

    South East: Abia, Anambra, Ebonyi, Enugu, Imo

    South-South: Akwa Ibom, Cross River, Bayelsa, Rivers, Delta, Edo

    South West: Ekiti, Lagos, Ogun, Ondo, Osun, Oyo.

    While the first quake ever in Nigeria occurred in 1939 in Ibadan, the first tremor was recorded in Warri in 1933.

    Geological setting of Nigeria

    Lagos and most of the southwest region are more prone to earthquakes than other regions. Interestingly, the Nigerian Association of Water-Well Drilling Rig Owners and Practitioners (AWDROP) has alerted the federal government about putting measures in place that could limit or reduce the effects of earthquake aftermath. The drilling group’s concern followed on the heels of another scholarly research led by Dr Adepelumi Adekunle Abraham, of the Department of Geology, Obafemi Awolowo University, Ile Ife which pinpointed Shaki in Oyo State as being in danger of earthquake. Their report titled “Preliminary Assessment of Earth Tremor Occurrence in Shaki Area, Shaki West Local Government, Oyo State” triggered a call by AWDROP for regulation for underground water extraction. There is none as yet in this regard.

    Instruments to detect seismic activity

    Nigeria is gradually equipping itself to improve its seismic records and that effort has currently raised the country to a status of possessing five active seismic stations in Nigeria. The plan is to increase the number of seismic stations across the country. The Centre for Geodesy and Geodynamics (CGG) Toro is saddled with the task of monitoring and studying seismic events of the country. The active seismic stations run on a 24-bit 4- channel data acquisition system with seismometers broadband. It is not certain if the planned acquisition of telemetry equipment has been affected. Greater emphasis should be on the education of the population.

    Forecast

    Nigeria is only five years away from the terminal forecast period of 2010 to 2028 when it was predicted that an earthquake of magnitude greater than 5.0 would occur in the country along its seismic fault line with the South-West most susceptible. Increasingly several seismic alerts and warnings from agencies and researchers point to a possibility that must be taken seriously. The forecast had a probability that increased from 6% to 91.1% between 2010 and 2028.

    Future research led by the CGG should endeavour to bridge the knowledge gap as regards the extent of the probable future earthquakes in Nigeria. This will enable an orientation process to get Nigerians and businesses prepared for any such occurrence.  It is unhelpful to hold on to the arguments that large earthquakes may not occur in the country. A shift in the North Pole after the Indian Ocean tsunami has altered many an existing geophysical balance.

  • TNG Deal Breakers: 2023 flood forecast: Awaiting another cycle of calamity

    TNG Deal Breakers: 2023 flood forecast: Awaiting another cycle of calamity

    Rain! Rain! Go away!

    Come again another day!

    Singing this childhood lullaby to adults smacks of irresponsibility or simply childishness. Because, certainly, it will rain. And it rains with indifferent ferocity, taking along with it all that stands in its way, including human beings. It is a calamity officially predicted. But unfortunately without any resilient mitigating plans. Year-on-year, the cycle of flood forecast and losses seem premeditated to query the role of government. Wherever a plan is in place, loss of lives could be brought to the barest minimum. There could be a loss of economic assets which can be replaced by appropriate insurance or calling government provisions for rebuilding. 

    And yet, as if to give the impression of being on top of the situation,  the Nigerian Federal Authority declared that “Nigeria would witness another round of flood in many states this year, but stated that early preparations had commenced avoiding some of the mistakes that were made in 2022”. It also admitted that 662 human lives were lost to the devastating floods in 2022. 

    There was no news about compensation to victims’ families or visits by the government, either State or federal, to some families that lost their loved ones. Rather it is a declaration that they should wait for another round of flooding this year with a kindhearted warning for people living in flood-prone disaster areas to relocate. No mention was made about where to relocate or where the government has put up emergency shelters to cater for people who might be displaced by the flood. Officials think they have done enough with hosting a press conference, admitting that nearly 700 citizens perished in flood waters in just one year – 2022.

    ‘Mistakes were made

    Mustapha Ahmed, the Director-General of the National Emergency Agency felt great to admit that mistakes were made in the handling of flooding last year. “We are starting early because we have seen one or two mistakes that were done last year.” What were the mistakes and who was negligent in performing the duties assigned that led to an unprecedented loss of human lives?  Suddenly, NEMA realized that collaboration with the States was absent in preparation for 2022 flooding preparations. “We can’t work if NEMA is moving on one side, while the States are on the other side,” he lamented to the press.

    Besides the DG’s pronouncement that “state governors would be informed early this year about disaster-prone areas,” he did not disclose flood mitigation measures that will at least save lives. Questions like building shelters with basic supplies for those people who will be temporarily relocated and long-term plans to move people out of these areas with States government’s collaboration.

    Kudos to NEMA! It held a 5-day seminar which ended last week with facilitators from Bournemouth University Disaster Management Centre. Certificates were awarded to attendees which included some State Emergency agencies. How does this seminar translate to a robust mechanism for responding, mitigating and preventing the perennial flood disaster and the avoidable loss of lives?

    Naturally, NEMA should have a risk management expert and or actuary at its top-level executive function. These would be complemented by outsourced experts that would plan on a long-term basis how to deal with flooding in Nigeria. Since it can only get worse because the intensity of the rains cannot be stopped on the back of climate risks of the 21st Century, it is only logical that managing the risk of both natural and man-made disasters remains the only solution. African Reinsurance Corporation has been at the forefront of formulating risk measures to help farmers adapt to climate risks and protect their crops. NIRSAL is doing the same with the help of risk experts.  It is beholden to NEMA to seek the expertise it lacks. If it could invite experts from Bournemouth University to deliver seminars, the abundance of such expertise locally can greatly help its work. Perhaps, its functions are being misinterpreted to apply only in emergencies.     

    A dam buffer  

    A presidential committee on flood prevention set up by President Buhari in the wake of the last year’s devastating floods is working on a proposal to construct a buffer dam along Dasin Hausa to protect Adamawa and Taraba States from flood waters resulting from Lagdo Dam. The Committee has 90 days to prepare a holistic plan to prevent flooding in all parts of Nigeria! 

    Note that this Dasin Dam construction had been abandoned and the flood Committee is considering recommending the construction work to recommence and awarded again. That’s how we roll! No accountabilities about how much money was committed by the government and the name of the contractor who failed to execute the contract. No general audit and no plan to involve experts to acquire the project!  

    Certainly, this presidential fiat is a tall order that would lead the country to nowhere. You cannot fashion a blueprint for flood risks in this way. A presidential committee comprising only politicians and civil servants are unable to achieve anything significant when risk management experts are excluded. Commendably, though this government is smart because in 90 days, a new government would have been known and the current one would be winding down.

    A case for a National Flood Insurance Policy

    The Nigeria Meteorological Agency (NiMet) and Nigeria Hydrological Services Agency (NIHSA) – which actually can be collapsed under one agency – in pushing out the annual flood outlook and forecasts should only serve for modelling risk uptake by commercial underwriters as well as emergency responses. The way these outlooks are dished out seems to make these predictions represent the end itself and not a means for mitigating and response.

    We need not reinvent the wheel but adopt and adapt workable solutions to our environment. All over the earth, nations face similar natural events to ours. However, they have employed the expertise required for the purpose and solving problems. The subject of flooding and other natural disaster are risks we face that has solutions.  

    We can learn from the United States Federal Emergency Management Agency (FEMA) which wrapped up its “2023 traditional reinsurance placement for the National Flood Insurance Program (NFIP), transferring an additional $502.5 million of flood risk to the private reinsurance market for a total premium. Combined with the agency’s “three in-force catastrophe bond transactions, FEMA has transferred $1.9275 billion of the NFI P’s flood risk to the private sector.”

    About 8.5% of losses placed with 18 private reinsurers are structured to pay between US$ 7 billion and US$ 11 billion for any single flood event. 

    Nigeria doesn’t have the scope of US exposure, but part of emergency funds under the various headings that I had written about a couple of weeks ago can serve to get insurers and risk experts to come together and identify areas to insure and where funds from the Ecological Project Office can buy bonds from the reinsurance market. The most critical is the insurance of loss of lives and property. There should be a succour for families that suddenly lose their loved ones. 

    There is hardly any other country that has recorded this mass death resulting from flooding as happened last year. What is urgently required for the 2023 rainy season is for the relevant agencies across all tiers of government to collaborate with National Orientation Agency to mount a robust enlightenment campaign in flood-prone areas so that people will understand the dangers they face and possible self-help that they may activate in emergencies.

    Emergency Response System

    Nigeria does not possess the capacities, both in human and equipment investment to respond to emergencies related to rescue operations. Also, it is unlikely that any framework exists to call in the military to augment the lack of trained rescue personnel in emergency agencies. It will be a daunting task to get all these in place before the rains. Therefore, the quickest and easiest plan now is the prevention of human disaster. Resources will need to be mobilized to accommodate people that will be temporarily relocated to purpose-built shelters for about three months during the peak of rainfall using NiMet mapping and the hydrology forecast. 

    It is only wishful to express and propagate the idea that a strong response system may be put in place before April to tackle any flooding of the proportion of 2022. The vulnerable area mapping and meeting of governors and other stakeholders as expressed by NEMA seem like routine engagements. The Presidential Flood Emergency Committee and NEMA need not give false hopes to citizens. But they can work together to make resources available to move people away from flooding areas.

    This aside the federal government and the States can then invite both commercial risk market players to advise on the best approach towards our own Nigeria National Flood Insurance Policy. It will be structured to be owned by NEMA. For this to happen, NEMA would have to be restructured both in concept and operations.

  • TNG Deal Breakers: Nigeria’s 2023 top risks, shocks and national preparedness

    TNG Deal Breakers: Nigeria’s 2023 top risks, shocks and national preparedness

    Yet again, the year 2023 retains much of the woes that had plagued the country in the past five years in terms of the risks it faces which some analysts describe as existential if it festers beyond this year without any strong remedial initiatives by the government.

    The current year’s Global Risk Report commissioned by the World Economic Forum (WEF) listed 35 risks that were incorporated into its Executive Opinion Survey (EOS). Out of this, 5 top risks were identified for each country surveyed. For Nigeria, 6 were identified because two predatory risks tied on the 5th ranked position. About 12,000 respondents were presented with a basket of 35 risks to select the top 5 that present the greatest threat to their individual countries.

    The 18th Edition of WEF’s Insight Report partnered with two of the world’s leading insurance companies, Zurich Insurance Group and Marsh McLennan to publish this year’s report. In the EOS section, measuring the National Risks Perception listed as Nigeria’s top risks the following;

    1. Terrorist Attacks: Geopolitical risks
    2. Debt Crises: Economic risk
    3. Cost-of-living crises: Societal risks
    4. Severe Commodity supply crises: Environmental risk
    5. Rapid or sustained inflation: Economic risks
    6. Employment and livelihood crises: societal risks   

    Rapid or sustained inflation and employment and livelihood crises are tied to position 5 owing to the number of times respondents pick them as presenting the greatest risks.

    Dominance

    “Cost of living crisis dominates global risks in the next two years while climate action failure dominates the next decade. It is also believed that “geopolitical fragmentation will drive geoeconomic warfare and heighten the risk of multi-domain conflicts.”

    In the short-term and long-term view of the Survey, environmental risks will be dominant accounting for between 5 to 6 top risks on the scale. Environmental resilience measures will be the number one preparedness metric for countries that may absorb the shock of events to come. 

    The Survey puts terrorist attacks and cost-of-living crises as the most volatile of the six identified top risks confronting the Nigerian State. Although, it has seemed that Nigeria contained the Covid-!9 outbreak from spreading among the risk-prone population, the aftermath shows worsening economic, environmental, and societal risks on an unimagined scale. Compounding geopolitical risks from terrorism and banditry divert many investable funds that could have cushioned the cost-of-living crises.

    “Recent and current events such as COVID-19 and the cost-of-living crisis are steadily eroding economic, educational and health-related gains in a widening proportion of the population, with a growing divergence between advanced and developing countries. This in turn is interacting with a multiplicity of environmental and geopolitical risks – climate change, ecosystem collapse, multi-domain conflicts – to further threaten the security and stability of societies around the world”, the report states.

    In context, these form part of the issues that leading contenders in the forthcoming presidential election are pitching for electoral votes. Inflation and severe commodity supply crises comprise other major risks exacerbating livelihood crises.

    Resilience and Preparedness

    The year 2023 marks another turn of events for the country with the opportunity to choose new leaders. Skyrocketing food prices, the rising fuel cost and the eventual removal of the petrol subsidy present both the investment opportunity and threats. Tradeoffs are expected between investment in human development and short-term cushion to subsidy removal. Invariably, investments in all development indexes will be on the upper scale. The type of resilience to built-up will largely, depend on the government’s aggressive push to build human capital.

    Undoubtedly, Nigeria is not alone in these festering risks. Globally, the Cost-of-living crisis, Erosion of social cohesion and societal polarization top the rest in terms of severity in the short term up to 2025. Aside from these two, eight more risks plague the earth’s inhabitants including; Natural disasters and extreme weather events; Geo-economic confrontation; and Failure to mitigate climate change.  Large-scale environmental damage incidents; Failure of climate change adaptation; widespread cybercrime and cyber insecurity; Natural resource crises in addition to Large-scale involuntary migration.

    However, in 10 years, the Survey sees Large-scale involuntary migration,  Erosion of social cohesion and societal polarization emerging as the severest of societal problems and topmost risks to tackle. Identified among the top 10 risks among countries are Failure to mitigate climate change; Failure of climate-change adaptation; Natural disasters and extreme weather events; Biodiversity loss and ecosystem collapse and Natural resource crises.

    Driven by technological innovation, widespread cybercrime and cyber insecurity will continue as a top risk. Geoeconomic confrontation as seen in Russia and Ukraine war, contestations in the South-China Sea and other such economic conflicts will continue to present risk issues to the world.  Large-scale environmental damage incidents will increase as well.

    Biodiversity and ecosystem balance

    On the risk of biodiversity loss and ecosystem collapse including natural resources crises, the federal government through the National Agency for Great Green Wall (NAGGW) and the National Biosafety Agency (NBMA) believes efforts so far indicate a balance and improvement in the country’s ecosystem. However, the World Economic Forum’s report states that “defensive, fragmented and crisis-oriented approaches are short-sighted and often perpetuate vicious cycles.”

    Aside from the mandates to ensure biosecurity by maintaining “adequate levels of protection in the field of safe transfer, handling, and use of genetically modified organisms” and impacting adversely on “conservation and sustainable use of biodiversity.

    The agency lacks sustainable and resilient measures to “prevent, respond to and recover harmful biological substances that may threaten the health of humans, animals, the environment, and the economy.”

    The same may be said about the NAGGW and its ambitious programmes without a general framework for achieving the set objectives. However, it can be credited with some positive modest records having established over 506km of shelter belts and 427 hectares of plantations. The agency also claimed to have produced 37,252,179 seedlings of trees. According to the agency, this has been its response to the threats to climate and biodiversity in the country.

    Rethinking the country’s risk management framework will foster a coherent national reliance on a time-tested process of measuring, mitigating and possibly transferring some of the identified risks to a national portfolio and the commercial risks market. Thereafter, it will possible to deal head-on with the contagious and cyclical threats of food and fuel crises.  Combating terrorism and ensuring the safety of farmlands will encourage farmers to return to their farms and with increased production, acute hunger will begin to abate.

    “Lack of preparedness for longer-term risks will destabilize the global risks landscape further, bringing ever tougher trade-offs for policy-makers and business leaders scrambling to address simultaneous crises. A rigorous approach to foresight and preparedness is called for, as we aim to bolster our resilience to longer-term risks and chart a path forward to a more prosperous world,” says the WEF report.

  • TNG Deal Breakers: Outlandish outbound medical tourism and drain on dollar revenue

    TNG Deal Breakers: Outlandish outbound medical tourism and drain on dollar revenue

    At 415 Naira to US$1, Nigeria’s outbound medical tourism cost the economy 664 billion Naira or US$ 1.6 billion as of May 2022. These are the estimated official figures admitted by the federal government as money spent by Nigerians seeking healthcare overseas. Comparatively, while inbound medical tourist visit to the country was under 1000 in 2019, for the same reason 1.9 million Nigerians travelled abroad.

    These figures would have continually declined if proper investments were made in the healthcare sector. In addition, the health policies and executive recklessness in both public and private sectors are significant factors fueling the craving for overseas medical travel, even for the most minor ailments like neck pain! For surgery alone, the Nigerian Investment Promotion Commission estimated 30,000 Nigerians travelled for surgery alone in 2019. 

    Although there have been some investments in modern healthcare facilities in the country, these are quite a few and grossly inadequate to stem the tide of the merry-go-round that medical trip has become. For instance, the Nigerian Sovereign Investment Authority (NSIA) invested a total of $22.5 million in two diagnostic centres in Kano and Umuahia ($5.5 million each) and the NSIA-LUTH Cancer Centre in Lagos costing $11.5 million. In as much as these investments are encouraging, the managers of the facilities are not marketing them properly. 

    There is also the Duchess a purpose-built, state-of-the-art, 100-bed hospital that is meant to deliver the highest standard of healthcare comparable to anywhere else on the planet. Duchess International Hospital is said to have benefitted from the N200 billion CBN post-Covid funding.

    Besides, quite a huge portfolio of rent seekers has developed around the business of medical tourism with the medical profession itself broiled into the saucepan. The commissions paid on referrals by doctors in Nigeria have enticingly augmented revenue for those who choose to practice in the country. In all these, the economy bleeds. The scarce foreign exchange earnings from crude oil and remittances to Nigeria are again sucked back into the same originating economies.

    Quick fixes

    It is wasteful to dwell on what could have been done during the tenure of the winding down of the government of eight years. Rather, the focus now should be on how to do sustainable quick fixes to save the economy post-Buhari regime. Genuine patriotism needs to be demanded by the incoming federal government from both private and public sector executives. The culture of entitlement and outlandish nibbling of the system should be stopped. The medical profession in Nigeria should also take responsibility for the numerous referrals they have aided when there, apparently, was no need it for it. The following comprise quick fixes that can patch forex leakage through medical tourism:

    o   Medical trips and allowances for executives in both private and public sector establishments should be paid in naira so that recipients can make dollar purchases themselves.

    o   Government should accredit only highly rated diagnostic and hospital facilities across the country as authentic referral centres for medical treatment overseas. Then, the referrals given by these hospitals and diagnostic centres become affirmation that they lack either the personnel or the facility to conduct such a procedure or test. 

    o   Medical trip overseas by top executives is loaded on some companies’ earnings. This entitlement and the dollar allowance is the major lure to foreign medical trip.

    o   All medium and large-scale companies in the private sector have in place health insurance packages for employees graded according to their position and office. 

    o   In addition to this, appropriate tax on the foreign exchange component of the medical allowance due to top execs can be a disincentive to the collection of this money in forex while the government will make it tax-free if it is paid in local currency. This measure should also apply to the public sector’s top-level employees.

    o   A reassessment of the existing national health insurance scheme to ensure it works for everyone 

    Exemptions should be given to foreign nationals who, in most cases, have a healthcare package that may require them to travel to their home countries for access to facilities. Of course, the executives have earned their perks and corporations owe themselves a duty to ensure top-notch healthcare for their executives. However, this should not be to the detriment of the bleeding economy. Medical facilities in the country ought to be used before jetting out for things that can be done locally thereby saving money for both enterprises and the economy.

    The Downsides 

    Certainly, Nigerians are significant contributors to this burgeoning medical tourism industry. In a report authored by Dr Olusesan Makinde, he admitted that while “medical tourism could provide access to health care services that are not available in departure countries, several issues such as cost of service, follow-up after surgery, quality of care, and adverse outcomes are challenges that have plagued the industry.” 

    Thereby, medical tourism is systematically creating a cycle of business out of the weak health system from the low and middle-income countries that contribute heavily to this market. This is largely due to the fact that “some of the services that medical tourists seek are not ethically allowed in their home countries where they will return upon completion of a procedure, thereby creating a follow-up conundrum.”

    However, Makinde notes; “not all services provided to medical tourists are of the quality advertised. About 25% of medical tourists who presented in one of the leading Asia country tourist hospitals for care regretted seeking care at this health facility and were unlikely to recommend the practice to their peers. In addition, it is said that the risks associated with services are downplayed or never mentioned to medical tourists by Medical Tourism Facilitators. 

    A study recently reported that 39% of patients who presented at a health facility in Nigeria after receiving neurosurgical care outside the country died from complications of the procedures they had undergone. Upon return to the country, over a quarter of these patients presented with infections necessitating follow-up care that was not initially planned and that incurred unplanned expenses, which pushed the cost of care to astronomical levels. 

    Another downside not known to the public, according to Makinde, is that “medical tourists, in their bid to seek care, are exposed to infectious microbes that are uncommon in their native environments, thereby facilitating the transfer of these contagious agents across geographic boundaries. 

    Many Nigerians travel to countries such as India and the UK for various treatments including cardiac surgery, neurosurgery, cosmetic surgery, orthopaedic surgeries, and renal transplant surgeries. The ongoing case of one of Nigeria’s serving Senator’s daughter is a case in point that should be shaming to any government. Recall also that the wife of a Nigerian ex-president died after undergoing cosmetic surgery in Spain.

    Low Awareness

    As stated earlier, patients with medical conditions that are treatable in Nigeria are being referred abroad because of better information on the availability of services over the internet and social media whereas health facilities available in the country are held back by the code of medical practice which frowns at physician’s advertising. However, advertising facilities and services are not prohibited. If healthcare facilities and expertise available overseas can be advertised and is permissible under the same code of ethics for medical practice, the facilities and expertise available may also use the internet to inform people about services offered in the country.

    The drain on the foreign exchange earnings of the government through avoidable medical trips abroad should be stopped. Only in the case of emergencies with referrals from the accredited best-rated facilities as proposed here, can a foreign trip be permitted.

    Although, the federal government may not impose restrictions on private-sector health spending, but it can show examples and curb frivolous medical trips in the ranks of top public sector employees. After reining in public servants’ penchant for medical tourism, it can then focus on the private sector by first, deciding to peg annual forex allocation to private companies for overseas healthcare.

  • TNG Deal Breakers: ECOWAS Bank and access to credit for Nigeria’s SMEs, businesses

    TNG Deal Breakers: ECOWAS Bank and access to credit for Nigeria’s SMEs, businesses

    It isn’t very likely that many Nigerian entrepreneurs are aware of the existence of the ECOWAS Bank for Investment and Development (EBID). Headquartered in Lomé, Togo, the bank has been in operation for 40 years and among Nigerian businesses, little is known about the financial products through which it supports both the public and private sectors’ financing requirements. 

    It was not until a few years ago that the Federal Ministry of Foreign Affairs realizing that Nigerian entrepreneurs and businesses were not making use of the bank’s facilities began an awareness tour of Nigeria’s geopolitical zones. But that was where it ended! There was neither a follow-up nor any known support policy or strategy mapped out to support struggling entrepreneurs who may qualify and access credit to boost their operations. 

    It is also incumbent on the Federal Ministry of Finance to sensitize the private sector and small businesses about the activities of the Bank and the role it plays in guaranteeing facilities from the Bank. In addition, the ministry may also organize workshops and bring in resource persons from EBID to lecture entrepreneurs on the levels of credit available, requirements and processes involved in applying for loans and grants. 

    While other West African countries’ businesses seem to be making use of EBID’s financial support, Nigerian authorities appear to have abdicated their duties towards ensuring equal participation by their citizens. Although EBID’s support to the SMEs is not well publicized, credible information from Nigeria’s foreign affairs ministry indicates that the bank finances manufactured exports to other African countries, especially within the West African sub-region. 

    Model

    Modelled after NEPAD (New Partnership for Africa’s Development), and as the financial arm of ECOWAS, “EBID’s primary mission is to promote economic integration through the financing of programmes and projects of its Member States in line with those of the Community and/or the New Partnership for Africa’s Development (NEPAD). Consequently, it has two windows, one of which is dedicated to the promotion of the private sector, whilst the other focuses on the development of the private sector.” 

    This financing strategy is meant to encourage more trading and partnership in the ECOWAS countries in line with the foundational objectives of the economic community. What the bank intends to achieve through SME support is to standardize exportable goods and services across the region. Packaged food and clothing dominate items that receive grants and loans from the bank provided the entrepreneurs show markets where there is demand for the products.

    Capital Raise 

    Beginning this year, the Board of Governors for EBID has approved a capital increase to US$ 3.5 billion from the existing US$ 1.5 billion. At an extraordinary session held last quarter of last year, the Board comprising finance ministers of Member-States also called for the last tranche of the bank’s capital totalling US$ 438 million. 

    The ECOWAS Bank plans to expand financing operations to provide ample opportunity for entrepreneurs within the region to access single-digit loans that will support trade with member countries. In addition, the Bank is intensifying its resource “mobilisation initiatives and seeks to position itself as the foremost regional development finance institution committed to playing a key and expansive role in assisting ECOWAS Member States to navigate the path to socio-economic recovery from the fallout of the COVID-19 pandemic and the Russian – Ukraine war.”

    Over the years, the Bank has quietly morphed into a fully operational Development Finance Institutio, facilitatingd about US$750 million for Nigeria’s Bank of Industry. Aside from this intervention, there seems to be no other recorded intervention in the country’s public and private sectors.

    With the Bank’s increase in capital, Nigeria’s economic managers owe it a duty to businesses to inform them about Nigeria’s shareholding commitment to the Bank and how they can benefit from the loans and grants structure of the bank. “With each intervention, we have always endeavoured to achieve our vision of being “an effective instrument for poverty alleviation, wealth creation and job promotion for the well-being of the people of the sub-region,” EBID claims.

    Specific Areas of Intervention

    Primarily, the Investment Bank’s financing targets infrastructure and basic amenities in its regional and national projects while the private sector focus is mainly on industries and services. Specifically, Member-States’ rural development and environmental development projects may attract funding for irrigation, flood control, rural water supply and agriculture projects.  Livestock, fisheries, ecosystem protection, renewable energy and capacity building are other areas it can pull investment to support such programs.

    Aside from EBID’s social sector provisional funding in vocational training, education and health, its private sector investments embrace the agro-allied industry, mining, and other industries. Technological innovations and services related to information technology, financial engineering, hotel and tourism are other areas facilities can be extended.

    With the Bank’s capital raise and efforts to increase its paid-up capital, Nigerian businesses have the opportunity to access requirements in the various sectors of activity which focuses on the private sector and SMEs engaged in packaged food products that may be traded in other West African countries. Part of its expansionist programs up to 2025 may rely on AfDB investment targets on agriculture and food packaging.

    Levels of intervention per loan

    • Minimum amount of UA1 million (about US$1.5 million);
    • The maximum amount of UA 20 million (about US$30 million) for national public sector projects;
    • The maximum amount of UA 30 million (about US$45 million) for regional public sectors projects;
    • The maximum amount of UA is 15 million (about US$22.5 million) for private sector projects.

    There are also smaller units of credit to SMEs which constitute some of EBID’s financial products to encourage entrepreneurs in the West African market.  

    Before the current structure of the Bank, it operated as ECOWAS Regional Development Fund (ERDF) which focused its financing regimen on the public sector while ECOWAS Regional Investment Bank (ERIB) engaged the private sector. For its current wider scope of activity, the Bank envisages itself as “a powerful financial institution for private sector promotion and financing in the region and an effective instrument for poverty alleviation, wealth creation and job promotion for the well-being of the people of the region.”

  • TNG Deal Breakers: In The Beginning

    TNG Deal Breakers: In The Beginning

    Whilst we were yet adults, we learnt of the cliché, “let my people go” which when translated infers the minimum position to scale through a requirement. In academics, it is called a pass. It means you may pass to the next level or class on your personal best and not on the competitive best. Pass is ordinary! Measured against other values on the score sheet, it can only fetch you something meagre.

    Third-party insurance is an ordinary pass or so it seemed! In many cases, it is a serious concern and can cause severe financial pains to the insurer. For some insurers who weigh their portfolios scientifically, they would not touch it. Third-party liabilities to the insurer are problematic. And if death happens, it’s a penny-wise, pound-foolish situation and a live snake in the hands of the underwriter. The negotiations are usually thorny and frustrating.

    Here’s one case; a friend lost his insurance job and later set up a sachet water company in his neighbourhood. A used distribution truck was bought to help in the delivery of water, and a driver and a motor boy completed the operations unit of the small outfit. After that, he purchased thirty-party insurance to operationalize the vehicle on the roads. On a day my friend was beginning to await the return of the day, he received a call from the police to come to the police station for an emergency. It turned out that the driver of the truck had knocked down and killed a young hawker at Ikeja, Lagos’s capital. The tragedy aside, the insurer of the vehicle was contacted and after a prolonged negotiation, they sealed N1 million as their compensation limit for the death of the young man. 

    For N5000, the insurance company was obligated to pay N1 million. It could have been more if specialized lawyers handle the claim negotiation. The number of insured vehicles in Nigeria apparently makes third-party policy unattractive and maybe the main reason it is frustrating to bargain a claim involving death. Ordinarily, death claims do not have any prescribed limits. However, if you take a cursory glance at Table 3 below, you will note that in this particular case, the insurance company did not receive the appropriate premium on the water truck. This is called the competitive rate in the Nigerian market! Often, this is the reason for claims repudiation.

    Road Accident Figures 

    The Q2 reports by the National Bureau of Statistics show the carnage and horror of accidents recorded on Nigerian roads. The total number of road accidents during the period was 5,263 as represented in the table below.

    Table 1: Category of Vehicles Involved in Road Accidents

    Vehicle Category Frequency percentage
    Government 67 1
    Private 1,800 34
    Commercial 3,396 65

    Source: NBS

    Table 2: Type and Number of Vehicles involved in Road Accidents

    Vehicle Type Occurrence
    Trailer 276
    Luxury Bus 13
    Car 1639
    Tricycle 173
    Bicycle 10
    Truck 596
    Tanker 102
    Minibus 904
    Motorcycle 1133
    SUV 174
    Van 9
    Pickup 155
    Others 103

    Source: NBS

     

    The Trends

    The tables above represent in real terms the horrendous carnage on our roads. In Table 1, commercial vehicles had nearly 3,400 accidents ranging from fatal, serious injuries to minor injuries. The vehicles involved had various degrees of damage. Unfortunately, commercial buses are the least insured and cost the most damage to people and property. In most cases, their insurance, usually a third-party policy, is not genuine and not purchased from licensed insurers. Equally, in Table 2, the combined number of accident occurrences involving cars, tankers, trucks and minibuses is 3,241. These are 2nd quarter figures only! Notwithstanding the fact that motorcycles and tricycles are breaking limbs and causing deaths in their numbers across Nigeria.

    Why motorists must pay premiums on vehicles 

    Insurance premiums are paid by vehicle owners so as to compensate passengers, property owners and passersby who are third parties when, for instance, we read reports of tanker explosions where lives, property and goods were lost. It is common sense and a sense of responsibility when you seek to care for others who may suffer from the inadvertent accident of vehicles. Nobody wills that an accident should happen, but our daily experience shows that accidents do happen despite our prayers and wishes against its occurrence. So, it’s fair that each motorist sees proper insurance of their vehicles as a personal CSR even without the law mandating it. Hit-and-run cases will also get compensated if premiums are paid to licensed insurers.

    New rates for the New Year  

    Inflation, prices of goods and services going up including transportation costs. Most incidentally, vehicle costs have risen exponentially due to forex scarcity and government auto policy.  Insurance companies are also paying more claims than hitherto. In the last five years, it is estimated that more than 50% of premiums are paid to policyholders. Tax deductions, business acquisition costs, levies and commissions take their portions leaving a small percentage for administrative costs. Perhaps, Nigeria’s insurance may be classified as a social service if the trend continues. 

    Table 3   Motor Third Party Tariff

      Type of Vehicle 2018 rates  2023 rates TPPD* limits
    1 Private Motor N5000 N15,000 N3million
    2 Commercial Motor (own goods) N7,500 N20,000 N5million
    3 Commercial Motor (staff bus) N7,500 N20,000 N3million
    4 Commercial Motor (Trucks/General Cartage) N25,000 N100,000 N5mllion
    5 Motor Trade (road/premises risks) N5,000 N20,000 N3million
    6 Special Types (Hearse/Ambulance) N5,000 N20,000 N3mllion
    7 Motor Cycle N1,500 N2,000 N1million
    8 Tricycle N3,000 N5,000 N3million

    *TPPD: Third Party Property Damage      Source: NAICOM

    Amidst speculations that some underwriters are unwilling to implement these new rates on unwilling and price-shy vehicle owners, the National Insurance Commission has signed off on applying the new rates beginning January 1, 2023. Some rates were adjusted to about 150% while it is 50–75%. The corresponding increase in third-party property damage claim limits was also adjusted upwards to reflect the new tariffs. The name tariff means it is fixed and regulated by the government and prices are not commercially adjustable by insurers. 

    The highest beneficiaries of these new rates and possible adoption and compliance by both insurers and vehicle owners are ordinary folks. When you read reports of fuel-laden tanker explosions or trucks ploughing into pedestrians, an understanding of the tariff structure will be clearer. 

    Drivers of new tariffs

    Although the statistics generated by Federal Road Safety Corps give ample justification for tariff increase, there are also rising claims metrics showing that insurance companies are paying higher claims, comparatively, on the low premium vehicles. But the most important factor for the increase by NAICOM is to afford real protection to Nigerians. The “let-my-people-go” premium of N5000 was actually letting people down. Some insurers believed the third party to a scoop that nobody was going to file a claim. 

    In the beginning, the third-party premium was actually an impressive turnover on the insurer’s balance sheet without much expense but the situation has apparently reversed driven by the following factors;

    ▪  Awareness and increasing claims on motor 

    ▪  Inability to pay claims

    ▪  Claims repudiation

    ▪  Very low prices on commercial and corporate fleets

    ▪  Covid-induced reduction in the number of corporate fleets and remote work model

    Certainly, the hard-pressed economy and low purchasing power of individuals and firms may trigger price resistance. But if the government truly desires to effect a balance in the protection afforded through insurance, then it has to drive volume compliance by motorists so that insurers can accept the risks on the roads.  There may be no right time to do the right except it is done now!