By Emma Okonji
The Minister of Communications Technology, Dr. Omobola Johnson has said the sufficient availability of broadband across the nook and carnies of Nigeria, will facilitate the creation of a digital economy for Nigeria. She therefore called on the private sector operators to join hands with the federal government in deploying broadband for middle-mile and last-mile connectivity.
The minister who was represented by her Special Adviser on Media, Mrs. Efem Nkanga at this year’s West Africa Information and Communications Technology (WAFICT) Congress in Lagos, organised by IT & Telecom Digest Magazine, said: “Broadband access and internet technologies are key enablers of socio-economic growth and a knowledge-based economy.”
She added: “The presence of broadband as a strategic tool in any nation enables the creation of a digital economy crucial for fostering inclusive development. Broadband also plays a very important role in fostering economic development as well as enabling innovation, entrepreneurship and job creation.” According to her, broadband is bringing positive changes to the way people live, work, create, innovate, trade and learn across the globe- transforming the way things are done everywhere.
She said, Nigeria could follow suit to lead the African continent in broadband penetration, should the required measures be taken. She explained that President Goodluck Jonathan, in recognition of the crucial and strategic role ICTs play in national development, in July 2011, created the Ministry of Communications Technology to facilitate the transformation of Nigeria into a digital economy, and that the ICT sector is the 4th pillar of the economy in terms of its contribution to Gross Domestic Product (GDP).
A NUMBER of vibrant sectors in the economy may not have been fully captured especially in the small and medium scale business levels of the economy in the process of rebasing.
Speaking exclusively with The Guardian in Abuja, Head,Real Sector and Households Statistics, National Bureau of Statistics(NBS), Isiaka Olarewaju, explained that emerging feed backs from recent rebasing recently carried out,showed that a number of small and medium scale business levels were not captured.
According to him, “It will surprise you to know that since the last rebasing exercise, the NBS has not rested on its oars. We have continued to monitor developments in and around our economy and have discovered that a number of sectors which contribute significantly to the nation’s Gross Domestic Product(GDP) have not been captured. So what that means is that in the subsequent exercise, Nigeria’s GDP figures will increase ,based on new additions to the mainstream which have already been captured” .
Nigeria’s economy had remained unmeasured in the 23 years, until it was rebased in April to fall in line with the United Nations Statistical Commission’s programming known as System of National Accounts(SNA). The commission stipulates that all countries of the world must carry out rebasing of their economy once in every five years.
According to Olarewaju who described rebasing as the updating of Gross Domestic Product using statistical data, the bureau has opted for base year estimates, which entails constant valuation of the economy to identify growth or drop in any sector of the economy. This he said will help the country in understanding the status of of the economy rather than waiting for the next five years to analyze trends.
He pointed out that GDP is calculated as value added outcomes of production of goods and services in all areas of the economy. But in order to analyze one year’s worth with another, to see whether their is growth or not, a base year estimates is compiled to show the way forward.
Olarewaju said that one of the advantages of recapturing areas not hitherto known is to help government have access to accurate data, and to guide policy makers on decisions that would help them plan better for all citizens of the country.
On why the increasing growth in the economy cannot be equated directly to individual economic wealth, he said that the exercise covers broader measurement of human progress, to measuring output growth which tends to concentrate on economic growth. He said however that with better planning, resources would be well distributed and many more lives enhanced by government deliberate policies for growth.
Smile Communications, one of Nigeria’s newest internet service providers has launched its 4G LTE broadband internet service in Abuja. This came barely one year after the company came into the market in 2013 at Ibadan and a few months later in Lagos.
The company said company said the Abuja roll-out is coming after more than three years of extensive testing and development.
Tom Allen, Smile Group’s Chief Operating Officer , stated that: “Abuja is very strategic in the company’s growth, and Smile has taken its time to ensure the service is at its best in the capital city. Our vision of becoming the broadband internet provider of choice in Nigeria has guided us in everything from selecting our people and partners to developing relevant products and services. We are confident and excited, and we are ready to share the promise of digital citizenship with Abuja residents and millions of Nigerians.”
According to Allen, Smile customers are already experiencing global standard speed and quality; however, with the implementation of 4G technology, these customers can experience speeds over 20Mbps.
Allen noted that key driver for Smile’s operation is to create a memorable experience for the customers.
Jonathan, who had been widely expected to run again, will collect a nomination form on Thursday to be the ruling party candidate in the presidential vote, his spokesman said.
“President Jonathan thanks all Nigerians, members of the PDP, friends, associates who in sincere appreciation of the achievements of the administration in the last four years have been urging him to seek a second term in office,” presidential spokesman Reuben Abati said in a statement emailed to press.
The announcement will be seen as a mere formality by the Nigerian political class since Jonathan had already been adopted as sole candidate by the board of the ruling People’s Democratic Party (PDP).
Jonathan’s government has been beset by criticism over its inability to end an insurgency by Boko Haram Islamists, for his response to their abduction of more than 200 schoolgirls still being held six months later, and for a raft of oil corruption scandals.
However, the president still appears to be in a strong position, partly because there is no clear alternative, but also because Nigerian elections tend to be fought more on vast patronage than on policy, which gives an encumbent in this oil-rich state an advantage.
The battle lines between Jonathan and whoever wins the nomination for the opposition All Progressives Congress (APC) are increasingly being drawn, with several defections both ways over the past year.
Nigeria’s lower house speaker and fourth most powerful person, Aminu Tambuwal, defected to the opposition coalition on Tuesday, boosting its bid to unseat Jonathan.
The top two contenders for the APC presidential ticket next year are former military ruler Muhammadu Buhari and recently defected vice president Atiku Abubakar. Both are Muslim northerners, while Jonathan is a Christian southerner, which will inevitably add an ethnic and sectarian dimension to the contest.
In 2011 Buhari’s defeat against Jonathan triggered three days of bloodshed that left 800 dead and 65,000 displaced.
The APC’s failure to agree on a leader has diminished its support among Nigeria’s elite and made it look weaker as the polls approach.
Several lawmakers defected to the APC last December as it gained momentum, but since then a number of powerful figures have swung back to the president’s camp.
(Reporting by Felix Onuah; Writing by Tim Cocks; Editing by Susan Fenton)
The Governor of the Central Bank of Nigeria, Mr. Godwin Emefiele, says the Nigerian economy created a total of 1.2 million jobs in 2013 and that about 91 percent of these jobs were created by the private sector. Speaking at a JPmorgan event in Washington, US on the sideline of the 2014 IMF/World Bank Group Annual Meetings, Emefiele said: “For the first half of 2014, the economy has created over 500, 000 jobs and “interestingly, almost 40 percent of employers cited “business expansion” as the reason for hiring new staff.”
He noted, however, that given that over one million persons enter the job market annually, there appears to be room for improvement.
According to Emefiele, the economy has remained resilient due to the fact that “the system has endured over 10 years of reforms. In the financial system, we have now had about a decade of sustained reforms to make us a better system”.
“The Reforms after the global financial crisis of 2007/2008 anchored on four pillars, namely: enhancing the quality of banks, establishing financial system stability, enabling a healthy financial sector evolution, and ensuring that the financial sector contributes to the real economy,” he said.
He also told his audience that the 2004 Bank Consolidation Programme was embarked upon to create more resilient banks, adoption of risk-based regulatory framework while the 2009 reforms after the global crisis was to enhance quality of banks, detoxicate the banking system and improve corporate governance.
Saudi Arabia has long been a swing producer of oil, ready to take action to maintain a floor for prices. However, with the Kingdom showing no signs of intervening in the near term, Libya and Nigeria have emerged as nations that could alleviate recent downward pressure on prices.
Both countries posted large output gains during the summer, amid a backdrop of softening demand and accelerating North American production.
Helima Croft, head of commodity strategy at RBC Capital Markets, pointed out that the unanticipated return of Libyan exports was the initial catalyst for the downward move in oil.
She also noted that Libya and Nigeria contributed nearly one million additional barrels per day to the market over the three-month period.
“In both cases, production has increased in an environment where the overall security situation has deteriorated, seemingly placing them at risk for a sudden reversal in export volumes that could help lessen the burden on the other big producers to turn off the spigots,” Ms. Croft said in a report.
Despite the remarkable recovery in Libyan exports, the security situation has significantly worsened since the summer as regional leaders warn that the country is at risk of becoming a failed state.
“For now, though, oil has been spared from the rising unrest,” the strategist said, noting that the elected government has managed to keep control of oil infrastructure and oil accounts at the central bank. “How long they can maintain this advantage, however, is very much in question.”
Nigeria’s oil surge was primarily attributed to a decline in crude theft and force majeures by companies operating in the volatile Niger Delta. However, Ms. Croft warned that the oil region will likely become more difficult to control as national elections set for February 2015 approach.
“The Nigerian military, underfunded and overextended by the virulent Boko Haram insurgency in the north, will be hard pressed to deal with any uptick in election related unrest and criminal activities in the oil region,” she said. “In our view, the recent gains in output could quickly become a casualty of Nigeria’s looming game of thrones.”
On Sept. 30, Kenya announced the results of its “rebasing”—a recalculation of its gross domestic product to include previously unaccounted-for economic activity. Its GDP expanded 25.3 percent, to $55.2 billion, moving it up several rungs on the list of Africa’s largest economies, to 9th. The government adjusted its 2013 growth rate from 4.7 percent to 5.7 percent.
Kenya’s is the latest in a series of rebasings that have reinforced investors’ perception of the area’s growth potential. Even as Ebola ravages West Africa and civil war devastates the Democratic Republic of Congo, many of the other economies in the region remain dynamic: The International Monetary Fund predicts sub-Saharan growth will be 5.8 percent next year, up from an estimated 5.1 percent for 2014. Many of the area’s governments issue bonds that look like good bets based on that projected growth. “Africa’s the final frontier among emerging markets for high yield,” says Brett Rowley, emerging-markets sovereign analyst for TCW Group in Los Angeles.
The first big rebasing of 2014 took place on April 7, when Nigeria declared itself the largest economy in Africa, surpassing South Africa in GDP. According to Nigeria’s National Bureau of Statistics, the GDP numbers had been inaccurate for years, and the state finally addressed the problem. A recalculation by the statistics bureau, with help from the World Bank, the IMF, and the African Development Bank, showed the country’s statisticians were missing almost half of Nigeria’s economic activity.
The new figure, which took more than a year to calculate, increased the GDP total from $262.2 billion to $488 billion. It’s still not entirely accurate, because the calculations for the farm sector were based on older numbers—highlighting the difficulty of calculating GDP as well as the importance of the number. GDP is the world’s most watched economic statistic, and Nigeria’s triumph over South Africa made news around the globe. (South Africa regularly rebases its GDP, so an announcement that the country’s GDP is much larger than previously claimed is unlikely.)
Rebasings are “something a country might use to market itself, and it has political implications,” says Roy Adkins, Africa sovereign debt analyst for T. Rowe Price, the mutual fund group. Politics played a role in Nigeria’s recalculations. A national election is coming up in February, and incumbent President Goodluck Jonathan will be able to brag that on his watch the country usurped South Africa’s premier position.
Many poor and middle-income countries have had to work with shaky statistics for decades, according to the World Bank’s Bulletin Board on Statistical Capacity, which surveys the quality of statistics from different countries. According to the IMF, most African GDP figures are too low and need an update. Underestimating is chronic because calculating GDP in the most accurate way is expensive. It’s also impractical to conduct annual censuses of the population and all economic activities—in short, counting every person, good, and service that can be found. An affordable and faster option, which most countries choose, including the U.S., is to conduct several types of census—for population and various economic sectors—in a single year, and in the years between censuses use surveys, statistical samples from which to extrapolate an overall growth rate.
Nigeria’s old base year was 1990, and its new one is 2010. Nigeria in that time went from having no cell phones to having one of the largest user populations worldwide. Because there wasn’t a starting figure for the mobile telecom industry in the 1990 base from which growth was extrapolated, this part of its economy wasn’t counted until now. The country’s film industry is another example: What were just a few movies produced annually in 1993 have exploded into Nollywood, the world’s second-largest film industry by volume. Both mobile phone networks and films are now part of GDP. Nigeria’s case shows why recalculating GDP often is important. Donald Kaberuka, president of the African Development Bank, says all African nations should rebase their economies every five years to keep GDP figures as accurate as possible.
Yvette Babb, a fixed-income and currency strategist for Standard Bank Group(SBK:SJ) of South Africa, Africa’s largest lender by assets, expects four economic sectors to show the most growth in the rebased economies: services, telecommunications, wholesale and retail trade, and manufacturing. If a wave of rebasings does uncover more manufacturing, that would be important fodder for the “Africa rising” debate. Skeptics say sustainable economic growth in Africa requires more manufacturing and less reliance on exporting raw materials, the continent’s established source of revenue. In Nigeria, rebasing took manufacturing from a 1.94 percent share of GDP to 6.83 percent, according to the National Bureau of Statistics.
Countries that have rebased in recent years include Ghana and Namibia; up next are some of Kenya’s neighbors in East Africa such as Tanzania. Taken together, the new numbers are expected to show that Africa accounts for more of the world’s economic activity than previously thought. It formally comprises about 4.9 percent of global GDP, but its share is probably closer to 6 percent, says the African Development Bank’s Kaberuka.
A rebased GDP, even if imperfect, is at the very least evidence that a government wants to increase its transparency and attract investment. “This sends the right message. As a Eurobond investor, you want to accurately know the size of the economy,” says Aly-Khan Satchu, chief executive officer of Rich Management, an investment adviser in Nairobi. The value of sovereign Eurobonds issued by African countries is expected to beat last year’s record amount of $16.6 billion, according to Standard Bank. Carlyle Group’s (CG) first private equity fund to invest exclusively in sub-Saharan Africa aimed to raise $500 million this year. It blew past that target to close at $698 million.
As an emerging market with very strong investment proposition, investor-confidence and interest in the Nigerian economy has continued to rise with more and more investors—individual and institutional, local and foreign—seeing opportunities in the country’s real estate and hospitality sectors.
Africa, especially countries of the Sub-Saharan Africa including Nigeria, Ghana, Sierra Leone, Cote d’Ivoire and others have, in the past couple of years, seen considerable growth owing to demographics, increased spending power and softening of the economy of the developed countries.
In all of this, the Nigeria market remains a focal point for Africa-bound foreign investments and this is understandable from the standpoint of the country’s demographics, fast-paced urbanization, growing middle class with strong spending power, rich oil resource and its status as a trading economy.
“We have not confirmed any plan to do any additional hotel projects in West Africa yet, but Nigeria is strategic and key part of our consideration for further investment in West Africa. We are definitely looking to invest in Nigeria. Nigeria is a considerable focus to us. We believe in that country and it is just an accident of timing that we are not yet there. But surely, this is something we are looking closely at”, Ivor McBurney, Kingdom Hotel Investments’ (KHI) Vice President of Finance, Development Projects, told Nigerian journalists on facility tour of their projects in Ghana.
KHI is a leading international hotel and resort real estate investment company headquartered in Dubai with focus on emerging markets. It has a balanced portfolio of hotel properties in upscale and luxury market segments and has built a diversified hotel and real estate portfolio with access to 18 operational hotels in 13 countries across four continents. The company’s strategic hotel partners are Four Seasons Hotel and Resort, Fairmont Raffles Hotels and Resort, Movenpick Hotels and Resort, Swissotel and Intercontinental.
With investment in North Africa (Egypt and Morocco) and Sub-Saharan Africa where they have invested in Ghana, Kenya and Zambia, McBurney sees a great future for the hospitality market in Sub-Saharan Africa and, according to him, “the hotel industry in West Africa, given the level of economic development, is reaching a new level of luxury and sophistication; that is how I think the industry is going to develop in the near future”.
He disclosed that their investment model involves developing a hotel project and looking for a particular real estate asset that will go with the hotel, citing Accra in Ghana where they developed 260-room Moevenpick Ambassador Hotel and “looking at the market, we saw that there was need for a retail space, and in addition to this, we are developing high end residential real estate called the Ambassador Heights”.
Robert Davis, Ambassador Heights’ Sales Manager, explained to the visiting journalists that as a luxury residential development rising adjacent to the Moevenpick Ambassador Hotel, Ambassador Heights comprises only 18 homes aimed to complete the first 5 Star mixed used development in Ghana.
“Ambassador Heights will deliver a taste and lifestyle never seen before in Accra. Homeowners within this exclusive community will enjoy the services and amenities of the surrounding hotel enclosed within the comfort of a beautiful, safe, and secure environment”, he assured.
Continuing, he said, “positioned across the land to the north and west of the Moevenpick Hotel, and surrounding one of West Africa’s largest pools and most impressive sets of amenities, Ambassador Heights offers three and four-bedroom city homes with individual gardens for private ownership”, adding that homeowners will enjoy world class design and build quality in addition to the luxury services of the hotel including swimming pool, spa, fitness, restaurants, retail, meeting and event facilities, housekeeping, in-room dining, laundry, valet, porter services, and much more.
According to him, interest in the residences has been phenomenal with over 50 percent of it coming from Nigerian investors who, he assured, would enjoy fabulous return on investment in terms of high value appreciation and rental yield which he estimated at 10 percent per annum.
The Managing Director of online hotel booking platform Jovago, Marek Zmyslowski, at the ongoing 3rd EU-Nigeria Business Forum has stated that online businesses have contributed to the growth of the Nigerian economy.
In a statement made on a panel discussing private sector contribution to Nigeria’s growth at the EU – Nigeria Business Forum held yesterday, Marek Zmyslowski stated that with the influx of online businesses in Nigeria, the economy has seen a significant boom. Zmyslowski was on the panel with the Deputy Minister of Economy, Poland, Andrzej Dycha; UK Trade Envoy to Nigeria, David Heath MP; Head of EU Delegation to Nigeria, Ambassador Michael Arrion; Regional Director, Peugeot Nigeria, Eric Maydieu; CEO, National Competitiveness Council of Nigeria (NCCN), Chika Mordi; World Bank Lead Economist, John Litwack; Director, Orleans Invest, Simone Volpi and a representative of the Hon. Minister of Industry, Trade and Investment, Olusegun Aganga all of whom held varying opinions on the position of the Nigerian economy and what it stands to gain from executing the proposed free trade agreement.
As Zmyslowski noted, “Agriculture and Oil used to be the leading sources of the Nigerian economy, but with the rebased GDP it was shown that these two industries together only account for 37.9% of the Nigerian economy. A bigger percentage of 51% was allocated to services of which online businesses like Jovago.com play a big part of.” He went on to say that “the rebasing of the GDP merely reinforced the fact that Nigeria is the biggest economy in Africa, a fact which has been long evident from Nigeria’s booming economy”
This EU-Nigeria Business Forum, which is the 3rd one that has been in held in Nigeria so far, is set to showcase European trade in Nigeria and discuss possible business growth for Nigeria. The EU-Nigeria Business Forum is being organised by the EU delegation to Nigeria, a number of EU Member States and the Nigerian government. The forum is expected to bring together, policy makers and business representatives with the aim to boost trade relations between Europe and Nigeria.
The Ebola outbreak in West African countries is not seriously affecting the Nigerian economy, Finance Minister Ngozi Okonjo-Iweala said.
Nigeria, Africa’s biggest economy, has recorded 21 cases of the virus, and eight people have diedwithin its borders, according to the World Health Organization. There were no current confirmed cases as of Sept. 10, the health ministry says.
“We have a team monitoring the economic impact and we don’t feel we are yet at the point where we can say it’s having a huge impact on the economy,” Okonjo-Iweala said in an interview with Bloomberg TV Africa late yesterday. “There’s been some fall-off in hotel occupancy, in Lagos in particular, some meetings have been postponed, but you still have other businesspeople who are arriving.”
Ebola has killed at least 2,288 people in Guinea, Liberia and Sierra Leone, countries on Africa’s Atlantic coast that don’t border Nigeria. On Sept. 9, the parent of Nigeria’s biggest company, Dangote Cement (DANGCEM), said it was postponing a planned investor day in Lagos, the commercial hub, as a result of Ebola-related travel fears.
Okonjo-Iweala also said that the country’s Excess Crude Account, where a portion of oil revenue is stored to cushion the economy against volatility, stands at $4.11 billion. That’s the same level as reported by ThisDay newspaper in July.
The minister said in January she was concerned that a decline in the account balance to about $2.5 billion at that time had left the economy “vulnerable” and should be redressed this year.
The country plans to open the Development Bank of Nigeria in the next six to nine months. The lender will initially be capitalized with $2 billion, a figure that may rise to as much as $10 billion, and fill a gap in Nigerian business lending, the minister said.
“It’s very difficult for businesspeople, especially small and medium-sized enterprises, to find any money for five years, seven years,” she said. “Mostly they can borrow for a year to three years. If you want to build a business sustainably and you want your economy to have sustained growth you’ve got to fix access to finance.”
The development bank will be partly financed by the Nigerian government, and is also due to receive $500 million each from the World Bank and the African Development Bank, and a credit line from the German development bank, KfW Group, she said.
“It’s going to be strong and get rated,” she said.
Referring to recent African Eurobond issues, Okonjo-Iweala said governments should exercise discipline in borrowing. She negotiated debt relief for Nigeria from the Paris Club group of creditors in 2005 during her first stint as finance minister.
“It has to be investment with high returns to justify the borrowing, but even then I would be very cautious and I think on the continent we shouldn’t get too enamored with floating these bonds,” she said.
African nations from Senegal to Kenya have sold sovereign debt this year as borrowing costs dropped to a 15-month low in August, according to JPMorgan Chase & Co. indexes. The West African nation ofGhana said yesterday it had sold $1 billion of bonds due January 2026 that were priced to yield 8.25 percent.
“We have to watch it so we don’t find ourselves as a continent back in the situation we were in before,” the minister said. “Each time you go to float these Eurobonds you should do it making sure you get reasonable yields. I’m not one to say, let’s rush out and accumulate a lot of debt, maybe because of my experience trying to get debt relief.”
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