From TV Producer to Public Relations Powerhouse: The Rise of Worktainment Limited
Worktainment Limited is a public relations (PR) agency founded in 2017 by Obinna Inogbo, a seasoned professional with a unique background. Prior to venturing into PR, Mr. Inogbo spent eight years honing his skills as a TV producer and screenwriter. This experience proved invaluable, fostering strong relationships with public figures across various industries. The seed of Worktainment was planted when Mr. Inogbo recognized the potential to leverage his existing skills for independent ventures. Initially, the company encompassed TV production, screenwriting, and talent management. However, after two years, a strategic shift was made. Research led Obinna Inogbo to discover the world of PR, a field that mirrored the services they were already unknowingly providing. This revelation led to formal training and certification as a PR professional from the Nigerian Institute of Public Relations. Worktainment’s success hinges on the transformative power of PR. A prime example is their work with Kawai Technologies, a first-time retainer client that secured a coveted spot on the Financial Times’ list of Africa’s Fastest Growing Companies for two consecutive years (2022 and 2023). This accomplishment has been instrumental in attracting new clients seeking similar global recognition. The future of Worktainment is ambitious. The short-term goal is to secure three solid retainer clients by the end of 2024. Long-term aspirations include a six-person team by 2027, the company’s tenth year. Beyond financial success, Worktainment seeks industry respect and influence. Their back-to-back nominations (2022 and 2023) for Best Innovation in PR at the prestigious Lagos PR Industry and Gala Awards stand as a testament to their achievements. The ultimate vision lies in a future where Worktainment graces the Nigerian Stock Exchange sometime between the company’s eleventh and twentieth year. The Nigerian PR industry can be broadly categorized into “agency-side” and “client-side” entities. The agency side comprises PR agencies, consultancies, and individual practitioners offering reputation management, communication strategies, relationship building, and business forecasting services to clients for a fee. Client-side PR professionals are employed by non-PR organizations to manage these aspects internally. The industry is regulated by the Nigerian Institute of Public Relations (NIPR), where Mr. Inogbo holds an Associate Membership. Lagos, the company’s base, houses the largest chapter of the NIPR, boasting nearly 60% of the nation’s PR practitioners. Worktainment’s client roster includes names like Kawai Technologies, Reddington Hospital, Coral Pay, Banke Kuku Textiles, and Caverton Offshore Support Group. Growth for Worktainment, and the industry at large, faces several challenges. Some clients struggle to grasp the value of PR, viewing it as an unnecessary expense. Others lack patience, expecting immediate returns on their PR investments. Perhaps the most significant hurdle is overcoming the misconception that PR is a cost center rather than a strategic investment. The industry is undergoing a shift towards smaller, more nimble PR firms with less than ten staff members. This trend aligns with the dominance of Small and Medium Enterprises (SMEs) within the Nigerian business landscape. Larger PR agencies typically cater to conglomerates, a smaller market segment compared to SMEs. The future of the PR industry holds promise. Immediate trends suggest a growing comfort level with smaller PR firms, driven by budget constraints. In the medium term, clients are expected to exhibit greater patience as they recognize the long-term benefits of PR investments. The long-term vision is an educational system that integrates PR principles into primary and secondary education, reflecting the growing importance of personal branding in the social media age. Competition within the Nigerian PR industry is fierce. Lagos alone boasts an estimated 6,000 registered PR professionals vying for clients across the nation. Fees range from N300,000 to over N5 million per month, with experienced professionals commanding higher rates. Worktainment tackles competition with confidence. Having survived the critical first five years, they are poised for success in the crucial years that follow. This longevity serves as a powerful testament to their effectiveness and strategic direction. On a personal note, Mr. Obinna Inogbo holds a degree in Politics and International Relations from the University of Reading in England. He possesses a keen interest in both Nigerian and Western pop culture.
Ndiame Diop becomes Nigeria’s World Bank Country Director after Shuham Chaudri
Ndiame Diop resumed office yesterday as the new World Bank country director after Shubham Chaudri, the man that occupied the office since 2019 left last month. This is the second time in under a year that the Bretton Woods institution are changing their leadership in Nigeria. The International Monetary Fund (IMF) replaced Ari Aisen as its country representative in October 2023 with Christian Ebeke. It is also the first time that the two positions are occupied by Africans. Ndiame Diop, the new country director for the World Bank is a Senegalese national while Christian Ebeke is a Cameroonian. Shubham Chaudri before he left was perhaps the most visible World Bank country director, at least since the Victoria Kwakwa. Under his leadership, the World Bank portfolio in Nigeria expanded significantly, with about 30 projects and programmes approved under his leadership. Some of the programmes / projects include the recent combined US $2.25 billion for reforms for economic stabilization to enable transformation (RESET) development policy financing programme (DPF) for US $1.5 billion, and the US $750 million for the Nigeria accelerating resource mobilization reforms (ARMOR) programme for results (PforR). Indeed, under Chaudri leadership in Nigeria, the World Bank approved an estimated US $19 billion for about 30 projects in the country between 2019 and 2024. Nonetheless, Nigerians will not easily forget the US $1.5 billion that was not approved for the Nigerian government as budget support in 2020, following the Bank’s policy credibility concerns. At the time, sources close to the Bank said, ““There is skepticism about the commitment to structural reform. They are trying to ensure the reforms started are followed through and the commitment is credible. Therefore, unless the i’s are dotted and the t’s are crossed, the fund will not be released.” At the time, the focus of the credibility concerns by the Bank were the multiple exchange rates, and fuel subsidy. The reason the government was able to access the funds four years after is because it has now adopted a single exchange rate market and removed fuel subsidies June 2023. Diop arrives in Nigeria with similar credentials to Chaudri. According to the statement released by the Bank, he “served as the World Bank country director for Brunei, Malaysia, Philippines, and Thailand, based in Manila. In this position, he more tripled the Bank’s financing to the Philippines to scale up the Bank’s support to key economic reforms (policy based budget support programme) and the nation’s endeavour to bridge disparities in various sectors, including nutrition, stunting, healthcare, social protection delivery, education, agriculture, and digital connection.
Interest rate decisions cannot be arbitrary … Let’s focus on stability first
Later this month, the monetary policy committee (MPC) of the Central Bank of Nigeria (CBN) will meet to determine interest rates – unchanged, raise, or reduce. The committee at the 295th meeting of the MPC held on 20th and 21st of May 2024 raised the monetary policy rate by 150 basis points to 26.25% from 24.75%. See fig. 1. Fig. 1. The Dynamics of the Monetary Policy Rates of the Central Bank of Nigeria 2014 – 2024. Following recent ferocious argument about lowering interest rates, the 296th meeting on the 22nd and 23rd of July now has greater significance. Yes, the recent argument that the CBN should lower its interest rates is not new. The argument is as old in Nigeria and elsewhere as the notion of interest rate itself. It is an enduring argument that will continue to be made. In Nigeria, the main proponents have always been the Nigerian Association of Chambers and Commerce, Industry, Mines, and Agriculture (NACCIMA), the Lagos Chambers of Commerce and Industry (LCCI), and the Manufacturers Association of Nigeria (MAN), all for obvious reasons. However, the latest argument was forcefully made by Aliko Dangote, an industrialist and Africa’s richest man. He said at the opening session of a three-day national manufacturing policy summit organized by MAN in Abuja, “nobody can create jobs with an interest rate of 30%. No growth will happen. No power, no prosperity. No affordable financing, no growth, no development. What these arguments stresses is that monetary policy does not work in Nigeria like it does in other countries. Essentially, that the increases in interest rates do not lead to a reduction in consumption and investments. According to these arguments, price increases are caused by supply constraints because of large informal markets, and lower interest rates is required to deal with unemployment and poverty in the country. I understand these sentiments, but while monetary policy does not work perfectly, it does work. Before the MPC can start to lower interest rates, I expect that it will look out for when current trajectory of inflation peaks. The current trajectory started in May 2022 on the back of the Russian / Ukraine war that started in February 2022. Before that could peak, the removal of fuel subsidy and exchange rate reforms of June 2023 led to another spike from July 2023. Between May 2022 and May 2023, inflation increased from 17.7% to 22.4%, and between June 2023 and May 2024, inflation increased from 22.8% to 33.95%. Contrary to what many people may think, all central banks, including CBN prefers a trajectory of low interest rates, but the conditions and macroeconomic environment must be right for doing so. Any arbitrary, forceful, or pressurized lowering of interest rates will only jeopardise the growth and jobs we seek. Any arbitrary reduction in interest rates that fails to take into consideration prevailing macroeconomic conditions will only lead to further instability, jeopardise future growth and jobs. Fig. 2. The Policy Rates for Nigeria, South Africa, Ghana, Kenya, US, and the UK 2014 – 2024. As fig. 2 shows, the global economy started to see increases in interest rate in early 2022, all responding to different levels of inflation in their economies. In these other economies, just as in Nigeria, the risk of inflation remains elevated. Indeed, I shared most recently in the 2024 board retreat of Vitafoam Plc, all macroeconomic risks are currently elevated. Exchange rate, growth, income, and interest rates risks are all elevated. In such prevailing circumstances, there is not a magic wand, and the arbitrary reduction of interest rates will certainly make the situation worse. The elevated risks for interest rates come from rising inflation, rising government debts and deficits, and the weak Naira. Between April 2023 and April 2024, money supply increased by 173%, energy prices by 122%, exchange rate by 81.32%. These are not circumstances that dictate a reduction in interest rates. Interest rate decisions are considered based on macroeconomic conditions and environment. This includes balancing consumption, savings, and investments. That is often fairly understood. What is often not obvious is that all global economies compete for the pool of capital available. So, in addition to using the changes in interest rates to check inflation, central bankers are also mindful of capital flight. For instance, fig. 2 and 3 show the dynamics of the policy rates and inflation in six countries, including Nigeria. The other countries are Ghana, Kenya, South Africa, UK, and US. For four of those countries – Kenya, South Africa, UK, and US, the rate of inflation is less than 10%. Only Nigeria and Ghana have inflation currently above 20%. Ghana has inflation at 23% while Nigeria’s inflation is at 33%. But what is even more important is that the recent inflation trajectory has peaked in all the countries except for Nigeria. Despite that, interest rates trajectory has not started to come down because the central bankers are careful not to reduce interest rates too early. Fig. 3. Inflation dynamics for Nigeria, South Africa, Ghana, Kenya, US, and UK 2020 – 2024 Also, for all the countries considered, Nigeria has the highest gap of negative real interest rates – that is the gap between interest rates, which is the reward for savings, and inflation, which is the costs of savings. Any arbitrary reduction in interest rates will expand the gap between the reward and costs of savings, declining savings further, and worsen Nigeria’s capital flight. Indeed, Nigeria is the only country currently with a negative real interest rate. And as the graph in fig. 4 shows, it is the rate raises by the CBN in the last three meetings that have closed that gap. There is no greater evidence than this that the CBN is not as hawkish as some would like us to believe. Fig. 4. Nigeria’s inflation and the dynamics of the CBN’s monetary policy rate 2020 – 2024. Finally, the same argument that higher interest rates do not generate growth and jobs works in the other
ESRI User Conference West Africa to Take Place in Abuja on 10 – 11 September 2024, at NAF Conference Centre
The NAF Conference Centre in Abuja, Nigeria, is preparing to transform into a hub of geospatial intelligence. The ESRI User Conference West Africa, hosted by leading geospatial applications firm Sambus Geospatial, convenes on September 10th – 11th, 2024. This premier event promises to be a catalyst for innovation and collaboration, uniting GIS professionals, academics, and industry leaders from across West Africa. To register for the Esri User Conference West Africa 2024, please click the link: https://africabusinessconvention.com/event/esri-user-conference-west-africa-2024/ The conference highlights the growing importance of Geographic Information Systems (GIS) in West Africa. GIS technology allows for the visualization, analysis, and management of geographic data, playing a crucial role in various sectors. From infrastructure development and environmental management to disaster response and urban planning, GIS empowers informed decision-making. Sambus Geospatial boasts a rich 33-year history as a pioneer in the field. The company established itself as a leader in introducing and implementing GIS solutions across West Africa. Today, the legacy of offering a comprehensive suite of services, including ESRI software installation and support, project development, and capacity building programs is even more heightened. The ESRI User Conference itself reflects the expanding use of ESRI’s ArcGIS platform, the industry leader in GIS software. Attendees can explore cutting-edge mapping technologies through interactive displays, gain hands-on experience with the newest ArcGIS Pro functionalities in workshops, and learn from renowned speakers showcasing real-world applications of GIS across diverse sectors. A key feature of the conference is its focus on collaboration. Dedicated networking sessions will allow attendees to connect with fellow professionals, forge valuable partnerships, and share best practices. This exchange of knowledge and expertise is crucial for fostering a vibrant GIS community in West Africa. The conference arrives at a pivotal moment for geospatial technology in the region. Several milestones have shaped its evolution. The increased availability of high-resolution satellite imagery in the late 20th and early 21st centuries provided a wealth of data for GIS analysis. The proliferation of smartphones and tablets with GPS capabilities has democratized GIS data collection and analysis, making it more accessible. Finally, the emergence of open-source GIS software like QGIS has expanded access to this technology and fostered innovation. The ESRI User Conference West Africa serves as a springboard for the future of geospatial technology in West Africa. By bringing together key players, showcasing advancements, and fostering collaboration, the event empowers participants to leverage the power of GIS to tackle the region’s most pressing challenges and build a brighter future. Sambus Geospatial, through its leadership in hosting this conference, demonstrates its ongoing commitment to empowering West Africa with the tools and knowledge needed to thrive in the geospatial revolution. Adding to the excitement, the conference will also feature a dedicated exhibition space. Here, leading geospatial companies will showcase their latest products and services, offering attendees a glimpse into the future of the field. From cutting-edge software solutions to innovative data collection tools, these exhibits promise to awe attendees and spark new ideas for utilizing GIS technology across West Africa.
Nigeria’s Central Bank’s discontinuation of the price verification will reduce transaction costs – NESG
The Nigerian Economic Summit Group (NESG), one of Nigeria’s foremost think tank has said that the discontinuation of the Central Bank of Nigeria’s (CBN) price verification system will help to streamline the importation process and reduce transaction costs for importers. It said this in its latest brief that it “supports the recent decision by the CBN to discontinue the price verification system portal”. The Central Bank had released a statement that it will discontinue its price verification system from 1st of July 2024 few days ago. According to the statement released by the CBN on the matter, importers will not be required to complete the price verification of Form M from the date. The CBN’s price verification system was introduced in August 2023. It was established as a mandatory trade document requirement and prerequisite for the completion of Form M. While the portal was set up to improve the transparency of the foreign exchange market transactions, it meant another layer of documentation and associated costs. While importers have argued for the portal to be discontinued and the process streamlined, it was the CBN’s remarkable turnaround of the foreign exchange market, which delivered market convergence and closed the disparity between the official Nigeria foreign exchange market and the parallel market that made discontinuation possible. read more. According to its policy brief, the discontinuation of the policy will have at least three benefits to importers, and by extension, the economy. It will streamline the importation process, reduce transaction costs, and increase business confidence and investments. “The elimination of the price verification report requirement will lead to a more streamlined importation process. By removing this administrative hurdle, businesses can expedite the importation of goods and raw materials, reducing lead times and improving the efficiency of supply chains. This enhancement in operational efficiency is expected to lower production costs and increase the availability of goods in the market,” the NESG said in its briefing. “The removal of the verification process will reduce the transactions costs associated with importation. Importers will save on both time and money previously spent on compliance, allowing them to reallocate these resources towards more productive uses,” the NESG further argued. Other benefits of the elimination of the requirement for the purposes of importation include boosting manufacturing, enhanced competitiveness, and support for macroeconomic instability. The price verification system was first introduced in in August 2020 to forestall over pricing and mispricing of goods imported into the country. It was made mandatory in August 2023.
Nigeria must grow its foreign reserves. – Ogho Okiti
Hello and welcome to my commentary this week. For some time now, the government and many Nigerians have been trying to forget the eight disastrous years of President Muhammadu Buhari. But that did not last very long. Last week, the International Monetary Fund (IMF) reminded us again after it projected that the Nigerian economy will be the fourth largest in Africa by the end of this year. But that is not President Buhari’s headache, so let’s stick to 2023. At the end of 2023, Nigeria was the third largest economy in Africa after Egypt and South Africa. To contextualise the awful decline in Nigeria’s GDP since 2015, the size of the Nigerian economy then was 492 US billion dollars, while that of Algeria which is now projected to overtake Nigeria this year was 187 US billion dollars. Indeed, in 2015, Nigeria was not just the largest economy in Africa, it was larger than the second, which was Egypt, by 142 US billion dollars. However, this commentary is not about mocking President Buhari’s economic policies. It is about pointing out how things can be much more different under President Bola Ahmed Tinubu than it currently is. So, here, I share three fiscal policy mistakes of the Buhari years that should not be repeated by President Bola Ahmed Tinubu. But before I do that, I want to take a quote from the book by Greg Mills, “Why Africa is Poor.” Greg Mills wrote, and I quote, “The main reason why Africa people are poor is because their leaders have made this choice”. He added, “The record shows that countries can grow their economies and develop faster if leaders take sound decisions in the national interest.” In the 8 disastrous years of President Buhari, the attitude, rarely publicly mentioned or discussed is that the government elevated Nigeria’s external problems. The government would readily blame the decline in oil prices from 2014 to 2016 for the economic recession of 2016 and 2017, the Covid – 19 shock of 2020 and the Russia / Ukraine war of 2022. Yes, these shocks were significant and were the fault lines, but the awful fiscal policies of the government amplified the problems and impact on the Nigerian economy. How? By escalating Nigeria’s deficits and debts, and by failing to carry out a single economic reform, President Buhari’s responses to economic shocks made economic outcomes even worse. Under President Buhari, Nigeria experienced an “Idi Amin” type of fiscal policy. He did not merely escalate Nigeria’s deficits and debts before expanding revenues but continued to expand them on the back of unrealistic and folly revenue expectations. The second mistake was to think that increases in government expenditure automatically translates to increases in investment, growth, and jobs. Nigeria’s experience has shown that not all government expenditures contribute to growth. Turning now to current contexts. The initial evidence is that President Bola Tinubu is different, and he is. In the first month of his administration, he carried out two major economic reforms. First was the removal of fuel subsidy, followed by the aggregation of all formal foreign exchange transactions into the Nigeria Foreign Exchange Market (NFEM). Unfortunately, these reforms have not progressed as intended. Exchange rate volatility invariably means that some element of fuel subsidy has returned, while the volatility of exchange rates negates one of the important reasons for the reforms. It is evident that President Tinubu recognizes that the difference he can make on Nigeria’s growth performance is not necessarily by increasing government expenditure. He knows that the greater impact on growth is dependent on the other things that he has started to do, which are the reforms around fuel subsidy, exchange rates, power and taxation. Policy reforms, which are invariably policy investments can shift the gear of the economy for another 25 years because of their impact on private investments. However, there is still something missing. If anything, the last seven months has buttressed the notion, and some will argue that it has reinforced the notion that the government believes monetary policy tools, elements, and applications will be sufficient to stabilize the Naira and bring inflation expectations down. In the context, the Central Bank of Nigeria has rightly tightened monetary policies, made the foreign exchange market more transparent, and removed many elements of market rigidities. However, what is the contributions of fiscal policy? Historically, every successive government have sought to use foreign savings for investments in Nigeria. That is great, but it is not sufficient. It is the reason why we suffer disproportionately from every shock to the economy. So, fiscal policy must step up. Nigeria needs to improve its level and rates of savings, and the government must lead. Indeed, the only government that followed this principle was also the one that was able to attract significant foreign investments. As I close, the point I’m making is that we must grow our reserves. We must seek to replicate the growth in reserves like Nigeria did under President Olusegun Obasanjo. It is the only antidote to frequent economic shocks, to attracting long term foreign investments, and a platform for keeping the value of our collective relative wealth stable in US dollars. The notion behind the role of foreign reserves in modern economic development is simple. It is like the share of equity of a business owner asking others to invest in the business. Foreign reserves is the equivalent of our skin in our development journey. It is the insurance that foreign investors look out for. And it is ridiculous to ask that only monetary policy to bear the brunt. That is not sustainable. For more of my thoughts, please visit tb.africa. I thank you.
Cardoso’s strategy paying off as exchange rate markets converge
For as long as anyone can remember, the Nigerian foreign exchange market has always been known for its multiples and the disparity between the official and the parallel exchange rates. However, following critical measures undertaken by Yemi Cardoso, the governor of the Central Bank of Nigeria (CBN) since September 2023, the two broad markets are converging for the first time since 1985. Following significant fall in oil prices in the early 1980s and the pressure on the US dollars, the then government’s reluctance to allow the demand and supply of the US dollars to determine its price against the Naira led to the emergence of what we now know as the official and parallel markets rates. According to available records, the parallel market rates was first recorded in 1985. Then, the Naira exchanged for the USD at 0.894 at the official rate, and N1.70 at the parallel market, a 91% gap. Historically, the Naira’s exchange rate, despite some attempts to change by some former governors of the CBN, have been fixed and or managed by the CBN. With the fixed or managed exchange rate regime came the “administrative” allocation of foreign exchange rates to areas or sectors the CBN believes are more critical, the restriction of access to the official foreign market for some purposes, and the determination of the rate at which government businesses are conducted. For instance, there are many instances in the past that the rates used for government business is different from the official and parallel rates. Also in 2015, the CBN restricted 41 items, and later 43, from access to the official foreign exchange market. This led to pressure on the parallel market. Cardoso reversed the decision in October 2023. Fig. 1. Parallel exchange rates started in 1985 and continue to diverge from official rate until Feb. 2024 Since becoming the CBN governor, despite early turbulence period in the exchange rate market, Cardoso has remained adamant in his pursuit of the reintroduced “willing buyer, willing seller”. This policy allows all eligible and permitted foreign exchange transactions in a single market. Before his appointment, the Bank had collapsed all segments of the foreign exchange markets into the importers and exporters (I & E) window, changed the operational rate for all government related business to the weighted average of the preceding day’s executed transactions at the I & E window, and the reintroduction of order based two-way quotes. However, many analysts spoken to by ThinkBusiness Africa believe it was the directive to cap the Net Open Position for banks at 20% short and 0% long of shareholders’ funds that has galvanized the foreign exchange markets towards convergence. On January 31, the CBN released a circular that the NOP of foreign currency assets and liabilities should not exceed 20% of a bank’s shareholders’ funds unimpaired by losses. This means that banks must keep the NOP within this limit to mitigate risks associated with foreign exchange fluctuations. By setting a limit to the NOP in both the short and long term, it puts a limitation on the ability of the banks to “speculate” with their shareholder’s fund. Proshare, one of Nigeria’s financial intelligence publications estimated at the time that about US $4 billion was affected by this directive. In addition to the directive on banks’ NOP, the Cardoso led CBN also removed the allowable limit on exchange rate quoted by International Money Transfer Operators (IMTOs), incentivizing them to stop the settling of exchange rate deals offshore. Those measures have been improved again by another set of measures mandating that Naira equivalent of IMTOs foreign exchange transactions be paid in Naira by their corresponding banks. Fig. 2. Nigeria’s Naira exchange rate to the USD for official and parallel markets. As the fig. above shows, the effect was immediate and the Nigeria foreign exchange market rates (NFEM), which is the I & E in the data, has followed the same pattern of the parallel exchange rates. As can also be seen from the graph, from the December 2022 until the foreign exchange reforms of 14th June 2023, though the official and parallel exchange rate markets were stable, there was a constant difference of about N300. This difference and gap in the exchange rate created significant distortions in the exchange rate market, provided arbitrage incentives for corruption, and created “winners” and “losers” in the country’s foreign exchange market. However, from February this year, the rates have converged. Though other challenges the remain, the most important is the stability of the rates. The current trajectory of between N1450 – N1490 to the US dollar has remained at this band for seven weeks now, the longest stretch of any band since June 2023.
Food Crisis: Why its happening and what can be done about it. – Ogho Okiti
Last week, the National Bureau of Statistics released inflation figures for April 2024. Headline inflation was 33.6%, up from 33.2% in March 2024. Food inflation was 40.53%, compared to 24.61% in April 2023. The inflation report coincided with the release of an excellent brief by Nextier, an Abuja based think tank on the 15th of May titled “averting Nigeria’s imminent food crisis.” The brief relied on the combined work of four major international institutions to arrive at its conclusions. UNICEF, Food and Agriculture Organisation of the United Nations in the report “The State of Food Security and Nutrition in the World 2023, and the United Nations World Food Programme 2023 all estimated that 25 million Nigerians were at high risk of food security last year. The international rescue committee has now projected that that figure will reach 32 million this year. These estimates mean that in the space of two years, 15 million Nigerians have been added to the number of those at risk of acute food security and hunger. It is not only unacceptable, but also grossly irresponsible and portends serious social danger for the country. We all know how we got here, and all the reports alluded to that. According to the reports, continued conflict, climate change, inflation and rising prices were the key drivers of the awful trend. The reports went further to say that food access has been affected by persistence violence in the North East States of Borno, Adamawa, and Yobe, while armed banditry and kidnapping in States such as Katsina, Sokoto, Kaduna, Benue, and Niger have displaced farmers. In addition to these reasons, Nigeria experienced a catastrophic flooding across many states in the country in 2022. According to the National Emergency Management Agency, the 2022 flooding damaged more than 600,000 hectares of farmlands, affecting harvests in the year and subsequent farming seasons. Many of these communities have not recovered nearly two years after the crisis. So, the food inflation figure of 40% is no fluke. If anything at all, it masks the dangerous and rapid increases in the prices of food that have left millions of families in the country impoverished. In preparing this, I found out that the price of a bag of garri is now N90k, while the price of a bag of rice is now N70k. The price of a paint bucket size of beans is now N7k, whereas it was N3k in December 2023. A loaf of bread is now above 1k, selling as high as 2k in some areas. Generally, prices of foodstuffs now double every 3 – 4 months. In most of the analysis, there are some critical points that are missing, though and these points have implications for food production in the future. The most important is the data shared by the National Population Commission ahead of the planned 2023 census. The 2023 enumeration recorded a significant shift in urbanization of the Nigerian population. In 2006, 65.1% of Nigeria’s population lived in the rural areas, while 34.4% lived in the urban areas. In 2023, rural population is now 41.3% while urban is 58.7%. It means that since 2006, there has been a rural urban shift in Nigeria’s population of about 20% in favour of urban areas. While population growth means that some previously classified rural areas are now urban, it has mostly been caused by migration. For context, the average urbanization for Africa is 44.5% in 2022, according to the UN Trade and Development (UNCTAD). The rural urban migration that we see coincided with the rise in insecurity in the country. The implication is that the rise in migration has not followed the economic motivation reasons of jobs and economic opportunities in urban areas. The corollary of this is that migration into urban areas has not translated into increasing productivity in the urban areas, but also means less agriculture production in the rural areas. Nigeria is thus losing both ways. Symptomatic of that is the many thousands of young people that one sees on the streets of Lagos that are very likely out of school and homeless. Food prices are also up in the rural areas, which suggests that the usual narrative of subsistence farming requires reexamination. Now, long term fall in food prices have implications for both long term growth and underline productivity. Until food prices are relatively stable, it is difficult to have stable prices, rising productivity, and rising real income growth. The long-term prospects of the economy to generate long term savings, low interest rates, and increasing discretionary income is dependent on the increasingly lower proportion of income growth spent on food. This pattern of development has been replicated everywhere else and needs to be replicated in Nigeria. As I conclude, I propose three things. First is the deliberate and intentional support of large-scale farming. The rural migration data has shown a decreasing number and proportion of people in the rural areas. The continuation of that trajectory leaves the continued reliance on subsistence farming in tatters. Second, improve the security of the rural areas to slow down the migration to the extent any form of migration from the rural to the urban areas is only motivated by better income opportunities. Third, there should be a deliberate focus on rural infrastructure. That will not only improve the living conditions in the rural areas but also improve their capacity for income growth and opportunities. For more of my thoughts, please visit tb. Africa. I thank you.
The problem with Nigeria’s minimum wage is the process. – Ogho Okiti
As we near the end of another minimum wage process, what is clear, as always, is that the gap between the demands of the Nigeria Labour Congress (NLC) and the Trade Union Congress (TUC) on the one hand, and the government and the organized private sector on the other side remains huge. What do we know? After the NLC triggered a nationwide strike two weeks ago following the rejection of the N60,000 made public by the government, the government now suggests it has reached an agreement with labour for a new minimum wage of N62,000., but labour unions disagree. It is very easy to understand why labour unions are agitating for a significant rise in the minimum wage. The current minimum wage is ridiculous. Even an increase of the current minimum wage of N30,000 to N62,000 per month, though more than 100% increase, is less than it is in relative US dollars. In 2018, when the minimum wage was set at N30,000, it was the equivalent of 98 US dollars. At N62,000, the new minimum wage will be about 42 US dollars. It is especially easy to understand the fierce agitation this time. As my commentary two weeks ago highlighted, Nigeria is going through the worst costs of living crisis in more than 25 years. Food inflation is above 40% and there is no sign that that is going to abate anytime soon. Indeed, the cumulative annual inflation rate since the last minimum wage in 2018 is about 100%. So, a minimum wage of N62,000 barely compensates for previous inflation, not to mention inflationary expectations that will follow increases in the minimum wage. Also, using the proposed N62,000 minimum wage, which is an equivalent of 42 US dollars, it will still be lower than that of Bangladesh, Burkina Faso, Cameroon, Chad, Republic of Congo, but higher than that of Cuba where every citizen receives free food. Indeed, from the data I have seen, Nigeria’s minimum wage will still be lowest in the world in US dollar terms. It reminds me of last year when Piodi, an ecommerce site estimated that it will take more than five or six generations for anyone earning Nigeria’s minimum wage to earn a million US $. Given the economic crisis since last year, it will now take more than ten generations. While these are the immediate issues, the real problem is structural. It is the awful process we use in determining the minimum wage that is the problem. The Nigeria Labour Congress (NLC), like every labour organization anywhere in the world sees a direct correlation between a minimum wage and standard of living while businesses and government sees a correlation between it and the costs of labour and the ability to pay. Or simply, its underline productivity. It is in this context that Governor Chukwuma Soludo was quoted as saying, and I quote, “he pities the president if he accepts an unsustainable minimum wage”. But both the politicians and the labour unions are not asking the most important questions. Why are governments not able to pay workers good wages? The simple reason is that most of these workers are not “productive”, and the problem lies with the governments. They are often employed, not to be productive, but to fill spaces for political considerations. Both the governments and the labour unions are hypocrites. Indeed, it is open secret that a great number of Nigeria’s civil service is also a social service. So, the reform of Nigeria’s wage and employment policy is also critical to Nigeria’s sustainability. The lack of an effective process for adjusting the minimum wage without agitation is the main reason why we have the current challenges with labour. An effective system will have the following features. First, it will be a standing committee. I believe many will be surprised that there is an office called the national salaries, incomes, and wages commission in Nigeria. Established by an Act in 1993, it was set up to deal with “issues relating to salaries and wages of Nigerian workers” and “take care of annual reviews of wages and salaries in the public service”. Only the government can explain why this commission is ineffective in contributing towards a stable policy environment for the adjustment of minimum wages. So, the first thing required is a legislation of the process of adjustment of minimum wages in Nigeria. Second feature is that there should a standard time lag for the review and adjustment of Nigeria’s minimum wage. For some countries, it every three years, and for some, it is every year. For Nigeria, it has been haphazard and only changes until labour agitates for it. That is why it is chaotic, disruptive, and inefficient. It was first done in 1981, then 10 years later in 1991, then 1999, 2000, 2001, and 2013 and the last time was 2018. In conclusion, there are structural adjustments that need to be made to Nigeria’s labour market that will improve the wages and living conditions of those at the bottom of the pyramid. First, the minimum wage should be set it in regional or state terms or let there be both Federal and State minimum wages. In the context, State legislations can take into careful consideration their peculiar labour market conditions, including considerable differences in regional standard of living, costs of labour, and prevalent types of work. A single national minimum wage gives the erroneous notion that the Nigerian economy is homogenous. It is not. The economy of Lagos is totally different from the economy of Abia, Kano, Ekiti, Zamfara, etc. and these economies are different from each other. While it understandable to have a uniform minimum wage, it is not wise to have a single minimum wage for the whole country. For instance, India has more than 1200 minimum wage rates for different types of industries and skills levels and the United States have more 100 different minimum wages across the nation. Second, minimum wage in Nigeria should be set per hour
Agama to shrink “time to market” for firms after Senate confirmation – Ogho Okiti
After his Senate confirmation yesterday, the Director General of the Securities and Exchange Commission (SEC), Dr. Emomotimi Agama, has set his eyes on shrinking the time it takes for companies to access the market for different forms of capital. The priority to shrink the time to market follows the frustration of many market stakeholders during the regime of Lamido Yuguda where the time to market sometimes extended beyond 12 months. Agama’s priority, according to sources to him is to seek to conclude the process in 14 days. Dr. Agama was confirmed as DG SEC by the Senate Committee on Capital Markets, chaired by Senator Osita Izunaso. The committee also cleared the nominations of Frana Chukwuogor as Executive Commissioner (legal and enforcement), Bola Ajomale as Executive Commissioner (Operations), and Samiya Usman as Executive Commissioner (Corporate Services). They were all nominated April 19 by President Bola Ahmed Tinubu who is seeking the cooperation of the capital market for his US $1 trillion economy. In addition to shrinking the “time to market”, Agama is also set to establish very strong market rules to not only ensure minimal infraction but also deal with any form of infraction. According to sources, “the SEC must not only ensure that market players follow the rules of the market, but also that there are in no doubt that any infraction will be punished.” That is the only way to strengthen the market, the source added. The third leg of his priority is capital market education. The view here is that gross ignorance of how the market works is not a catalyst for strong capital market growth. To speed up the time it takes for companies to access the market, Agama plans to establish an advisory and business relations office in the SEC. The purpose of the business relations office is to offer prior screening of every proposed offer to ensure that it meets existing rules and regulations of the capital market regulator. Prior experience has shown that one of the delays come from gaps in the applications to SEC and the back and forth on these gaps often mean that companies lose out on access to cheap capital on offer at the capital market. The prescreening process by experts at the business relations office will thus be a great welcome by market participants. The confirmation of Dr. Agama means that this the first substantive DG of the SEC to emerge from within the organization since Mounir Gwarzo in 2017. Until his appointment by the President, Agama was the Managing Director of the Nigerian Capital Market Institute (NCMI), a subsidiary of the SEC. Before then, he was the head of Registration, Exchanges, and Market Infrastructure and Innovation, one of the strongest and key departments at the commission. In addition to top level management in SEC, Agama was a secondee to the US Securities and Exchange in 2018 after completing an 18-month programme in capital market at the George Washington University in the US. The SEC thus have at the helm this time a stockbroker, an accountant, an economist, after receiving his Ph.D. in economics, with distinction, from Nile University of Nigeria after submitting a dissertation on the links between cryptocurrency operations and macroeconomic variables in Nigeria.