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Monday, November 13, 2017

How Nigeria can benefit from Global Halal Industry and diversify its Economy away from Oil

        Halal industry can simply be described as businesses that conduct their operation in accordance with laid down ethical procedures. It is about credibility and quality control first before any other thing else. The Halal products and services comprise broad number of sectors that cut across most of the areas of modern economy. Such businesses include banking and finance, food and beverages, hotel and tourism, education, marketing and advertising, as well as manufacturing. Thus, unlike what most people think about Halal as meaning Shariah or simply things made for Muslims only, Halal is universal for all people across all religions, culture and geography. In modern marketing terminology you can described Halal products as a brand group, just like when you categories some consumer products as for Western, Asian, or Latin consumers, but still being consumed by people in Africa, Middle East and Eastern Europe. Hence, the label Halal does not mean only for Muslims in Nigeria but also for Christians, Jews, and adherent of other religions living in Nigeria and Africa. Already there is vast market for these product categories. For example, most of the meat been consumed in Nigeria is Halal meat. An average Southern Christian buys his meat from a Hausa Muslim meat seller who follow Halal procedure of killing and preparing an animal for consumption. Halal means ethical, sustainable, environmentally- and socially-responsible goods and services. According to CNN's


       In Malaysia the government created what they called Halal Industry Development  Corporation charged with the responsibility of ensuring the integration and comprehensive development of their national Halal industry. It functions included focusing on the development of "halal standards, branding and promotion, and commercial development of halal products and services". It is the first of it kind in the world, established in 2006. Today many countries are following in it footsteps in order to tap the growing Halal market that was put at $2.3 Trillions. The annual grow of the Halal market around the world was estimated by World Islamic Economic Forum as 8%. In particular Dubai in UAE has gone far in this direction as it aspires to become global hub of Halal economy. Thus for those who are making noise about Islamic banking in Nigeria, but cannot restraint themselves from going to Dubai to enjoy the luxury of modern world this is a challenge for them. Because Halal does not mean for Muslims only, but humanity at large. Just like New York, London, Paris, Tokyo and Hong Kong welcome everyone, Dubai, Istanbul and Kuala Lumpur do the same thing despite their aspirations to become centers of the global Islamic economy. Countries such as China, UK, Thailand and South Africa are doing everything possible to become global exporters of Halal products and services such as beverages, cosmetics, pharmaceuticals, travel and tourism as well as financial services. In Europe alone it is estimated that the market is growing at the rate of 10-20%. Brunei has achieved some level of success in exporting its Halal certified products into Europe and gradually the products are getting acceptance in other parts of the world. As Nigerian government is eager to attract foreign investors into the country federal government shall include Halal industry in it strategy. It can start by creating Halal tourism industry and invite tourist from everywhere to Nigeria. There is also exportation of Halal meat as Nigeria is a big producer and consumer of animal products in Africa. We can become the 'Holland' of Halal diary and meat in the world looking at our potentials in this sector. Australia, despite not being a Muslim country, is one of the top exporters of Halal products mainly meat. Nigeria can as well export Halal meat to Middle East, especially Saudi Arabia and UAE. Brazil is another important exporter of Halal products. Singapore is one of the top destinations for Halal tourism and travels. China is important in production of Halal fashion products, while UK, France and Germany in Halal media and recreation.

Friday, November 10, 2017

BUHARI PLANNED CABINET RESHUFFLING: A NEW ECONOMIC TEAM?

    According to President Buhari himself an expanded cabinet is in the offing, in order to take care of many reservations and interests that included need for fresh faces and ideas, take care of interest groups, bring about flexibility and speed of execution of projects and deliver on the promises he made before election of 2015. Already there were cases of disloyalty and double standards on the part of ministers, the recent rise in the number of media leaking of letters confidentially written to the President office has been seen as embarrassing to the office of Mr. President. The entire cabinet is also accused of being out of reality with the happenings in Nigeria and the need to do things fast enough to meet expectations ahead of 2019 election where President Buhari is rumored to be interested in second running. This piece as usual is only concerned with Buhari appointments into his economic team. Shall Buhari sack his entire economic team or reshuffle it by adding new faces with fresh ideas? This is the question on people mind when it come to the team. Some people already saw need for changing the entire team, while others suggested otherwise. Looking at Buhari entire cabinet there is scarcity of business people, not only in role related to business and economy but any role at all. This is normally compared with past cabinets of Obasanjo, Yar'adua and Jonathan. Some analysts are associating the composition of Buhari cabinet with President lack of business experience and past career history. Hence, the President romance with retired security officers, journalists and bureaucrats. Unlike Buhari, Obasanjo has been involved in large scale agro-business venture. His Otta farm has been described as one of the largest commercial agriculture farms in Nigeria. In President Buhari economic management team, its head the Vice president Yemi Osinbajo is a lawyer by profession, likewise Minster of budget Udoma Udoma who is also a lawyer though he has some business and financial experiences, Minister of finance Kemi Adeosun though with first degree in economics was widely seen as less qualified to hold an important ministry like finance looking at her past work history, Minister of trade and investment Okechukwu Enelamah was originally a medical doctor who later earned an MBA from Harvard and ICAN membership. Compare this with past cabinets, former President Obasanjo had produced some thing of US like economic team. His team from finance minister (Mrs Ngozi, Okonjo-Owella) , President economic adviser (Soludo, later made CBN governor), and Director debt office (Mansur Mukhtar), etc., were all top economists with minimum qualification of PhD Economics. It was said that in constituting his economic team Obasanjo was, at one time or the other, advised by World Bank consultants among others. Hence, all the three members listed above were involved with multinational finance corporation such as World Bank, IMF and African development bank, at one time or the other.


         In the United States, Council of Economic Advisers (CEA) is a United States agency in the Executive Office of the President in existence since 1946, it advises the President of the United States on economic policy. Among it functions are provision of an objective empirical research to the White House, and production of the annual economic report of the president. The US tradition of appointing members into the economic team has been characterized by invitation of respected economists, most of them academic economists working in top US universities. In most cases because their assignments involve technical areas of economics, politics was put aside when appointing members. Likewise, only those who are professional economists or in associated areas (but not anyone with no business with data/econometrics) were invited. Normally, the President nominate the chairman of the council while the senate confirm him. The current US president Donald trump who himself came from the business sector appointed a lot businessmen into his economic advisory team. Though, there were criticism on the domination by Billionaires over academics in the Mr. Trump team. Thus, what we have in Nigeria is not an economic team in the sense of what is obtainable in the US. If you look at the performance of the ministers in Buhari economic team, all of them can be described as moving at slow phase unable to accomplished 40% of the tasks at their disposal. They are as well not very creative as expected of people responsible for putting the Nigerian economy in position as one of the most dynamic emerging economies in the world. Ask, for example, the Minister of Trade what is the level of Foreign Direct Investment (FDI) coming to Nigeria or what is the position of Nigeria in term of FDI in Africa? The Minister of Finance will tell you that her ministry has made progress with Treasury single account and whistle blowing program, but what happens to her core job of managing fiscal policy in order to ease current tensions in the economy as a result of poor injections by her ministry, not making needed funds available on schedule, where it is most needed or create needed atmosphere for job creation? For the minister of Budget up to now his ministry is yet to achieve 70% budget implementation. Though, in fairness to them they have found themselves in the general climate of sluggishness and cautious approach of new government that took over from an opposition party that was widely seen as corrupt. The recessionary business climate did not favour them. Unlike Obasanjo or Jonathan ministers who found themselves awashed with cash from booming crude oil export. Thus in introducing changes to his economic team, Buhari shall look at weaknesses of the existing team and try to deal with them as appropriate. Mr President shall also listen to people complaints about the inadequacy of his team by complementing it with competent people from academic, business and diaspora. Let have an economic team that is worth the name.

Monday, November 6, 2017

Emerging Risks and Opportunties of investing in Nigerian economy from the perspective of Buhari's agenda


        Nigerian economy has just come out of recession that engulfed it from 2016 to 2017. Recession, not just in Nigeria, usually scare away foreign investors who want to avoid putting their money in negative growth territory. Added to this was Nigeria battle with Boko Haram, though that threat has subsided with government taken over of areas previously controlled by the insurgents. But, other security threats such as kidnapping and arm robbery remain. In the past four decades, the major stumbling block in the way of Nigeria as it moved towards achieving it developmental goals was corruption. Today not much can be said to have changed, despite Buhari government mantra about fighting corruption. But, some notable achievements have been realized in other associated lines. Particularly, government policy of single treasury account has helped federal government blocked leakages in its revenue and weeded out thousands of ghost workers and dubious contracts. Government has also created 'whistle blower' program that received alerts on corrupt transactions and acted on it. Risks associated with the movements in oil price are still the major obstacle in the way of Buhari efforts to stabilize Naira and rise level of foreign reserve. Just like in other developing economies, Nigeria problem is compounded by poor infrastructures to the extent that in some cases investors have to provide their own power and build access roads in order to stay in business. Nigeria has improved in the latest world bank ease of doing business ranking jumping 24 places from 169 to 145. This is another signal to foreign investors that Nigeria is really open for business. Many macro-economists have projected Nigerian economy to grow in 2017 and 2018, albeit moderately. The gradual appreciation in the price of crude oil is expected to translate into improvement in macroeconomic fundamentals such as foreign exchange rate, foreign reserve, inflation and interest rate. As more money enters federal government ownership, overall level of liquidity in the economy will improve. Likewise, the value of Naira and level of foreign reserve. But, government must improve its economic management process for it to achieve all these. Federal government shall, as a matter of necessity, involve more competent individuals in the management of the economy. In this regard Buhari shall expand his economic team by involving industrialists, academics, businessmen, bankers, and international consultants. Thus, Buhari shall learn from other countries and not keep things to himself and his weak economic team.


            The recent offer of Sukuk bond to investors by Nigerian government was over subscribed. This to some extent show the attraction of Nigerian economy to both local and domestic investors. It is clear indication that investors are optimistic on Nigerian economy. The massive infrastructural investments in roads, railways, power generation and airports embarked on by this government is a positive indicator of the future potential of the economy, all things being equal. Other government commitments like in boosting consumers demands through direct involvement in poverty alleviation programs, and gradual injections of liquidity into the economy were aim at returning the economy into path of grow. The general improvement in nation's security is a positive thing for the economy.  Already, Boko Haram has been subdued, Niger Delta militancy reduced, Biafra agitations tamed and other security challenges are being deals with gradually. According to the world bank, political stability, security, and regulatory environment are leading factors driving decisions to invest in developing countries. Despite recent improvement in Nigeria ease of doing business ranking, Federal government must do better than it is doing now to fight bureaucracy and red tape in the governance process. One important sector that all potential investors shall pay attention to is agriculture. Already this government has shown commitments to develop the sector through massive investments and discouragement of importation of food items from abroad. With population approaching 200 millions, Nigeria is a bigger consuming nation not only in Africa but the world. Thus, producers of retail products shall see this as an opportunity to invest their money where they will drive the highest benefits. Real estate investors have opportunity to invest in a developing economy hungry for shelters. Manufacturers shall see this as chance to expand their markets looking at the gradual improvement in power supply and government efforts to build all kind of infrastructures. As general election in 2019 is fast approaching, the implications of the election on the economy include possible inflation spiral. The usual unpredictable atmosphere that come with election will possibly delay some investment until after election particularly money coming from pessimistic investors. Despite that we shall expect more investors friendly atmosphere as government do everything possible to please voters and demonstrate that it is working for the interest of the nation. The political stability that is gradually becoming part of Nigerian democracy since 1999 has helped in reducing political risk,  thus improving the country's economic outlook to the rest of the world.