With the device manufacturing industry embracing software over hardware as its primary business model, a new report has revealed that 84 per cent of organisations globally have already put software at its core in delivering services and generating revenue.
According to a report by global IT security firm, Gemalto, nearly all (94 per cent) device makers have invested in software development in the past five years and 88 per cent of the enterprises believe the Internet of Things (IoT) is driving growth within the manufacturing industry.
“Companies who adopt software-based revenue models will reap three main benefits: long term relationships with their customers, predictable revenue streams and a clear competitive advantage,” Shlomo Weiss, Senior Vice President, Software Monetisation at Gemalto, said in a statement.
“From gaining insight into product usage, to pay-per-use payment structures and on to new market penetration – all the companies we surveyed identified a real need to transform how they do business,” Weiss added.
Out of the 84 per cent companies that have moved on to a software-centric approach, 37 per cent firms have had 11 per cent average increase in revenue.
They expect growth in the next five years, with the revenue from software projected to rise from 15 per cent to 18 per cent.
“Germany is leading the charge. All (100 per cent) German organisations surveyed have boosted their software-based services over this time in last five years followed by France (98 per cent) and the US (93 per cent),” the report said.
The report also noted that businesses that have moved to software-based selling have seen other benefits.
Over eight in 10 (86 per cent) firms have driven diversity in hardware with software features, 84 per cent implemented remote feature upgrades and 84 per cent improved customer experience.
Seventy nine per cent businesses also report having a more flexible strategy that allows them to adapt to market change, 76 per cent have better control copy protection and 73 per cent are becoming more competitive in the market.
These changes are also having a positive impact for employees.
The majority of businesses have retrained their employees (64%) and hired new ones (58%), with three in five (61%) also revealing they have or intend to reshuffle employees into different roles.
Nigeria’s unending quest for sugar self-sufficiency
The National Sugar Development Council (NSDC) has announced that the country’s quest to attain sugar self-sufficiency of 1.6m metric tons by 2018 have been dashed. TAIWO HASSAN reports
As Nigeria faces rising unemployment rate, it has been said that the country’s sugar industry presents a golden opportunity to create over 114,000 jobs.
The Federal Government has prioritised the country’s sugar sector as one of the key areas in its bid to achieve backward integration programme in the sugar industry.
Indeed, this can be seen from the recent call by the Federal Government to vigorously pursue and effectively implement the National Sugar Master plan (NSMP).
However, industry stakeholders had stated that if the sugar master plan is well articulated and fully operational, it has the potential not only to create over 114,000 jobs in the sector, but also capable of generating 400 megawatts of electricity through ethanol for the country’s power industry.
In addition, the sugar master plan could also save Nigeria over N500 million annually from sugar importation.
However, it will only require about $3.1 billion to implement the NSMP over the next 10 years.
In order to achieve the set objective, the Federal Government imposed high tariff on imported sugar to discourage importation and paid more attention to its self-sufficiency policy in sugar production.
This, according to the government, is part of the efforts to discourage importation of sugar by signing a backward integration agreement with four refineries that would enable them set up their various farms locally and meet local demand.
Indeed, a Sugar Industry Monitoring Group (SIMOG), a peer review mechanism set up by the Federal Ministry of Industry, Trade and Investment (FMITI), has been working round the clock by touring the various sugar refineries in the country to ascertain the progress made in line with Nigeria’s quest to achieve BIP in the sugar industry.
The team, which comprises of all players in the industry as well as representatives of the NSDC and Federal Ministry of Industry, Trade and Investment, visited other BIP sites being run by BUA, Dangote and Golden Sugar, for assessment, recently.
They gave a pass mark based on the progress seen on the BIP sites. The monitoring team said that the country was working assiduously to meet self-sufficiency in sugar production.
Recently, the Executive Secretary of NSDC, Dr. Latif Busari, while reviewing the activities of the council in 2017 and making projections for 2018 in Abuja, said that the council had reversed the 2018 sugar projection for the country to 1.58 million metric tons from 1.6m metric tons initially projected in the master plan.
He stated that the shortfall was on the heels of continued importation of the commodity, which is affecting government’s projection on the sugar master plan.
The council’s executive secretary also stated that the council, along with relevant monitoring groups, had concluded the review of the backward integration programme implemented by participants, adding that a new sugar import quota for participants would be released in January based on approval by Mr President.
Nigeria currently consumes between 1.3 million and 1.5 million tonnes of sugar yearly. This is because the sugar investments locally is yet to attain optimum level.
However, when fully on stream, importation of sugar into the country would soon be phased out.
Industry stakeholders admitted that if not for the slow pace the NSMP’s implementation was going, the country’s local production is supposed to have increased astronomically.
Importance of NSMP
The NSMP framework is targeted to ensure that Nigeria achieves sugar sufficiency locally and boost trade investment.
Similarly, the sugar master plan is also aimed at reducing unbridled importation and encourage local production.
The NSMP is a 10-year document that will lapse in 2023, having kicked-off in 2013 under the then administration of late President Umaru Musa Yar’adua and meant to generate about 117,000 jobs.
For industry stakeholders, the biggest challenge facing Nigeria’s sugar sufficiency programme is the massive importation of the product, in spite of high tariff imposed by government.
Forex restrictions: The pains, the gains
Last week’s pronouncement by the Governor, Central Bank of Nigeria (CBN), Mr. Godwin Emefiele that the implementation of the policy to restrict importers of certain items access to foreign exchange has boosted domestic production and reduced import bill was cheering news for the manufacturing industry. TAIWO HASSAN reports.
In 2015, when the Central Bank of Nigeria (CBN) announced that it would ban 41 goods from accessing foreign exchiange, almost all the manufacturing industries were severely affected. As expected, the directive was followed with huge criticism by the Organised Private Sector (OPS), which raised the alarm that the country’s economy was heading for the worse. Despite the verbal and media attacks, the apex bank stuck to its gun, insisting that the policy was specifically targetted at growing local production and discouraging indiscriminate importation.
Emefiele, while announcing the policy, had argued that most of the 41 items could be produced locally. The items include rice, cement, margarine, palm kernel, palm oil products, vegetable oils, meat and processed meat products, vegetables and processed vegetable products, among others. Some of the goods and services excluded from accessing forex from the CBN window include poultry, private airplanes/ jets, Indian incense, tinned fish in sauce (sardines), cold rolled steel sheets, roofing sheets, wheelbarrows, head pans, metal boxes and containers, enamelware, steel drums, among others.
Shackled by cash crunch and economy contractions, the OPS groups including the Manufacturers Association of Nigeria, (MAN), National Association of Small and Medium Enterprises (NASME), Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), Nigerian Association of Small scale and Industry (NASI) and the Lagos Chamber of Commerce and Industries (LCCI) took the issue to the Presidency with a view to convincing them to review the policy.
While calling for an urgent review, the groups stated that 16 of the 41 items on the list were critical raw materials for intermediate goods produced in Nigeria, especially as the country lacked the capacity to optimally produce the items locally. The OPS said the ban on oil napalm had led to loss of about 100,000 jobs while the ban on glass and glassware triggered the loss of 80,000 jobs, mainly in the pharmaceutical industry, as companies in this sector found it difficult to package their products.
The policy was also reported to have led to the closure of some companies and the relocation of some other major blue chip companies from Nigeria to neighbouring countries. Also, at some period, the Nigeria Customs Service (NCS) stated that it lost N230 billion in anticipated revenues in the last quarter of 2015 due to CBN’s closure of the foreign exchange window to the 41 banned items.
The Comptroller-General of Customs, Hameed Ibrahim Ali, disclosed then that he had opened talks and made a request for a policy review to Vice-President Prof. Yemi Osinbajo. Similarly, the Managing Director of the International Monetary Fund (IMF), Christine Lagarde, raised the issue in April 2015, during her official visit to Nigeria, warning that the restrictions on the 41 items was making an already bad situation worse in the foreign exchange market.
However, at the 2017 Annual Bankers’ Dinner of the Chartered Institute of Bankers of Nigeria (CIBN) in Lagos recently, the apex bank governor emphatically stated that the dogged implementation of the policy had led to improvements in the domestic production of those items and a reduction in Nigeria’s import bill. Emefiele asserted that local manufacturers were recording profits and major boosts to their revenue due to the policy.
According to him, in spite of opposition to the introduction of the policy restricting 41 items from Nigeria’s foreign exchange market, the faithful implementation of the policy had seen to the considerable decline in Nigeria’s import bills. From an average of about $5.5 billion, he disclosed that the napalm tion’s monthly import bill had fallen consistently to $2.1 billion in 2016 and $1.9 billion by half year 2017.
Citing the example of Psaltry International Limited (PIL), an agro-allied company based in Oyo State, he said the introduction of the policy had reversed the fortunes of the starch-producing company, adding that prior to the policy, Psaltry had only few customers and a huge backlog of inventory.
However, due to the policy, he disclosed that the company now had over 50 multinational clients including Nestle and Unilever, thereby saving the country $7 million in foreign exchange drawdown over the two years of the policy. He also asserted that the access restriction policy had freed Nigeria from the perennially embarrassing importation of toothpicks.
Agric sector boost
No doubt, the policy also assisted the agric sector, especially the area of self-sufficiency in rice production. Checks showed that the implementation of the policy had a great impact on Nigeria’s import bill and boosted local rice production in Nigeria. Specifically, in 2012, Nigeria had imported about 1.2 million metric tonnes of rice from trading partwith. Compared with 2016, one full year of implementation of the policy, rice import to Nigeria had fallen by 99 per cent to only 784 metric tonnes.
Truly, many firms operating in the country may have experienced pains at the beginning, but some of CBN’s policies are major gains to the economy and an elixir for growth.
Youth entrepreneurs: Expert decries lack of business plan
Chief Executive Officer, Vantage Global Consult, Mrs. Olanrewaju Oluyide, has decried the lack of ideal business plan among aspiring youths targeting start up business in the country. She made this remark while speaking at a 3-day SMEs business clinic in Lagos. He stated that there was need to empower and equip young Nigerians with basic entrepreneurial skills, legal requirements and financial support before going into start up business in order to avoid failure.
Mrs Oluyide said that the programme was organised to teach young Nigerians who are interested in venturing into small scale businesses to enable them to have the necessary requirements for start ups.According to her, most people ignore the necessary business information and rush into businesses only for them to fail miserably and ultimately blame other external factors for their failure.
Declaring the clinic open, Oluyide urged the participants to take advantage of the rare opportunity presented to them through the programme to avail them with the knowledge they would acquire from the clinic and avoid the common pitfalls prevalent in the Nigerian business environment.
She said: “It is common knowledge that most people venture into many businesses without having the opportunity to learn the basic entrepreneurial tips before starting the business. It is against this backdrop we decided to organise the business clinic to avail our young ones, who are interested in going into small scale businesses, the opportunity to learn basic entrepreneurial skills to avoid mistake commonly experienced by most people.
“Many banks are looking for entrepreneurs to partner with by means of loan grants. You need to acquire these skills and the knowledge before setting up a business so as to convince any bank to grant you a loan. “Therefore, I enjoin you all to avail yourselves with the opportunity presented to you now through this programme. Many people are looking for this kind of opportunity but they cannot find it.
You have got it on a platter of gold. “Make a capital of it now. In fact, with the skills and knowledge you will learn from this clinic, you can request for loans from the government and corporate institutions that are into business of loan grants.” One of the facilitators, Mrs. Blessing Ahmed, said most entrepreneurs went into businesses without considering the legal implications of their businesses, adding that it is necessary for any business owner to have a lawyer so as to know the legal requirements of such businesses.
She said: “It is quite unfortunate that most people in Nigeria relegate the importance of legal requirements in the businesses they go into. It is advisable that before going into any business venture, you should get the service of a lawyer who will direct you on the legal implication of your business to be on a safer side if any problem arises.
“Most especially, people who go into partnership business with their friends, family members and other professionals need the services of lawyers. When you have a lawyer, you are sure of not making mistakes in signing agreements and going into contracts. Even as little as hiring a carpenter or a plumber, you
Ease of Doing Business: Sustaining the momentum
Last week, Nigeria moved up 24 places in World Bank’s ‘Doing Business’ report, which named the country as one of the top 10 most improved economies in the world. TAIWO HASSAN reports that this feat must be sustained.
internationNo doubt, in the past, it had been very challenging for manufacturing firms, including the small and medium scale enterprises (SMEs) to operate smoothly in the country amid a tough operating environment characterised by failed infrastructure and regulatory frameworks. Indeed, the lacuna in the country’s operating environment have had adverse effects on the nation’s Gross Domestic Product (GDP), orchestrating the exodus of renowned manufacturing firms and relocating to neighbouring countries. Part of the multiplier effect of the exit Nigeria resulted to difficulty in attracting foreign direct investment.
However, on assumption of office two years ago, President Muhammadu Buhari met an ailing economy battered by fall in prices of crude oil at the international market.
In order to raise the bar and bring back public confidence into the economy, President Buhari and his cabinet swung into action with many economic plans that were geared towards repositioning the ailing economy and arresting the alarming shutdown of industrial firms.
After exploring different fiscal policies, the breakthrough was achieved with the setting up of the Presidential Ease of Doing Business Council (PEBEC), a council that comprised both the public and private sector operators.
Specifically, the PEBEC, under the watch of Vice President Yemi Osinbajo interfaced regularly with the Organiser Private Sector (OPS) in finding a permanent solution to the ailing economy.
In order to make an instant impact, the Council unveiled the Economic Recovery and Growth Plan (ERGP), which articulated the economic policy direction of the government and followed it up with recent executive orders targeted at enhancing the investment climate and improving Ease of Doing Business in Nigeria.
World Bank reportn
According to the World Bank’s ‘Doing Business’ report released last week, the global bank admitted that the Federal Government had taken some positive steps to improve the economy rapidly, especially towards ease of doing business by private sector operators. Particularly, the global bank for the first time recognised Nigeria as one of the top 10 most improved economies in the world.
The World Bank Doing Business project provides objective measures of business regulations and their enforcement across 190 economies. It highlighted five reforms making it easier to do business in Kano and Lagos, the two cities covered by the report in Nigeria over the course of last year. They are Starting a Business, Dealing with Construction Permits, Registering Property, Getting Credit and Paying Taxes.
In company registration, the Corporate Affairs Commission (CAC) has moved to offering online registration and introduction of new features such as electronic stamping of registration documents. Thus, entrepreneurs have been able to register their businesses much faster, within 24-48 hours, thereby saving cost and time.
Finally, the report revealed that it had become easier to pay taxes in Nigeria because taxpayers can file tax returns at the nearest Federal Inland Revenue Service (FIRS) office, and electronic payment and filing are gradually gaining acceptance.
Commenting on report, Osinbajo said: “I welcome Nigeria’s improved performance. We are one of the top 10 reforming economies in the world in 2017. “After a decade-long decline in Nigeria’s rankings, last year government recorded a modest increase. This year, Mr President set us an ambitious target of moving up 20 places in the rankings – I am delighted that we have exceeded his goal. “Improving the business environment is at the heart of the Buhari administration’s reform agenda.
“We are reinforcing our economic turnaround by a vigorous and active implementation of the ERGP so businesses operating in Nigeria can thrive and be competitive globally.”
In a chat with New Telegraph, the President, Manufacturers Association of Nigeria (MAN), Dr. Frank Udemba Jacobs, commended President Buhari’s administration for the giant strides recorded in the economy so far, saying that this was a positive signal about the country’s image at the internation No INDUSTRYal scene.
He said that the World Bank report had also indicated that the economy was on the threshold of recovery. According to him, the collaboration between the private sector-OPS and the Federal Government- led economic team at resolving the challenges in the economy through the creation of PEBEC had brought light to the ailing economy.
“We are happy to hear this good news from the World Bank that Nigeria has moved 24 places to 145 on the Ease of Doing Business globally,” he said. “This movement in the ladder can be traced to the Executive Orders taken by the Vice-President, Prof. Yemi Osinbajo on the Ease of Doing Business in the country recently.
“It’s good news and music to my ears. It’s reassuring and an indication that the government policy on improving the ease of doing business in the country is working. I therefore say kudos to the PEBEC. “However, there still is room for improvement in order to move plantNigeria up to one of the top 50 countries in the ease of doing business index.
This is necessary if we want to be acknowledged as one of the industrialised nations of the world. I am optimistic that if and when the policies take hold fully, we would get there.
” For Dr. Nike Akande, the President of the Lagos Chamber of Commerce and Industry (LCCI), the World Bank’s Ease of Doing Business report on Nigeria, was a delightful news for the OPS and the government. She said that the report had shown that the short to medium term outlook for the Nigerian economy was much better than what it was this time last year.
The LCCI president traced the country’s economic improvement on the outcome of the series of new policy initiatives, engagements and consultations with key stakeholders and some positive developments in the external sector. “We appreciate the setting up of the PEBEC under the chairmanship of the vice president.
We applaud the recent executive orders taken by the administration to enhance the country’s investment climate and improve the ease of doing business in Nigeria,” she said. The LCCI SMEG chairman noted that the reforms of the current administration, especially the Executive Orders on Ease of Doing Business in the country, were good for economic recovery.
The World Bank’s ‘Ease of Doing Business’ report on Nigeria may have been out but many firms are still facing daunting challenges out there especially as it relates to policy summersaults and decayed infrastructure. Consequently, Nigeria must not rest on her oars in ease of doing business in the country.
DBN advocates sustained support to MSMEs
The Development Bank of Nigeria (DBN) has called for a sustained support and improved access to finance for Micro, Small and Medium Enterprises as a means of managing the growing employment need in the country and to address the global domestic population explosion.
Chairman of DBN, Dr ShehuYahaya made this call when Queen Maxima of Netherlands and the United Nations Secretary-General’s Special Advocate for inclusive finance for Development visited the bank in Abuja.
Yahaya implored the Queen to use her office to push urgently for increased access to finance for Micro, Small and Medium Enterprises (MSMEs) in order to enhance financial inclusion.
His words, “I will start by providing context to the situation that will confront the world over the next 20 to 50 years if strategic and sustained support is not afforded MSMEs as a critical segment of any economy; The current world population of 7.3 billion is expected to reach 8.5 billion by 2030, 9.7 billion in 2050 and 11.2 billion in 2100.
To manage this growth, 600 million jobs are needed over the next 15 years to absorb a growing global workforce”. “The employment need in Nigeria will be 30 – 40 million jobs by 2030 (mostly to be provided by MSMEs) and currently, 50 per cent of Nigeria’s GDP is attributed to SMEs and this is expected to grow to 70 per cent in 2050. There are over 37 million MSMEs in the country.
However, less than 5 per cent of these businesses have access to credit in the financial system”, he added. The DBN chairman noted that, “MSMEs are collectively the largest employers in many low-Income countries including Nigeria, yet their viability is being threatened by lack of access to risk management tools such as savings, insurance and credit.
Their growth, he said, “is often stifled by restricted access to credit, equity and payments services.” On a brighter note however, he noted that “global pursuit of financial inclusion as a vehicle for economic development has had a positive impact in Nigeria to some degree as the exclusion rate reduced from 53% in 2008 to 46.3% in 2010.
” The Dutch Queen was informed that DBN has commenced lending operations with the provision of over N5 billion to three National Microfinance banks for onward lending to 20,000 MSMEs across every sector of the economy
OPS: Battling multiple levies
Several surveys on entrepreneurial activities in Nigeria indicate that most micro, small and medium enterprises struggle to survive and compete with their counterparts in other countries due to high cost of doing business. TAIWO HASSAN reports.
Still basking in the euphoria of slightly exiting recession, the Nigerian manufacturing index of the National Bureau of Statistics (NBS) shows that the industry is yet to overcome its numerous challenges, especially as regards the operating environment.
No doubt, it has been disclosed in many fora that one of the biggest problems facing the country’s real sector has been inappropriate regulatory frameworks, which have brought setback to the industry. However, the organised private sector (OPS) group, has been liasing with the Federal Government and its agencies on the need to streamline multiple levies being placed on local companies operating in the country.
According to the group, the country’s operating environment is not conducive for many operators and this is affecting their businesses in all ramifications.
Amidst the multiplier effects of government’s multiple levies, the Manufacturers Association of Nigeria (MAN), which is one of the key voices of the OPS, believes that the government and its relevant agencies need to adopt a one-stop shop levy because of the financial burden on operators.
Levies For instance, MAN admitted that currently, any sales promotion to be embarked on by a company is required to be registered with NAFDAC, Consumer Protection Council (CPC) and National Lottery Regulatory Commission (NLRC), after payment of huge registration fees that are based on the value of each sales promotion.
This is in addition to the fees to be paid to the lottery commission in each state where the promotion is to be held and the Advertising Practitioners Council of Nigeria. According to MAN, this is a big financial burden on any company that is only trying to stimulate sales in this very challenging environment. MAN said:
“We recommend that government advises its regulatory agencies to ensure that only one fee is charged for a particular transaction.
“There is no reason why NAFDAC, CPC and NLRC (which are all Federal Government agencies) should charge separate fees for the same sales promotion, thereby increasing the cost of doing business in Nigeria.
” Victimisation Speaking on the need to embrace dialogue, the president of MAN, Dr Frank Udemba Jacobs, noted that some of its members were being intimidated by these agencies by forcefully collecting levies and taxes, which is not in tandem with best international practice.
He said: “Recent sensational media actions of NAFDAC against one of our members on the alleged infraction of its draft regulations and the publication of the fine of N1 billion imposed against the company, even before forwarding the letter imposing the sanction to the company, have serious damaging effects on the reputation and survival of business.
“In view of the fact that there was no substance in the allegation of NAFDAC, our member was eventually persuaded to pay a face-saving fine of N10 million to NAFDAC to close the issue. “However, the company is yet to recover from the massive damage to its reputation by the avoidable damaging actions of NAFDAC.
” The MAN president added: “We recommend that government should advise all its agencies to limit the discussion of infractions and sanctions to be imposed with affected members and the relevant OPS in order not to issuesdestroy such companies instead of publicising it in the media.
” Criminalisation Besides, according to the MAN president, for the past three years, government agencies have been adopting a new strategy of instituting criminal actions, not only against a company, but its principal officers in respect of alleged breach of regulations, which are purely civil matters.
“We recommend that government agencies should adopt the attitude of discussing issues with the affected companies and the relevant OPS with a view to amicably resolving such disputes,” Jacobs suggested. Forceful invasion Similarly, the OPS noted :
“Recently, the FIRS have been invading premises of companies to force them to pay corporate taxes even when such assessments are yet to be finalised.
“For example, FIRS invaded the premises of GSK with armed policemen in July 2016 and forcefully collected N200 million before leaving the premises, despite the fact that the said tax assessment was yet to be finalised as required by law.
“We appeal to government to prevail on the FIRS to follow the laid down procedure by tax laws for recovering taxes owed by companies instead of the gestapo approach currently adopted, which has the tendency of discouraging investors.
” World Bank report Over the years, the country has been consistently placed in the lowest category in the ease of doing business report.
The 2016 World Bank report on Ease of Doing Business placed Nigeria in the 169th position out of 189 economies. Some of the factors used in the report are ease of getting electricity, trading across borders, registering a property, paying taxes, obtaining construction permits, enforcing contracts, resolving insolvency, starting a business, getting credit and protecting minority investors.
Last line If remedies are not urgently effected, it will be difficult to get investors into the country to support start-ups with viable business ideas due partly to the country’s unfriendly regulatory frameworks.
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