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Nigeria : Chance for Re-Awakening

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Nigerians are gradually coming to terms that the cheese has indeed moved this time. The days of lucre and easy money, fuelled by petrodollars are far behind us; no thanks to shale oil and other sources of energy.

The aimless swagger has been replaced by a renewed sense of purpose and the need to produce in order to survive.

No wonder Agriculture seems to be the only game in town these days. To borrow from the words of Pravin Gordhan – Finance Minister of South Africa, it is now Agri-Cool. All manner of yesterday’s nose thumpers now proudly call themselves farmers, it is beginning to have a nice ring and tone to it.

Unlike other oil boom and busts, it seems that this particular bust is here to stay. We seem to be in a stalemate. If we cut production to shore up prices, the shale producers will seize the opportunity to increase their own production and drive the prices right down.

Not to talk of the conscious global effort towards cleaner renewable energy, and the significant improvement in its technology and adoption. COP 21 in Paris cemented the commitment to clean environment and green energy.

Time there was not too long ago in Nigeria, when first class and business class seats on commercial airlines were filled way before economy seats, and private jets littered all our airports.

But how did we get here and how did we subsequently fall from such deluded Olympian heights? The recurrent mistake we keep making as a nation is failing to anticipate and plan for our oil windfalls.

There have been many boom opportunities since Nigeria joined the Organisation of Petroleum Exporting Countries (OPEC) in 1971; Oil prices increased by 400% in six short months after the Yom Kippur War following the Arab Oil Embargo.

Crude prices doubled from $14 in 1978 to $35 per barrel in 1981 following the Iran/Iraq war. The price of crude oil spiked in 1990 with the uncertainties associated the Iraqi invasion of Kuwait and the ensuring Gulf War – the so called ‘Gulf War windfall’ under then Head of State Ibrahim Babangida.

Data from the U.S. Energy Information Administration shows that the latest windfall happened between February 2011 and August 2014, under the Goodluck Jonathan presidency, when oil prices were much in excess of $100 per barrel.

Another golden opportunity was squandered, characterised by organised kleptocracy of epic proportions as has now come to light.

There is a saying in my native Igbo culture that an abomination that endures for long enough becomes part of the culture. Corruption came close to achieving this status in Nigeria.

Our inflated egos were matched with the adventure into GDP rebasing in 2014 which put Nigeria as the largest economy if Africa, overtaking poster boy South Africa.

Alas this new status, propped up by an artificial exchange rate sustained by huge foreign reserves did not last. As the reserves dwindled, partial reality in the foreign exchange rate has wiped away close to half of the estimated $510b GDP. And along with it went our bragging rights.
 
I say ‘partial reality in the foreign exchange rate’, because I still feel that a differential of over 60% between the official rate and the parallel rate to the dollar seems to suggest that one of the rates is way off the mark. The acute shortage of the ‘Official Dollar’ seems to suggest that the parallel rate is closer to the mark.

The thing about the market is that you can distort it for a while, but you cannot hold it back for long. The market is like water; it will always find its level.

The earlier we let this happen the better for our economy. Within the period of a decade, I have witnessed the British pound at close to £1 to $1.9 and now at as low as £1 to $1.22; and yet the British government is not scrambling to shore up the pound by all means (including expensive subsidy of the currency).

It should be understood that such distortions open huge arbitrage opportunities for those with access, which distract from productive pursuit.

Rent seeking from allocation of dollars creates a new crop of overnight billionaires akin to those created during the era of petroleum subsidy. In the long run, it blows no good wind.

I have always argued that more important than the exchange rate, is the stability of the rate, which removes uncertainty, and attracts investment.

As it is, we are inadvertently inviting more pressure on the naira because even locals are saving their money in dollars, albeit at zero interest rates.

And why not? They have figured out that even at the relatively high interest rates on treasury bills and fixed deposits, savings are halved in real terms due to the fast deteriorating exchange rate of the naira.

We have to understand that the exchange rate is an indicator of the perception of performance, and opportunity in the economy.

To shore it up you have to do the hard work of better economic management. Removing the alert on the dashboard of your car that tells you that the oil level is low, puts out the disturbing light, but does not guarantee that the engine will not knock further down the road.

There is now a fervent glamour for buying Nigerian and growing what we eat. About time too. According to the Minister of State for Agriculture, Heineken Lokpobiri, Nigeria spends about $22bn annually on food imports.

How can a country with a huge population of over 170 million people (a viable consumer market by any standard), squander such a whopping amount on imported food, and in the process export much needed jobs in the agriculture value chain? This is despite the huge fertile landmass and favourable climate?

It is no different in the Education and Health sectors. It was estimated that Nigerians studying in British and American Universities spent over N137billion on tuition and living expenses in 2014.

There were also about 71,000 Nigerian students who paid tuition fees in excess of N160billion in Ghana during the same period (these may have easily doubled in the past year due to the deteriorating foreign exchange rate).

And yet the Nigerian Government’s total budget for education in 2017 is N540b (a paltry $1.1b against South Africa’s $22b) Why can’t we fix our educational system and send our children to school here? And fix our hospitals and treat our sick here?

I understand that luxury shop owners in Dubai and London are asking loudly ‘where are the Nigerians?’

Well, the Nigerians are at home, confronting the new realities of basic survival. You only have to look into the eyes of the average Nigerian to glean the pain of adjustment.

This difficult period is too painful to waste. We must seize the opportunity of this painful reality check, for a reawakening and realignment towards doing the right thing.

As Maria Robinson said “Nobody can go back and start a new beginning, but anyone can start today to make a new ending”. Let us begin today to write the ending we want for our country.

Austin Okere is the Founder of CWG Plc, the largest Systems Integration Company in Sub-Saharan Africa & Entrepreneur in Residence at CBS, New York. Austin also and serves on the World Economic Forum Global Agenda Council on Innovation and Intrapreneurship


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Detained Binance executive drags EFCC, NSA to court

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Binance executive Tigran Gambaryan has has dragged the National Security Adviser Nuhu Ribadu and the Economic Financial Crimes Commission (EFCC), to court alleging violations of his fundamental rights.

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In a filing dated March 18 and presented by his lawyer Olujoke Aliyu from Aluko and Oyebode Law Firm, Gambaryan sought redress before Justice Inyang Ekwo, requesting five reliefs. Similarly, Nadeem Anjarwalla, Binance’s Africa regional manager who escaped custody on March 22, initiated a separate suit before Justice Ekwo.

Gambaryan and Anjarwalla, in the suits marked: FHC/ABJ/CS/356/24 and FHC/ABJ/CS/355/24, had sued the Office of NSA (ONSA) and EFCC as 1st and 2nd respondents.

Gambaryan, a US citizen overseeing financial crime compliance at the crypto exchange platform, alleged that his detention and the confiscation of his international travel passport violated Section 35 (1) and (4) of the 1999 Constitution, constituting a breach of his fundamental right to personal liberty. He further requested the court to order his immediate release and the return of his passport. Additionally, he sought an injunction preventing further detention related to any Binance investigations and demanded a public apology from the respondents, along with costs incurred.

Gambaryan stated that he visited Nigeria on February 26 alongside Nadeem Anjarwalla, representing Binance, in response to invitations from ONSA and EFCC. Despite attending the meeting as requested, both were detained afterward without formal charges.

During the court proceedings, T.J. Krukrubo, SAN, representing Anjarwalla and Gambaryan, informed the court of the respondents’ absence despite being served. Krukrubo also mentioned their notice of withdrawal of legal representation for Anjarwalla, filed on March 26.

Justice Ekwo noted the withdrawal of legal representation and adjourned the matter to April 8 to allow the applicants to seek new representation and give the respondents an opportunity to appear.

In Gambaryan’s case, Krukrubo stated that although the processes were served on ONSA and EFCC, they still had time to respond. He requested an adjournment, indicating that the respondents’ deadline to file their applications would expire the following week.

Consequently, Justice Ekwo scheduled the next hearing for April 8 to continue proceedings.


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AXA Mansard Empowers Female SMEs with Financial, Digital Skills

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AXA Mansard, a member of AXA has empowered 200 female Small and Medium Enterprises with financial literacy and digital business skills.

In collaboration with SME 100 Africa, the two-day training, which was held in Lagos, is part of AXA’s lined-up programmes to commemorate this year’s International Women’s Day.

Speaking, Olusesan Ogunyooye, Head of Marketing AXA Mansard, said the training was aimed to empower female SME owners with skills to improve business output and position them for the increasing economic opportunities available in an increasingly digital marketplace.

Ogunyooye noted that the move was in line with AXA Mansard’s sustainability agenda, explaining that the company was convinced that support for women through its inclusive protection programmes was pivotal to its purpose of acting for human progress by protecting what matters and its mission of moving from being a payer to a partner.

He further said that focusing on digital skills was important because the company realised the importance of digital skills to the growth of the SME sector in Nigeria and wants to ensure that women were empowered enough to be a consequential part of that growth.

“It’s almost trite to say that SMEs are the engine for economic growth, especially in developing countries like Nigeria, where over 45 million adults are business owners. What needs to be continually discussed is how Nigeria is going to unlock that potential for economic development and how much of that potential will be unlocked by women and for women.”

“For us at AXA Mansard, we are aware that digital will play a major role in unlocking these current opportunities and Nigeria’s economic future. So, to ensure that women are equally represented in unlocking these future potentials, that’s why we have collaborated with SME 100 Africa to support them in developing the required skills”.

“Our choice of digital and financial literacy skills is deliberate. We understand the power of the duo. We understand that helping these SMEs with the skills to attract more customers will be a faster means to empower them.

“We see that they have amazing products and services, but they need to understand how to attract value for themselves by attracting the right customers, and you will agree with me that virtually all customer segments are online in one way or another today.

“So, if we can empower them with digital business skills, we would have helped them with the heavy lifting of trying to find and attract customers”. Ogunyooye explained.

According to him, AXA Mansard believes that for the world to experience progress truly, there must be an equitable distribution of creation and access to opportunities for men and women. This quest for balance informed the SHE for Shield initiative, a women-centred inclusive protection programme of AXA Mansard.

SHE for Shield is a group of initiatives designed for the Nigerian woman. The goal is to see them grow, add value, and help them mitigate risks at every step.

According to the company, research has found that access to health care is one of the most important things to Nigerian women, regardless of their economic segment. They desire to be financially independent, secure, and respected in the community.

 


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IFC Invests in New 4DX Ventures Fund to Support Tech Startups in Africa

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IFC is investing $10.5 million in a new fund by 4DX Ventures, a New York-based venture capital firm focused on supporting early-stage African technology companies across a broad set of sectors, including fintech, e-commerce, edtech, climate tech, and health tech.

IFC’s investment in 4DX Ventures Fund III will come from IFC’s $225 million venture capital platform, which was launched last year to strengthen emerging VC ecosystems and invest in early-stage companies in Africa, the Middle East, Central Asia, and Pakistan.

Africa is among the regions least served by venture capital, receiving just 2% of global venture deal volume in the third quarter of 2023. Access to capital on the continent has been further exacerbated by a slowdown in global venture capital investment.

Tech ecosystems are nascent, or even nonexistent, outside of more established markets such as Egypt, Kenya, Nigeria, Senegal, and South Africa.

“IFC and 4DX Ventures share the commitment to supporting tech entrepreneurs with innovations that will help Africa leapfrog in critical areas such as climate, health care, fintech, e-commerce, and education,” said Walter Baddoo, Co-Founder and General Partner of 4DX Ventures.

“We look forward to partnering with IFC to help promising tech startups build transformative businesses and realize sustainable development impact on the continent.”

4DX’s new fund will invest in companies with tech solutions that can improve productivity, efficiency and competitiveness across Africa. The firm’s first two funds invested in companies such as Egypt-based e-commerce platform MaxAB, an IFC portfolio company; Ghana-based health tech firm mPharma; and Kenya-based B2B e-commerce platform Wasoko, formerly known as Sokowatch.

“By supporting the development of tech ecosystems in emerging markets, IFC’s venture capital platform aims to improve access to key services, boost business competitiveness, and promote job creation through digital transformation,” said Mohamed Gouled, Vice President of Industries at IFC.

“Our investment in venture funds such as 4DX Ventures will help African entrepreneurs access more financing and resources they need to scale tech innovations and bolster sustainable growth across the continent.

In addition to providing capital, IFC will work with 4DX Ventures to implement their environmental and social management system.


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