Institute of Directors (IoD) Nigeria

DG/CEO at the ENABLE Programme on Governance Blueprint for Nigeria in Kaduna

Akin Ajayi on Governance http://www.leadership.ng/nga/articles/16845/2012/02/20/%E2%80%98bad_governance_killing_northern_economy%E2%80%99.html

‘Bad Governance Killing Northern Economy’ | Leadership Newspapers Bad governance and insecurity is forcing some companies to relocate from the northern part of the country thereby causing poverty in the region, the Director General an

DG/CEO of IoD Nigeria at the Governance blueprint programme for Nigeria in Kaduna http://dailytrust.com.ng/index.php?option=com_content&view=article&id=155044:collapse-of-industries-worse-than-boko-haram&catid=1:news&Itemid=2

‘Collapse of industries worse than Boko Haram’ The collapse of industries in the Northern part of Nigeria has done more damage to the region more that the Boko Haram crisis, the Director General and Chief Executive Officer of the Institute of Directors, Akin Ajayi has said.

In a bid to develop a blueprint for governance in Nigeria, The DFID Project, ENABLE (Enhancing Nigeria Advocacy for Better Business Environment) has identified the IoD Nigeria as the most appropriate BMO to anchor Governance Review of BMOs in Nigeria. To this end, the first edition of the meeting was held on December 13, 2011, at the Sheraton Hotel, Ikeja.

In a statement from the IoD Nigeria’s Directorate of Research and advocacy, the programme is scheduled to hold its next edition in Kaduna on February 16, 2012, at the ASSA Pyramid Hotel, 13, Lafia Road, Off Independence Way, Kaduna, at 10.00am with the DG and Chief Executive of the Institute, Mr. Akin Ajayi as one of the guest speakers. Moreover, the third and final edition will hold in Calabar at a later date to be communicated in March 2012.

The event is structured to involve a guest speaker with a panel of selected stakeholders bringing their industry and jurisdiction-specific knowledge to bear on the presentation and outcome of the interactive session.

The event is expected to produce a multi – year blueprint: targets, milestones, resources, policy and legislative requirements for attainment of set objectives

GOVERNANCE BLUEPRINT FOR NIGERIA

In a bid to develop a blueprint for governance in Nigeria, The DFID Project, ENABLE (Enhancing Nigeria Advocacy for Better Business Environment) has identified the IoD Nigeria as the most appropriate BMO to anchor Governance Review of BMOs in Nigeria. To this end, the first edition of the meeting was held on December 13, 2011, at the Sheraton Hotel, Ikeja.
In a statement from the IoD Nigeria’s Directorate of Research and advocacy, the programme is scheduled to hold its next edition in Kaduna on February 16, 2012, at the ASSA Pyramid Hotel, 13, Lafia Road, Off Independence Way, Kaduna, at 10.00am with the DG and Chief Executive of the Institute, Mr. Akin Ajayi as one of the guest speakers. Moreover, the third and final edition will hold in Calabar at a later date to be communicated in March 2012.
The event is structured to involve a guest speaker with a panel of selected stakeholders bringing their industry and jurisdiction-specific knowledge to bear on the presentation and outcome of the interactive session.
The event is expected to produce a multi – year blueprint: targets, milestones, resources, policy and legislative requirements for attainment of set objectives.

ARC. THOMAS C. AWAGU, F.IoD
PRESIDENT/CHAIRMAN OF COUNCIL, INSTITUTE OF DIRECTORS NIGERIA
AT THE MEMBERS’ EVENING

WELCOME SPEECH BY ARC. THOMAS C. AWAGU, F.IoD
PRESIDENT/CHAIRMAN OF COUNCIL, INSTITUTE OF DIRECTORS NIGERIA
AT THE MEMBERS’ EVENING ON THE IMPLICATION OF FUEL SUBSIDY ON THE NIGERIAN BUSINESS ENVIRONMENT, HELD AT THE GOLDEN GATE HOTEL, IKOYI, LAGOS
ON THURSDAY, JANUARY 26, 2012

Members of the Governing Council and Executive Committee of IoD Nigeria here present

Distinguished Guest Speaker for the day, Professor Anya O. Anya

Presidents and Members of Professional Bodies of the Organized Private Sector (OPS) here present

Members and Guests of IoD Nigeria

Gentlemen of the Press

Distinguished Ladies and Gentlemen

On behalf of the Governing Council and entire members of the Institute of Directors (IoD) Nigeria, I wish to formally welcome you all to this 1st 2012 and unique Members’ Evening on the Implications of Fuel Subsidy on Nigeria’s Business Environment.

I would like to start by first recognizing and welcoming in a very special way our Guest Speaker for this occasion, Professor Anya O. Anya. May I also welcome all Presidents of other institutes, associations and chambers.

Distinguished directors and members, the attention of the institute has been drawn to the recent implementation of deregulation policy in the Nigerian petroleum downstream sector by the Federal Government.

As you are aware, the nation’s downstream sub sector of the oil industry comprises activities relating to the distribution and marketing of petroleum products and derivatives throughout the country. The sub-sector has been particularly volatile recently due to government partial policy on deregulation of the industry by removing price control mechanisms that have undermined the growth of the sub-sector over the decades.

The Nigerian petroleum downstream sector has been in a deepening crisis, characterized by decay of key infrastructure and falling production capacity of the existing refineries. This has not only led to supply bottlenecks, but also prevented the sector from playing its optimal role as an engine of economic growth and diversification of the economic base of the Nation. Regrettably, there have been numerous missed opportunities for the reform of the sector, notwithstanding the fact that detailed analysis and reform plans for the sector do exist.

However, under the IMF structural adjustment programmes, successive Nigerian governments have had to tinker with the subsidy. Some historic attempts made in this regard would be imperative: In 1976, the then General Olusegun Obasanjo tried unsuccessfully to remove oil subsidy; students revolted against former president Ibrahim Babangida's austerity measures that resulted in the reduction of fuel subsidies in 1988; in 2003, a general strike paralysed Nigeria when President Obasanjo reduced fuel subsidy, a move that resulted in a price hike from 26 Naira/liter to 40 Naira/liter of petrol; and in 2007, Nigerians protested vehemently against a 15% increase in the price for petrol imposed by the outgoing administration of president Obasanjo. Records have shown that since 2000, hikes in petrol prices have attracted massive protests by labour unions and each protest has ended in compromises brokered between the unions and the government, but usually at a great cost by the economy and citizens.

It is noteworthy that in an attempt to address the perennial challenges inherent in this sector, the Federal Government recently announced a removal of subsidy on January 1, 2012. However, the action of the government towards subsidy removal was greeted by a fierce reaction by organized labour and civil society groups which embarked on a strike action, thereby holding the economic barometer of the country still for six days. This was followed closely with the setting up of a Board on Subsidy Reinvestment and Empowerment Programme to oversee and ensure the effective and timely implementation of projects to be funded with the savings accruing to the Federal Government from the subsidy removal, and another committee to dialogue with organized labour and all stakeholders. Further to the above, the pump price of Premium Motor Spirit (PMS) was hiked from N65 to N97 per litre. This has cost the nation a great deal of man-hour some loss of lives and property.

I must say that, while the policy direction of the government is not in question – as it has explained that proceeds saved from subsidy would be used for rapid infrastructure development, it appears that in the interim this will leave a huge burden on businesses, given that most businesses Nigeria depend on petrol-powered generators or have their goods and services transported via petrol-powered vehicles. Besides, it is a well established fact that the cost of energy forms a major part of the cost of doing business, given the dearth of public power supply source.

Be that as it may, IoD believes that, despite the fact that businesses are mourning their plight following the recent action of the government, so long as the status quo (subsidy) remained, the much needed investment in and developments in various sectors of the economy would continue to elude Nigeria and her citizens. It has also been recognized that no sustained growth in the non-oil sectors including agriculture, transportation and services can be achieved without adequate, reliable, consistent, competitive, sustained and sustainable supply and effective distribution of petroleum products.

Therefore, the purpose of this forum is to facilitate an exchange of views on reforms of the petroleum downstream sector, including the impact of the recent removal of the petroleum subsidy on the Nigerian business environment, and options for the management of the post subsidy regime.

But before I end my speech, I would like to make an attempt to look at some of the current implications of the deregulation policy. Perhaps many Nigerians and Nigerian businesses knew that fuel subsidy would be removed someday (economic risk) but not many could really anticipate the impact direction and magnitude of outcomes (uncertainty). It is therefore difficult to correctly predict how many business organizations would be worse off financially in 2012 because of the subsidy removal.

It is obvious that the subsidy removal has resulted in sharp increases in operating costs of micro and small enterprises, many of which rely on small electricity generators powered by petrol as well as a devastating impact on the psyche of the common man as the new policy poses a serious risk to their survival. Besides, the seemingly failure of government in creating a conducive pre-deregulation environment before effecting the policy has created an impression that the process might be doomed, which may ultimately lead to a change of policy as happened during the administration of late President Umaru Yaradua. Perhaps, this is one of the factors negatively affecting business environments. In addition, in the past few years, particularly between 2009 and 2011, policy changes expected to orchestrate prosperity have clearly not materialized in spite of several policy fine-tuning.

The removal of oil subsidy would increase the cost of moving goods around. This would further lead to increase in the prices of goods. When the prices of goods go up, there would be fewer demand for goods. If the demand for goods decreases, the companies would be forced to rationalise their operations. When this happens, there would be retrenchment. Whenever a company cuts its workforce, the remaining workers would demand higher salaries to cushion the effects of the bad economy. In a situation like this, companies would prefer to sack more workers, than increase their salaries.

Furthermore, policy changes have appeared to constitute into vendors of additional adverse risks and uncertainties that affect corporate competitiveness. In 2011 for instance, entrepreneurs woke up to new realities which saw so-called “stability in economic prices” and aggregate real output growth moving side-by-side with unprecedented levels of economic inactivity, massive credit defaults and heightened unemployment levels. Many more businesses shut down.

In my conclusion, it is evident from the above and indeed from the realities already on ground that Nigerian businesses that are forward-looking should begin to contemplate the adoption of strategic initiatives that will enable them to successfully navigate through the heavy mist of uncertainty that will in the interim overwhelm the environment of businesses in 2012. However, my advice to the business decision-maker is more of what needs to be done and how the design and implementation of robust, well-structured and targeted competitive strategy needs to be approached, while we work with the government to fully realize the benefit of the no-subsidy regime.

Once again, on behalf of the Governing Council of the IoD Nigeria, I welcome our distinguished Guest Speaker, Prof Anya O. Anya. I am very pleased to note that he is keen on interacting with directors and members of the organized private sector on this topical issue of petroleum subsidy. To the fellows and members of the Institute as well as guests, I say happy Members’ Evening.

I thank you all for listening.

Arc. Thomas C. Awagu, F.IoD
President/Chairman of Council
IoD Nigeria

L-R, L-R; Former President, Institute of Directors (IOD), Ms Benedicta Molokwu, Guest Speaker, Prof. Anya O. Anya, President, Institute of Director, Mr. Thomas Awagu and the former Institute President, Mr. Femi Ekundayo, at January 2012 (IOD) Members Evening on “Fuel Subsidy; Implications for Nigeria Business Environment” held at Golding Gate in Lagos…27-01-2012

Calling for Nigerian delegates

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IoD Nigeria members evening with Prof. Anya O. Anya

,L-R, Mr. Femi Ekundayo, Ms. Benedictha Molokwu, both former President of IOD and the Special Guest, Prof. Anya O. Anya, at January 2012 (IOD) Members Evening on “Fuel Subsidy; Implications for Nigeria Business Environment” held at Golding Gate in Lagos. 27- 01- 2012

,L-R, Mr. Femi Ekundayo, Ms. Benedictha Molokwu, both former President of IOD and the Special Guest, Prof. Anya O. Anya, at January 2012 (IOD) Members Evening on “Fuel Subsidy; Implications for Nigeria Business Environment” held at Golding Gate in Lagos. 27- 01- 2012

L-R, Former President, Institute of Directors (IOD), Ms Benedictha Molokwu, Guest Speaker, Prof. Anya O. Anya and IOD President, Mr. Thomas Awagu, , at January 2012 (IOD) Members Evening on “Fuel Subsidy; Implications for Nigeria Business Environment” held at Golding Gate in Lagos 27- 01- 2012.