Many properties litter the country with neither buyers nor occupants – especially in Lagos where the occupancy rate is very low. Akin Olawore, fellow of the Nigerian Institution of Estate Surveyors and Valuers (NIESV), is the President, Nigerian-British Chamber of Commerce (NBCC). In this interview with Dayo Ayeyemi, he speaks on what the Chamber is doing to ensure that Nigeria attracts Foreign Direct Investment (FDI) and other sundry issues in the industry and the economy
How would you describe Nigeria’s economy?
In terms of impact on the people, it seems worse, but in terms of structures and reforms that are taking place, there are improvements. However, if you look at the direct impact, it seems worse. Things are very tight, cash flow is very poor and businesses are not moving. There is so much more poverty in the land now, but in terms of reforms, there could be long-term and medium-term, there is hope that things would turn around positively.
We have seen a lot of increase in our foreign exchange earnings, some of them as a result of agricultural exports and some as a result of the increase in the price of oil and other things.
Sometime what you want to ask yourself is that we are exporting to earn foreign exchange, but more people are suffering, they don’t have food on their tables and inflation is high. Inflation is coming down now because people don’t have money to buy. There is no cash to buy and foreign exchange has stabilised.
Why has various reforms of this government not impacted on human lives?
From what I have seen, we have a lot of plans to spend money on infrastructure; if we spend money on infrastructure, it is still within the construction sector and that has a multiplier effect. So, government should put a lot of money out there. Perhaps, because of the lateness in signing the budget, this money has not been released; government can release the money until it is appropriated. You can see that we are trying to attract some investments, if we also attract investments, people will bring money into the system. But when we bring money into the system, most of that money may be foreign exchange. So, it is Foreign Direct Investment (FDI) and a very few people depend on this kind of industries, but if it is portfolio, nobody will fill it because they just come and buy stock, sell it and take the money out without any employment. If is it industry, perhaps there will be employment, more people will be able to make money, get salaries and people will feel the impact. But the one that will really give us impact in this heavily populated economy would be spending on infrastructure/construction and real estate sectors.
When we look at Balance of Trade between Nigeria and Britain, would you say the country is competing well?
I think right now both parties are trying to do better. Of course, we were not advantaged in the balance of trade for several reasons. One of the reasons bothers on issues of standards of the products that we need to send out there directly and the issues of the levels of things we send out and the kind of things that come from there. There is price disparity between the two. I think right now, both parties are trying to see that we are able to improve the volume of trade and make sure that goods that are sent out are received. There is a greater effort, not just balancing the trade, but to also increase the volume of trade between the two countries.
Can you attach figures to these?
As at now, I do not have such information. I have not come across it, but I know that our agricultural export has increased, but not mainly to the United Kingdom (UK). It has gone to Asia and United States of America (USA), but in UK, the issue of standards is there. You would remember the issue of yam that got spoilt and the banning of our beans; these are some of the things that affected the trade imbalance.
These are areas where, as a chamber, we are also looking at that. If we have problem with the standards, then it is good for our members and our farmers here to understand standards required and to work towards achieving them.
To that effect, we are partnering with standards accreditation agencies, one of them is in the UK, to do some trainings for our farmers on the standards that need to be attained, both from types of fertilizers that is being used so that we do not put so much chemical in the beans or yam produced and so that the produce would be able to meet standards.
Are you saying that these standards are not universal?
Each country has its standards because we are different individuals and we have diverse immune system and our environment is different.
When is the training for farmers on standards commencing?
We are hoping that it will start by August. It will commence from the agriculture sector. We are going to work with the Ministry of Agriculture and the training is likely going to take place in Ibadan. We are also in discussion with the International Institute of Tropical Agriculture (IITA) so that we can use their facilities and they can be part of the programme.
Does it mean that the Federal Government’s zero policy on exportation is not working?
One thing is the policy and another thing is the implementation. The policy is geared towards the fact that we should be able to meet these standards of goods, while the implementation is about what the challenges are and how do we make sure we meet these challenges?
We should realise that some of the produce, before they leave the farm and get to the ports outside the country takes time. Don’t forget that there are so many processes in between. As it goes, Custom will have to look at it and the produce may be on queue here before it get oversea and, even over there, it is also on queue. By the time this happens to perishable goods, these foods would no longer be fit for human consumption. Now we have a policy, it means we have a goal that there is zero tolerance for that. We now work backward and look at these processes.
What are reforms that should be put in place to reduce this time lag?
Part of the things we are also doing at the Chamber is that we have an Israeli partner who is already given licenses to build warehouses. Some of these warehouses would be refrigerated. It is one of the things we have been advocating.
How many of these warehouses are being proposed and where are the locations?
The warehouses will be built across airports in Nigeria. I know that licenses have been given to have one at Murtala Mohammed Airport, two airports in the north and another two in the south. I don’t have their permission to mention names, but I know that they have been in place and by the time we have the refrigerated warehouses, even if they bring fresh fruits, they go into the refrigerators. You have the air and land sides, so this one would also work with custom to have an embedded custom unit so that they can check the produce immediately. There is no need for queue like any other products going out.
What is NBCC doing to improve the nation’s Foreign Direct Investment (FDI)?
Well, two things: The first one, which is the most feasible, is trade mission. We go out on trade mission and in a few days from now, we will be going out for business festival in Liverpool. There, we will also showcase Nigeria, showcase the Chamber because members will be there and there would be a lot of networking sessions. All these are for people to know each other and to be able to discuss areas of mutual assistance. With that, of course, things will improve. Small and medium scale enterprise (SMSE) is the engine of growth. We are glad for all the big British investments that are coming into the country, but we want to encourage as many SMSE as possible so that they can help our own SME to grow. We are lacking in workable and efficient tools in lots of things that we do and in a lot of these things, some tools are available. Some are not in the way we want them, probably they are most sophisticated than we need. So, if we are able to bring people together, then you will understand what you need that I can make.
What are these tools?
If you look at Aba in Abia State, look at the shoe makers in that city, they need just basic tools to make the shoes much better than they are doing there. They need basic tools to improve the quality and the standards of the shoes. Look at various industries, it is tools that create efficiency, reduce time and help in increasing volume. With the way the economy is, you cannot afford to bid for time, otherwise you will bid yourself out of existence. So, if you can reduce the time you spent, then you produce more within the same time. At a point you would be able to reduce your cost and this would help us to reduce inflation.
Also, we are going to have inward mission, work very closely with our high commission in UK to have an inward mission after outward mission. British investors will also come and see the businesses themselves and see areas of partnership. So, these are the specific things that we are doing in terms of improving FDI.
Which sector of the economy are investors targeting?
We have got a lot of people targeting and investing in Information Technology (IT), agriculture and a lot of interest in infrastructure. Until government is ready and tenders are out, it will be easier to know that a lot of interests are coming out.
In the past four years, why do you think we have not recorded any growth in real estate sector?
You know that real estate is capital-intensive and is a barometer of the performance of an economy. There has not been much investment in real estate because the cash is just not there. Right now, a few activities are still going on here and there, but people are also reorganising and realigning their businesse. Instead of going to the high-end, which seems to be saturated now, those who have the strength and the liver are going to the lower-end. As you go to the lower-end, you also realise that the cash is not there, demand is not as much as you look at the high-end. This means that you have to be more efficient in the way you package your financial model. So where people can get off-takers and do stage payment, you see more development happening. Again, lack of growth is also because of the negative impact of economy on individuals. The cash you probably would have laid out for stage payment is not there. So, we hope that by the time things improve, people would have enough spending power to support real estate.
People also blame anti-graft war for downturn in real estate. Do you agree?
For the economy and for the real estate sector, I think it pays us better not to use proceeds of corruption. What you find in the proceeds of corruption is artificial growth and value jumps up. I mean, for some who are laundering money, he buys land at any price and the next person that is going to buy is going to benchmark that value. So, the real money that is coming will be used to buy expensive piece of land and the price goes up again. For now, let everything correct itself, let us get to the level that it should be and we can now do collaborative development.
What is responsible for the drop in mall construction?
You will see abandoned commercial properties because those that have been finished are not getting tenants. Rents have tumbled by 45 to 50 per cent over the past four years. If you look at the model of the mall, the market that it appeals to mostly are the foreign retailers because of the fact that our consumptive power is strong and middle class population and all the noise. So, when the people came, they realised that most of these things are there, but the cash is not there. Then there is exchange rate challenge because we cannot buy in dollar here, we rather buy in naira and so, by the time they bring in goods, the prices seem ridiculous. Most of the retailers they are targeting have either left or are no longer coming. We also have a problem at a particular time about how the foreign entities are going to take out their money. There was no dollar for them to take their money out, so this also affected some of them. With these, the rush to come into mall stopped, Also, because there is no demand, supply too has to slowed down. In a number of malls now, you will find a mixture of local retailers. However, for new projects, it may be difficult for them because of the kind of money they need (dollar denominated), contractors and consultants. Everything is dollar denominated, so it may be difficult for them to compete with those who have established themselves and who have more or less have even covered their cost. This is why there is lull in that sector.
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