Economy Archives - GUJRAT INDIA

IGR and Formalising the Informal Economy in Nigeria

Nigeria has had a tumultuous history, marked by decades of virulent political and civilian strife since its independence in 1960. The oil boom of the ’70s brought windfall profits to the emerging state, but corruption and gross mismanagement blighted economic indicators and rendered the vast majority of its population destitute. A reforms process initiated after the first democratically elected government was sworn to power in 1999 is beginning to show results, but hardly of the nature or scale that can reassure a country desperate to shake off its Third World heritage.

At the ground level, the extended economic stagnation and Nigeria’s persistent failure to enforce corrective policies spawned a flourishing informal economy – the aggregate of financial and business activity that operates outside government control, contributing neither in taxes nor in contribution to the country’s GDP. It includes everything from backyard employment and self-help finance to street vending and unregulated manufacturing. Nigeria’s vast informal economy of products, services and financial services was born out of necessity but is now estimated to contribute up to 65% of current Gross National Product. Even with a significant readjustment of the percentage, there is no debate that the state is losing out on millions in internally generated revenue (IGR) because of activity in the unorganised sector. IGR, or inland revenue, refers to state earnings from levies and taxes. Although current figures for Nigeria’s federal IGR are unavailable, it has been traditionally diminutive in relation to the country’s oil profits, which account for 85% of state revenue.

Across the African continent in general and especially in Nigeria, the informal sector no longer plays an auxiliary role but leads official economies in terms of maintaining livelihoods and creating new jobs. The present Nigerian government accepts that more than 90% of all new jobs are being created by this unorganised sector. The Lagos report in fact goes a long way to show that, even if only subconsciously, Nigeria is vitally dependent on its informal economy. Moreover, it needs to cultivate this sector and bring it under the tax regime if its long-term macroeconomic goals are to be achieved. The Nigerian informal economy is therefore critical on two counts: in terms of untapped revenue and, more importantly, as the driving force behind rapid enterprise development for durable economic growth. This is what the government can do to gradually subsume the informal economy under its jurisdiction:

* Devise innovative policy to bring unorganised activities under official purview through a system of sops, tax breaks and finance aimed at both existing and emerging unregulated businesses.

* Streamline tax and business regulations for universal applicability; crack down on systemic corruption through stringent penalties.

* Promote a credit environment sympathetic to small business realities. Government effort should concentrate on promoting lending through equity, not debt, because Nigeria’s informal economy is mostly about high-risk ownership businesses.

* Improve productivity in small businesses through infrastructure development and removal of trade and administrative barriers. Enhancing technical support and capacity building assistance to aid existing and emerging entrepreneurs.

* Transform education at the vocational and skills level to create a dynamic manpower base that is equipped to meet entrepreneurial challenges. Creating supplementary programmes for relevant technology and computer education.

Spain provides a sterling example of how it can be done right. Through the 1990s, the Spanish government pursued a radical reforms programme, easing corporate taxes and regularising labour laws. The outcomes was a drastic 40% fall in the unemployment rate over a period of six years, fuelled by massive job opportunities in the informal sector. Even though tax rates had been slashed, the government augmented revue collected from small companies by over 75% by bringing more of them under regulation.

Even though Nigeria has been the second largest economy in the continent after South Africa for years now, independent researchers have long been pointing out that the ranking is unrealistic in the sense that it takes no account the vast Nigerian parallel economy. The theory may not be unlikely but is near impossible to prove because sufficient relevant data for Nigeria is unavailable. There is no doubt however that the country’s future position in world affairs hinges considerably on the development and formalisation of its massive informal economy. In terms of attitude, what it requires foremost is the suspension of conventional perceptions with regards to the unorganised sector: in other words, a paradigm shift in economic policy outlook and execution.

The process of Nigerian economic reforms that began in 2001 has seen concrete steps aimed at boosting the private sector:

* A bank consolidation programme was initiated in 2004 to fortify financial institutions and enhance credit access to the private sector.

* Rapid disinvestment in large enterprises was started with the privatisation of mining, communication and oil marketing corporations.

* The government deregulated oil prices in 2007 and enforced the national Fiscal Responsibility bill and the Pubic Procurement bill.

Some of these measures have produced tangible results, cutting inflation and boosting international currency reserves. Their long term effects though are yet to be observed or examined.

In December 2008, the government of President Umaru Yar’Adua presented budget proposals for withdrawal of $200 million in African Development Bank trust funds to issue 10-year government bonds. The move was part of the treasury’s efforts to plug a substantial budgetary deficit amounting to almost 4% of GDP. Sadly, short term-measures such as this otherwise unremarkable decision have defined Nigerian economic policy for more than the last half century. What it needs in order to shed its Third World credentials is a unified, innovative strategy that reverses overdependence on oil and actively seeks to formalise its informal economy.

Specifically, Nigeria needs to come up with practical measures to convert its traditionally survivalist practices into entrepreneurial ventures that contribute revenue, create more jobs and provide innovative products and solutions. A number of Abuja’s policy directives in recent years have sought to reform the old economy to ostensibly promote small businesses and seed an entrepreneurial revolution. Besides its obvious contributions in terms of employment and income generation, the Nigerian informal economy is responsible for a number of positive effects –

* It allows a productive outlet for a huge population of Nigerians who are self employed by choice or necessity.

* It creates economic competition and promotes innovative business practices relevant to local realities.

* Most importantly, it mobilises Nigeria’s significant human resource pool that would otherwise be unused, or worse, ill-used.

In the Nigerian context, formalising the informal economy is synonymous with enterprise development and long-term macroeconomic growth. An endeavour of such moment calls as much for creative innovation in policy design as it does motivated implementation. In light of the country’s troubled past, its government would also do well to build popular consensus on important issues before trying to enforcing radical laws. Far reaching change, however, will only come with the realisation that leveraging the informal economy is key to resolving the age old Nigerian paradox – a country of enormous resources with extreme povert

Investing In A Developing Economy – A Possible Solution To Global Financial Crisis

INTRODUCTION

If there were security problems in Nigeria, no businessman would go to the country to explore opportunities, companies like Celtel, MTN, Etisalat, would not have ventured into security risk country to do business. Those who spread rumour about security and corruption problems in Nigeria are saying so to stop others from making money in the country. Figures don’t lie. They are the biggest testimonies for how conducive Nigeria’s environment for business and opportunities are. If you want to do business in Africa and record good returns on your investment, I welcome you to come to Nigeria. The political environment in Africa, particularly in Nigeria is tremendous.

Dr. Hamadoun Toure,

Secretary General,

International Telecommunications Union,

Cited in the Punch Newspaper, May 13, 2008)

What is happening currently with the Nigerian financial system is far from being affected in any way by the global credit crisis. At global level currently, the banks are under-capitalised, but Nigerian banks are over-capitalised. And I do not think this is a problem at all. I believe that Nigerian banks are under pressure from other economies within Africa continent that are affected by the credit challenges.

– Gordon Smith,

Head of Research, Africa and the Middle East, International Consilium,

(Reported in the Punch Newspaper, June 30th, 2008).

The foregoing statements aptly connote two understandings of the state of Nigerian economy. These understandings show that, the economy is one of the fastest growing economies in Africa and in the world. Although Nigeria has had hash economic history, it has undergone and still undergoing economic reforms, which are aimed at making Nigeria the Africa’s financial hub and one of the twenty largest economies in the world by the year 2020. Needless to say that the country has experienced political instability, corruption, and poor macroeconomic management in the past, this was responsible for unpleasant and harsh economic situation. The government relentless efforts to reposition the economy have translated into a remarkable economic growth and development. Several mechanisms have been put in place to sustain this growth and development, capable of balancing the interests of stakeholders. Perhaps, this view must have influenced Gordon Smith submission. He described Nigeria as the most dynamic market in Africa, which is under severe pressure from some countries in Africa to serve as a cushion against the effects of global turbulence. He also noted that some countries like Ghana, Malawi, Mauritius, among others were depending on her at the moment due to global risk exposure and that the country’s economy, led by the consolidated banks, was far from being affected by the global credit crisis currently rocking the world’s financial giants. He stressed further that foreign investors, who will be patient enough to weigh the Nigerian financial system on the credit risk perspective relative to global events, will find the nation’s financial sector more interesting to invest and raise capital from.

Faced with numerous challenges, Nigerian government is determined to strengthen, diversify and make the economy attractive and investment-friendly to both local and foreign investors. The government has adopted total liberalization and globalization as the economic policy, instituted privatization and commercialization programmes of public enterprises, provided total security for business and people, extended invitation to domestic and foreign investors, abolished laws inhibiting competition, embraced and fine-tuned policies to ensure quick realization of growth and development of all sectors of the economy. The effort is already paying off as Nigeria is now the focus for foreign investment thereby increased exponentially Foreign Direct Investment (FDI). Scores of economic missions and delegations from developed and developing countries have visited Nigeria, thus accelerating the growth of the economy at a very fast rate.

It becomes pertinent to direct the course of this discussion to embrace the second understanding of the above statements made by Hamadoun Toure and Gordon Smith. However, it becomes more pertinent to enumerate the inherent investment opportunities in Nigerian economy before discussing the issue of security as raised by Toure.

INVESTMENT OPPORTUNITIES AND SECURITY ISSUE IN NIGERIA

No doubt, Nigeria is an investment haven with countless and lucrative investment opportunities including oil and gas, solid mineral, agriculture, tourism, telecommunication, power and steel, transport, trade processing zone, financial sector, real estate / property, manufacturing, sport and entertainment, and fashion industry. Investors have a wide range of opportunities to choose from. It is important to note that the rate of growth of investment is fantastic and exponential in any of these sectors. Investors are at advantage of presenting their products and services to already-made market taking advantage of the population of over 140 million.

In telecommunication, statistics reveals that mobile phone users in Africa were about 280 million, overtaking United States and Canada with their 277 million users in the opening quarter of 2008. With 70 million connections in 2007, the Continent became the fastest growing region in the world, representing a growth of 38 per cent, ahead of the Middle-East (33 per cent) and the Asia-Pacific (29 per cent).It was also revealed that the fastest growing markets are located in northern and western Africa, representing altogether 63 per cent of the total connections in the region. The record showed that Nigeria, Zambia, Tanzania, The Democratic Republic of Congo, Kenya, Algeria, Tunisia, Ghana and South Africa are highly competitive markets in the Region. The record further contends that two-third of Africa’s telephony are in their early phase of development, with penetration rates below 30 per cent at the end of 2007.In percentage terms, it was noted that Africa is the fastest growing market in the world, but also the second smallest in terms of connections after Middle-East.

As Nigeria accounts for 57 per cent of the West Africa mobile phones, the country is acknowledged as the leading and the fastest growing telecom market in Africa. With mobile phone users at 44,932,181 and 734,444 for GSM and mobile CDMA respectively, her contributions to West Africa and Africa’s telecommunication growth can not be overemphasized. While the overall economic growth rate stands at 7% per annum, the mobile telephony is about 35-50%. Assuming that each of these connections was busy for a minute in a day, the country telecoms market has the capacity to generate over USD 16 million per day (USD16, 666,667) and close to USD 6 billion per year (USD 5,833,333,300). This is why telecom companies such as Visafone and Etisalat quickly joined the likes of MTN, Globacom, Celtel and other telecoms service providers in exploiting opportunities in the country.

Early this year, one of the main GSM service providers with a subscriber base of over 15 million announced a profit after taxation of USD650 million (78 billion naira) for the year 2007.Putting all these together, one can easily understand Toure’s submission describing Nigerian telecoms market as the best investment destination in Africa.

Recognizing the fact that the Nigeria telecoms industry is enormous and there is need to further exploit the sector to its fullest, the Nigeria Communication Commission (NCC) and the Ministry of State for Information and Communications have made their positions clear by extending invitation to global investors for active participation in the sector as they are willing to grant pioneer status and license for prospective applicants for various undertaking such as Fixed telephony, Mobile telephony, Fixed satellite (VSAT),Paging, Payphone, Internet and other value added services.

With the above facts, one can safely conclude that Nigerian telecom sector offers fantastic and lucrative investment opportunities to global investors. And putting into consideration 40% GSM market growth rate in the first quarter of this year (2008), there is potential for high return on investment in this sector.

Agriculture, the dominant sector of Nigeria economy, engages about 70 per cent of the population directly and provides nearly 88 percent of non-oil foreign exchange earnings. It contributes about 41 per cent of the GDP of the country. The sector recorded an overall growth rate average of 7 per cent in the last three years, a major improvement from under 3 per cent in the 90’s.

Statistically, 91 million hectares of the country’s total land area of 92.4 million hectares is adjudged to be suitable for cultivation. Approximately half of this cultivable land is effectively under permanent and arable crops, while the rest is covered by forest wood land, permanent pasture and built up areas. Among the states, which have the most abundant land, areas are Niger (7.6 million hectares) and Borno (2.8 million hectares).

Agriculture crops in Nigeria are grouped into cereals, root and tuber crops, grains legumes and other legumes, oil seeds and nuts, tree crops, and vegetable and fruits. Governments and the Ministries of Agriculture have made land acquisition easy, encouraged agricultural practices, extended (still extending) invitation to foreign investors and have put in place several incentives to stimulate growth in the sector. Despite, the agricultural potential of Nigeria is barely being tapped and this explains the inability of the country to meet the ever-increasing demand for agricultural products and her rank as 55th in the world (although first in Africa) in farm output.

As the world experiences food crisis and persistent rise in fuel price, the country’s agriculture offers unlimited opportunities for foreign investors and the world at large to provide solutions to these crises. Foreign investors will find investments in cultivation of sugar cane, sugar beet, sweet sorghum, starch (corn/maize), palm oil, soybeans, jatropha, and algae. These products are lucrative as they are potential for biofuels, a good substitute for fossil fuel. Presently, there is a very high demand for these crops from the developed economies.

Solid Mineral is another sector with great investment opportunities. Nigeria is endowed with numerous mineral resources. Recent policy reforms have brought the solid minerals sector to the fore. The emphasis is on encouraging massive foreign investors’ participation in this sector as less than 0.5 per cent is contributed to the Gross Domestic Products from Solid mineral sector. However, the Ministry of Mines and Steel and the Ministry of state’s focal attention in the last one year is to strategically place the country in a better position to explore and exploit just seven minerals in the plethora of minerals so as to increase Gross Domestic Product to 5 per cent within the next few years. The seven strategic minerals are coal, bitumen, limestone, iron-ore, barite, gold and lead / zinc.

Coal can be found in Enugu, Benue and Kogi. Within these three districts 396 million metric tones can be demonstrated using JORC classification criteria, while an additional 1,091 million tones of inferred and hypothetical coal resourced for the areas studied is 1481 million tones.

Knowing fully that development of coal will assist in the realization of energy, the Government and the Ministries are inviting foreign investors to participate actively in the exploration and exploitation of the mineral. Companies such as Denver Resources and Western Metals have already committed US$10 million and US$15 million respectively for two coal fields in the country. Another Chinese firm, Grid Xin Yuan International Investment Company that is providing more than half of China’s electricity needs is also in the country, indicating their interest in the development of a coal field in Kogi State.

The Bitumen reserve in the country is estimated at more than 27 billion barrels of oil equivalent while iron-ore is estimated at over 5 billion inferred reserves with presence in Kogi, Enugu, Niger, Zamfara and Kaduna States. Gold in just 10 locations is estimated at 50,000 ounces, barites 10 million metric tones and limestone at 2.3 trillion reserves.

Talc with an estimated reserve of over 100 million tones can be found in Niger, Osun, Kogi, Kwara, Ogun, Taraba and Kaduna States.The colour of the Nigerian talc varies from white through milky-white to grey. The talc industry represents one of the most versatile sectors of the industrial minerals in the world. The exploitation of the vast talc deposits in Nigeria would therefore satisfy not only the local demands but also that of the international market as well.

The national demand for table salt, caustic soda, chlorine, sodium bicarbonate, sodium hydrochloric acid and hydrogen peroxide exceeds one million tones. A colossal amount of money is expended annually to import these chemicals. There are salt springs at Awe (Platue State), Enugu, and Uburu ( Imo State), while rock salt is available in Benue State. A total reserve of 1.5 billion tones has been indicated. Government, to ascertain the quantum of reserves, is now carrying out further investigations.

In the same vain, large bentonite reserves of 700 million tones are available in many states of federation ready for massive development and exploitation, over 7.5 million tones of barite been identified in Taraba and Bauchi states, and an estimated reserve of 3 billion tones of good kaolinific clays has also been identified.

Gemstone mining has boomed in various parts of Plateau, Kaduna and Bauchi States for years. Some of these gemstones include Sapphire, Ruby, Aquamarine, Emerald, Tourmaline, Topaz, Gamet, Amethyst, Zircon, and Fluorspar, which are among the best in world. Good prospects exist in this area for viable investment. Understanding that this sector requires urgent investment, the Ministry has directed miners who are still in small artisan levels to form cooperatives so as to benefit from World Bank US$10 million assistance. Apart from this, three Nigerian Banks have also established solid minerals desk with fund of over US$ 8 million each for the development of the sector.

Foreign investors will find this sector worth-investing on as Nigerian governments have put in place various incentives and strategies for investment such as 3-5 years tax holiday, deferred royalty payments, possible capitalization of expenditure on exploration and surveys, extension of infrastructure and provision of 100% foreign ownership of mining concerns.

Recognizing that only a sustained macroeconomic environment and a sound and vibrant financial system can propel the economy to achieve the country’s desire to become one of 20 largest economies in the world by the year 2020, on the July 6, 2004 the Federal Government through the Central Bank of Nigeria (CBN), under the leadership of its Governor, Professor Charles Soludo launched a 13-point reform agenda to restructure, refocus and strengthen the Nigerian Financial System. To complement this agenda, another comprehensive long-term reform agenda for the Financial System (the Financial System Strategy 2020-FSS2020) was launched. The grand objectives of these agendas are substantially being achieved. The country financial system now comprises of strong, efficient and internationally competitive banks with an eye for global markets, a capital market with highest returns on investment, in dollar terms, a sound and rewarding insurance industry and other competitive financial participants.

Gordon was right in his submission to have described Nigeria as the most dynamic market in Africa. His view that “foreign investors, who will be patient enough to weigh the Nigerian Financial System on the credit risk perspective relative to the global event, will find the nation’s financial sector more interesting to invest and raise funds from” x-rays the truth about the country’s financial sector.

The country’s banking system is the safest and the soundest it has ever produced in history. It is the fastest growing banking system in Africa and one of the fastest in the world. In fact, the most outstanding contribution towards realization of the country’s dream came from this sub-sector. Economic analysts have observed that it has taken Nigeria less than 3 years to achieve what it took South Africa 20 years to achieve in the area of banking. In a short word, a world-class banking system has emerged in Nigeria.

Statistically, banking sector contributes 10 per cent to the Gross Domestic Product (GDP) and represents 60 per cent of the stock market capitalization, while there was a reduction in the number of banks from 89 to 25, the number of banks branches rose by 33 per cent from 3383 in 2004 to 4500 in 2007. The total asset base of banks rose by 104 per cent from $ 26.8 billions ( 3.21 trillion naira) in 2004 to $54.7 billion ( 6.56 trillion naira) by mid 2007; capital and reserves rose by 192 per cent from $2.72 billion (327 billion naira) to $7.98 billion ( 957 billion naira); capital adequacy ratio rose by 42.6 per cent, point from 15.18 per cent to 21.6 per cent and ratio of non-performing loans total loan improved massively by 51.3 per cent, point from 19.5 per cent to 9.5 per cent. The sector has also remained one of the most profitable in the country’s capital market. It was noted that 13 out of 21 quoted banks on the Nigerian Stock Exchange recorded returns in excess of 100 per cent since January 2007.

According to the April 2008 edition of the African Business, (the best-selling Pan-African Business Magazine published in London) 18 out of 28 West African Companies with market capitalisation of more than $1 billion are Nigerian Banks. The magazine stated that First Bank Nigeria Plc with market capitalization of $7.4 billion remains the largest company in West Africa. Two other Nigerian banks namely Intercontinental Bank Plc and United Bank for Africa (UBA) remain the second and the third largest companies in the sub-region with market capitalization of $6.2 billion and $4.6 billion respectively.

Apparently, the rising tide of banks in the country from all indications has made the sub-sector very attractive, not only to local investors, but also to foreign investors, and in particular, foreign banks. For instance, the consolidation of Regent Bank, Chartered Bank and IBTC to form IBTC Chartered Bank attracted the interest of the Standard Bank Group, the largest financial institution in Africa with a market capitalization of $ 17.8 billion, whose subsidiary Stanbic Bank, also of South Africa has just sealed a Merger deal for the latest Merger in the country, Stanbic IBTC Bank Plc. In this direction, other foreign banks have started making enquiries with CBN of a possible Merger or take-over.

To further substantiate the opportunities the banking sub-sector offers the global investors, a cursory look into Intercontinental Bank Plc will reveal the success of banking system in the country. Intercontinental Bank Plc is known to be the second largest companies in West Africa to have recorded a phenomenal growth in gross earnings, which stood at $1.45 billion ( 173.5 billion naira) in 2008. This is an increase of 99 per cent over the $728 million (87.4 billion naira) in 2007, profit after tax grew by 102 per cent to $380 million ( 45.6 billion naira) as against $188 million (22.6 billion) in 2007, while the capital base rose to $1.67 billion from $1.31 billion. The bank deposit base soared to $8.75 billion ( 1.05 trillion naira), an increase of 126 per cent from $3.9 billion (468 billion naira) in 2007, while the total assets also recorded a quantum leap to $14.2 billion (1.7 trillion naira), representing a growth of 108 per cent from $6.86 billion( 823 billion).

The bank is also in strategic partnership with BNP Paribas, the world leading energy financing bank, Afrexim Bank; Export Development Canada (EDC); Finance for Development (FMO); China Exim Bank; Export-Import of United States; International Finance Corporation in financing projects in different sectors of the economy. However, it is relevant to say that the success recorded by Intercontinental bank is a good example of the Nigerian banks’ strength and prospects, and a testimony to opportunities available to global investors in the country’ financial sector.

Apart from the above, Nigerian Capital Market offers viable opportunities as it is positioned to help companies to raise capital, and to generate high returns on investment. Its total market capitalization has grown by over 4000 per cent to $100 billion (12 trillion naira) in March, 2008, up from $2.39 billion (287 billion naira ) in August 1999.Among emerging markets, the Nigerian Capital market remains one of the most viable in terms of returns on equity. Historically, the market has delivered 28 per cent returns.

Insurance industry is not an exemption to this growth and development the country’s financial sector is witnessing. Although there are few black spots on the regulatory handling, the industry has equally recorded success in their reforms and operations. With the inflow of robust capital, insurance companies are now faced with the challenges of delivering returns to shareholders, maximizing value and exploring overseas markets. Their presence can be felt in countries like Ghana, Liberia, Sierra Leone, Sao Tome, South Africa among others.

Although Goldman Sachs’ report titled “New Market Analyst” with issue number 08/09 released on March 13, 2008 (cited in the Thisday newspaper March 19,2008) posited that Nigeria is a better economy than South Africa, International Monetary Fund (IMF) reported that Nigeria and South Africa got close to 50 per cent of the $53 billion private equity and debt flow to Sub-Saharan Africa in 2007. This underscores the growing confidence of International bodies and foreign investors in country’s financial sector and economy at large.

Furthermore, Fitch Rating Agency and the Standard and Poor rated Nigeria BB-(minus) in the area of sovereign credit, high in development of local currency debt market, and low in the areas of debt to GDP ratio and inflation. The opportunities for growth in Nigeria financial sector are still strong as the underlying fundamentals driving the growth are still present. All these and more, position the financial sector and the country at large as a leading and most dynamic market in Africa and present viable investment opportunities to global investors.

Needless to say that the opportunities presented above are typical examples and an evidence of opportunities awaiting foreign investors in other sectors of the economy.

Nigeria is the largest producer and exporter of oil in Africa (although recently placed second behind Angola in the latest OPEC report as a result of Niger Delta Crisis) with a production of 2.5 million barrels and above a day. Besides, the Nigeria is the 7th world’s gas reserve holder and the highest flaring nation in the world, with the potential to become a major player in LNG export. It has annual gas flares’ capacity to generate over 12000 MW of electricity needed to catalyze the growth of any economy. Although it currently flares an average of 1.2 TCF of gas annually, the sector has the potential to generate great returns on investment.

One of the greatest opportunities awaiting foreign investors is Real Estate / Property. For instance, Lagos Metropolis with a population of about 18 million has attained mega city status. The State has one of the highest urbanization rates in the world according to the World Bank. Consequently, there is an insatiable demand for housing delivery, which has necessitated the introduction of the New Private Estate Developers Scheme. Under the programme, the government will make large parcels of land ranging from 1 to 25 hectares available to corporate organizations capable of undertaking development and delivery of housing units. Such organization must however demonstrate that they have the financial capacity and technical expertise to deliver quality and affordable housing units.

Among other sectors of the economy that foreign investors will find viable and worth-investing on are Transport, Sport and Entertainment, Tourism, Power and Steel, Export Processing Zones, Privatization. And available records reveal that the rate of returns in these sectors is as high as in the sectors discussed above.

Apart from the opportunities mentioned above which our office is strategically positioned to maximize opportunities for the benefit of prospective investors. We also offer consultancy services in the areas of general management, manufacturing, marketing, finance and accounting, personnel, research and development, packaging, administration, international operation, specialized services and other value-adding services. And our strategic partnership with national and international companies put us in position to deliver quality service and high returns on investment.

Nevertheless, there have been fears raised by international observers, agents and bodies that Nigeria is a high-risk nation for investment and other business transactions. This development is attributed to security, multiple taxation, epileptic power supply, bad roads and poor work environment.

It may appear that doing business in Nigeria is challenging because of the activities of a few untrustworthy Nigerians who are unscrupulous. But such are simply characterization of human nature; as it can be found anywhere else in the world. It must be said emphatically that the world has been biased in their judgment and treatment of Nigeria security issue. There have never been terrorist attacks, suicide bombings or kidnapping until recently when the issue of Niger Delta came on board.

Niger Delta region-the source of nation’s oil wealth- has become an area of perennial tension, agitation, and recently, militancy. However, a confluence of factors such as environmental damage by oil exploitation, failure to develop the region, lack of job opportunities and sense of deep deprivation from the low share of derivation revenue accruing to the states in the region, has led to the present situation. Acknowledging their situation, the Federal Government has organised a Summit, to be chaired by Professor Ibrahim Gambari, the United Nations Under Secretary General, to provide everlasting solution to the crisis. Frankly speaking, Nigeria is a safe and investment-friendly place and Nigerians are accommodating and industrious.

Cyber Crime is another fearsome crime, which often put-off prospective investors from involving or investing in the business opportunities in Nigeria. This crime was actually imported into the country by expatriates. It has never been part of Nigeria culture. It is perpetrated by a few section of the population. Their operations are carried out via Internet and their targets are people who transact business via the medium. They pose as government officials and sometimes as businessmen with United Kingdom identity who deal in digital products. However the list of their tricks and operations is not exhaustive. With the help of Economic and Financial Crime Commission (EFCC), Independent Corrupt Practices and Related Commission (ICPC), and other Anti-Criminal Agencies, Cyber Crime and their perpetrators are under control and disappearing.

The grand objective of the present administration, as encapsulated in VISION 2020, is to make Nigeria a major industrial and economic power, and one of the 20 largest economies in the World by the year 2020 by providing enabling investment and business environment and maximum security for active participation of local and particularly, foreign investors. The realization of these aspirations had informed the radical and pragmatic reforms designed to increase the attractiveness of Nigeria’s investment opportunities and foster the growing confidence in the economy. In this direction, the Federal Government has provided incentives and strategies for investment such as 3-5 years tax holiday, deferred royalty, possible capitalization of expenditure and provision of infrastructures such as road and electricity, just to mention a few.

African economy is witnessing the strongest growth in 30 years; no doubt, Nigeria is one of the major contributors to this development. Most commentators have observed that the opportunities for business and investment in the country look increasingly rosy with GDP growth of 7 per cent in 2007 and 13 per cent in the next 12 years. The International Monetary Fund (IMF) forecast of 9 per cent growth rate for Nigeria in 2008 (which is second to India 10 per cent and ahead of China 8 per cent) lays credence to their observations.

Furthermore, the increase in Foreign Direct Investment, the entrance of multinational companies, the strong financial sector, the favourable and tremendous business environment, the government support, the abundant natural resources, and the population of over 140 million people, among others, put Nigeria in a comparative ( and possibly absolute) advantage over other African countries.

Just as it is difficult to ignore China as a market in the global arena, (one out of every five persons in the world is Chinese) so is it very difficult to ignore Nigeria as a market in Africa (one out of every three persons in Africa is Nigerian). With a population of over 140 million people and its economic potential, Nigeria still remains Africa most important market.

IMPACT OF GLOBAL FINANCIAL CRISIS IN A DEVELOPING ECONOMY

Unlike China and India, African economy(developing economies) is yet to be integrated into the world economy. This is as a result of slow rate of integration and globalization at which the economy is being fixed into the global economic and financial system. Consequently, developing economies will only suffer a limited financial impact from the credit crunch. However, this is not to say that developing economies are in isolation and totally free from the crisis.

To grant a point, this paper will continue to use Nigerian economy for its analysis as it represents a paradigm of a developing economy with valid and considerable variables.

According to the report from a recently concluded Bankers Committee Meeting, which ended on October 20 th, 2008 , the Nigerian banks are safe as they operate at 22 per cent capital adequacy ratio( 14 per cent above the world 8 per cent requirement) and the financial sector is far from being affected by the current global financial crisis. The report also posits that any bail-out scheme is unnecessary as the situation that warranted bail-out schemes in developed economies- poor quality assets and heavy loan losses resulting from exposure to inadequately collateralised mortgage loans- is absent in Nigeria. To underscore its point, the report noted that, as the Direct Foreign Investment in Nigerian banks is comparatively low and the banks connection with their foreign counterparts is loosely fixed, the impact of the crisis will be limited and indirect.

Conclusion

The words of Mr. Dominique Strauss-Kahn, the Managing Director of International Monetary Fund, at a meeting in Washington D.C are the corner stones of the concluding thoughts of this paper. He stressed as follow:

We meet at an extra-ordinarily difficult time- a time of uncertainty and insecurity, with a danger that those fears push us away from- not towards- a more inclusive and sustainable globalization….At its best, multilateralism is a means for solving problems among countries, with the group at the table willing to take constructive action together. When multilateralism is dysfunctional, globalization can be a Babel of Tower, with competing national interests colliding to benefit none. The new multilateralism, suiting our times, is likely to be a flexible network, not fixed system. It needs to maximize the strengths of interconnecting actors, public and private, profit-making and civil society Non-Governmental Organisations (NGOs). The multilateralism must respect state sovereignties while solving interconnected problems that transcend borders…The private sector cannot restore confidence on its own. Macroeconomic policy measures by governments cannot restore confidence on their own. Piecemeal measures on financial markets will not restore confidence on their own. What will restore confidence is government intervention which is clear, comprehensive and cooperative among countries..The world must act quickly, forcefully and cooperatively to contain the ongoing financial and economic downturn.

Thus, the position of this paper is that the confidence will only be restored if “government intervention which is clear, comprehensive and cooperative” is complemented with investment in developing economies with less or no crisis impact as “flexible multilateralism” and cooperative and sustainable globalization is solution that suits our time, not” economic isolationism”.

How to Improve Employee Morale in a Bad Economy

According to a recent Time magazine study, approximately 80% of people feel disrespected at work. In today’s economy, it’s increasingly difficult to find jobs – but it’s also very important to maintain employee happiness in order to maximize the efficiency of the company in preparation for long-term success. A few years ago, I attended a private leadership training seminar in Louisville, Kentucky, held by Adrian Gostick, author of “A Carrot a Day”. Gostick, who teaches the importance of maintaining employee morale through rewards and recognition, is one of the best public speakers I’ve ever seen. He runs the websites Carrots.com and OCTanner.com along with his business partner Chester Elton. The two travel the world speaking publicly and offering advice for implementing greater standards of employee recognition in the business world. During the session, he shared some of his tips for maintaining employee happiness in almost any size organization. Smart Money magazine recently reported that “optimistic diehards” are more successful in the business world – but anyone who has worked in that world knows just how difficult it can be to maintain a positive attitude sometimes.

Negativity is contagious and once it sinks into the corporate environment, it can spread like wildfire. So how do we combat it? With recognition, he says. An animated, witty presenter with a contagious sense of optimism, Gostick recommended praising efforts of employees who are attempting to improve their own performance, and actually rewarding them when those efforts bring measured results. Recognition is a huge factor in boosting employee morale. If you feel that your employees could use a fresh breath of positivity, try personal or symbolic recognition, or positive re-enforcement of good behaviors. PERSONAL RECOGNITION Personal recognition is exactly what it sounds like: recognition for a job well done. It can be in the form of a “great job” or a pat on the back. Sometimes, it could go a step further and emerge as a thank you card passed from a grateful boss to an employee who just went above and beyond. These types of recognition are almost always welcome – and can put a smile on someone’s face for the rest of the day. SYMBOLIC RECOGNITION Of course, in order to be effective, you want to avoid overkill. Too much of a good thing can become redundant or seem insincere. If you are constantly praising your employees, your words may lose their meaning. Employees may come to expect praise, and view it as less of a “reward” – or, even worse, feel hurt when you forget to praise them for doing what they consider to be a good job. Make sure you praise frequently, but not TOO much.

Praise when needed, and when recognition is deserved, when building rapport or when a particular employee needs a morale boost. And try different types of praise. Personal recognition is highly effective, but symbolic recognition can also be very helpful. Symbolic recognition involves going a step further and rewarding an employee with something other than just words, a smile, a handshake, or a friendly pat on the back. Symbolic recognition is often tangible, and involves gifts or prizes. I’ve seen companies provide everything from plaques to an employee’s favorite food, or even something as simple as a stress ball or bracelets. If you really want to make the employee feel special (and if it’s within your company’s budget to do so) a personalized trophy could be awarded to a top performer to proudly display on his or her desk. Now that we’ve discussed a few ways to recognize top performers, let’s examine how to be effective in our recognition. In order for recognition to be successful, Adrian Gostick says it must follow the following three rules: – frequent – specific – timely In his book “A Carrot a Day” (which I highly recommend to anyone in a leadership or management role) Gostick recommends doing something to boost morale once a day. The theory here is, if you continuously work to improve employee morale and keep your top performers satisfied, they will continue to work hard and keep your business running smoothly. However, if top performers are neglected, they may lose interest in working for your company.

This should not be underestimated, as top performers generally realize their own worth and know that, even in a tough economy, they stand a better-than-average chance of finding another job. Another reason recognition is important, Gostick says, is because “customers base their opinions of a company on its frontline employees.” Think about it. Front line employees are usually the first to see the customers, often dealing with them face-to-face in person. Unfortunately, they are also usually the lowest-paid. Because studies have shown that people associate more money with happiness, this also means front-line employees often run the risk of becoming unhappy with their jobs and even quitting to pursue other options. If your front line employees are unhappy, are they going to provide top-quality customer service? Probably not. “Customers will drive further and pay more for better services or cheaper pricing,” Gostick says. The key to employee retention is making your employees happy. Certainly, some idealism comes into play, but the theory itself is a good one and boosting employee morale can never be bad for business. In fact, Gostick states in his book that employees who are praised and/or rewarded regularly “focus better on company goals. They spot new opportunities faster. They have longer employment life spans.” The book even offers ideas for managers who are looking for new ways to praise, recognize and reward employees. No wonder, then, that it quickly became a bestseller on both the Wall Street Journal and Business Week lists. Some of the most notable tips:

Remember to thank people who’ve influenced you. This too often gets overlooked. Don’t just promote front line employee morale; promote it on all levels of your company.
Bring out the star inside your fellow employees. Publicly reward when appropriate – and observe the change it brings in attitudes and performance.
Make a formal event out of recognition. Have a ceremony at least once a year to publicly praise top performers and make them stars. This also gives employees something to work towards throughout the year.
Keep track of what your employees like – or dislike. This doesn’t just mean their feelings about the work environment. It can also help you think of creative ways to reward them. Get on a more personal level with your reward ideas by asking them what motivates them. You could even do an anonymous (or not) written survey of all employees for prize ideas. If possible, tailor your rewards to each specific person you’re honoring. They’ll appreciate the personal touch, while knowing you were listening to their needs and wants. This is a great way to build rapport by letting them know you care!

Rewards don’t just have to come from upper management – so don’t exhaust yourself trying to think of new ideas! Create a formal employee rewards & recognition program that allows employees to nominate and possibly even reward each other when they appreciate something a coworker has done or notice a job well done. This boosts morale, team rapport, and takes some of the weight off your shoulders so you can focus on other important management duties. Just make sure you aren’t relying on your employees to provide 100% of the recognition. Most of it should still start with you! Don’t underestimate the power of recognition. It is extremely important in the business world. Without it, you could actually lose employees. Top performers are the most capable of leaving because they have the very skills that other employers are searching for – and they KNOW it! Fail to show your top performers how valued they are and they may leave you for another opportunity, should one arise. However, if an employee is truly happy with his or her surroundings, or feels respected and appreciated in the workplace, he or she might settle for less pay or a longer commute just for those feelings of value. To further illustrate this point, Gostick shared a story about his recent experience traveling in China. During his trip, he met a young Chinese girl who spoke a little bit of English.

Deciding to strike up a conversation with her, he asked: “Have you ever been to America?” The girl replied that not only had she never visited the United States, but she had never even left her hometown. Understandably amazed, Gostick decided to probe further by asking: “Why have you never left this city? Don’t you want to see the rest of the world?” “If I’m happy here,” the girl answered without hesitation, “why would I ever want to leave?” It sounds like businesses could learn a lot from this story.

In a Shaky Economy Customer Retention Must Yield to Customer Acquisition

You’ve read the startling statistic that is recited with astonishing frequency and variability:

“It will cost your company “6 times less” or “10 times less” to keep an existing customer on the books than to acquire a new one.

We might quibble with the precise numbers, but it would appear to be a bedrock truth that saving customers, or more to the point, not losing them, is worthwhile.

By itself, that is a valid statement. Why lose business, unless it is bad business, but that we’ll save for another discussion.

When customer retention initiatives are pitted against marketing and selling, trying to add accounts to the books, I start to squirm. Especially in a poor economy such as ours, given a choice, it would be a major mistake to redirect resources from customer ACQUISITION to customer RETENTION, which is really what the startling statistic implies.

In a dire economy customers and clients will leave the fold for reasons that have nothing to do with factors you control. Their own business models may be under pressure, or suddenly become obsolete.

For example, let’s say you sell exercise equipment to gyms, which in turn sell memberships on a subscription basis. As long as memberships are increasing, there are available funds to support entering sales contracts for your stair climbers and resistance devices.

But when that membership pace slows, the payback on investment looks prohibitively remote, so you can’t sell the machines nearly as easily, if at all.

Catering to consumer skittishness, gyms begin to offer “no contract” memberships, and suddenly they look to you to lease or to rent your machines on an equally short-term basis.

If the trend continues, more gyms will be shuttered, and fewer start-ups will replace them. Your business will be in dire straits, unless you can ENLARGE THE MARKET for your exercise platforms.

That involves marketing and selling, perhaps directly to corporations; at least to potential buyers that have never appeared on your radar before. Comparatively, every dollar you throw after the declining gym sector in an effort to retain your customers, is wasted.

Don’t get me wrong. I have been selling customer satisfaction programs for years, and I am a complete zealot when it comes to treating your current supporters, well.

However, if they are an endangered species, on a short path to extinction, you need to find a suitable substitution, and fast.

Treating them luxuriously will not create any more where they came from.

This is one of the sad truths that explains why customer service staffs are cut back mercilessly in economic downturns. Service personnel are wonderful at supporting yesterday, but out of their depth in creating tomorrow’s profits.

But it is foolish to let their experience and customer sensitivity vanish.

Retraining non-salespeople to sell isn’t always successful, but it is worth the effort and resources. After all, they know your company and product inside-out, they don’t have to be recruited, and you can focus on the one skill everyone needs to put to work: selling.

The Cure For America’s Economy is to Mainstream a Global Mentality

America’s financial and economic wizards know the world is global but America’s mainstream lags behind. Money news programs such as Jim Kramer’s Mad Money demonstrate daily that stock markets are interdependent, currencies interlinked and commodity prices volatile with their dependence on human factors such as politics as well as on environmental events. Those variables affect business and trade but are not reflected in mainstream news coverage, which leaves the mainstream investor, small business owner and even ordinary job-seeker at a considerable disadvantage.

Most large city American newspapers have separate international and national coverage, as do the New York Times and the Chicago Tribune. The tabloid New York Post, however, does not, nor does the Chicago Sun Times. Smaller city newspapers such as Indian’s Hammond Times carry little news about the world other than major coups, catastrophes and notices about locals in global combat zones.

As a result, the New York Post on Thursday, July 2, as an example, headlined with the recently deceased Michael Jackson, control of local schools and a Yankee baseball team win. Inside stories of international events covered the young French survivor of a plane crash off of the Comoros Islands in the Indian Ocean and an affair between an American state governor and an Argentine mistress. A coup in the Central American country of Honduras received six short paragraphs at the bottom of page 19. Editorials covered Afghanistan and Iran. Marketwatch in the Business section cited nine worldwide indexes, the majority European, while the Foreign Exchange Hotlist cited 17 majors among the world’s 200 countries.

In contrast, Google News that day reported also on Israel, North Korea, Iraq, Indian, Russia, Pakistan, the European Union through Sweden’s newly assumed presidency, the International Atomic Energy Agency, Sri Lanka, Croatia, an African Summit in Libya, France and the question of the Muslim women’s burqa, and finally, the former Soviet satellite country of Georgia.

Throughout the unprecedented global economic crisis of the late first decade of the twenty-first century in which a western industrialized country elected a first nonwhite leader to meet the challenge, the lack of “consumer confidence” was cited as the cause for the continued stagnation of the American economy. Yet in a global world where financial insiders trade on the basis of interdependence, can national “consumer confidence” exist without a broader mainstream context?

American consumers responsible for the robust purchase of products to stimulate the economy through imports, exports, corporate expansion and small business investments, have small chance of resuming their role without a basis for their “confidence” being restored following the crises of American financial institutions and the ensuing bailouts that began with the last conservative administration before the new liberal one went into effect. With trust in the “system” shaken to its core by mortgage defaults stemming from unregulated and unscrupulous banking practices as well as predator banking, in addition to an ill-founded war on the foreign country of Iraq, American consumers are in sore need of reassurance about America’s abilities in a global world, a situation that was a call for the mainstream media to adapt and provide the “medium” circulating pertinent and relevant “news” to the American people.

In a global world, “news” is no longer defined as “man bites dog” versus the other way around. In a world of 200 countries all interlinked, “news” equates with information that is novel, useful and conducive to exchange between little-known neighbors with whom to establish business arrangements for mutual benefit to stimulate growth.

News about the world abounds on the Web but America’s mainstream deserves better than needing to put extraordinary effort into being informed. The mentality of a world leader derives from the “matter of course” attitude with which informed citizens regard the world by knowing its source of information has a finger on the pulse of the world’s workings.

Network Marketing Business Opportunities Are Great For a Suffering Economy

So why are network marketing business opportunities so good in an economy that is not? Well for one, it is a home based business. You are not going to need a new office or storefront to get started. Fact is, you do not even have to stop working your present job to get started. Since building your Network Marketing Empire can be started part-time and in your spare time it allows you to easily keep working it until you feel comfortable to stop your job and go full-time.

You are not going to have to go back to school to get started. Most Network Marketing Business Opportunities will require very little to no specialized upfront knowledge. Unlike some careers, you do not need any formal education at all. Good too, is our industry does not discriminate against anyone. You can be male or female, any race, religion, age or handicap. It does not matter. I like to think of it as the great equalizer. You are never going to be told you do not have the qualifications or that you are over qualified.

You can start in the most depressed economy in the US or world and as long as you have an internet connection, you are in business. You are not going to need thousands to start, only hundreds, and it is peanuts compared starting a traditional business. Yet the income can be huge.

Since your business can be global, you have the ability to diversify your income from all over the country and all over the world. That creates stability in your income. Imagine seeing your income coming in from Japan, India, Philippines, UK, Hong Kong, and all over the US. Would that not make you feel great? You do not even know all these people, but someone in your network does.

So as you become financially stronger, you start to attract others in need. You can become a beacon of hope. People no longer have to worry if they get downsized out of a job; one lady I know was excited about it because it gives her more time for her business. While others are worried, she is happy. Now she is the beacon of hope to those who have limited options. That’s freedom. That is why Network Marketing business opportunities are great in a slow economy.

Well I hope that this broadens your level of options for your future, Get involved, check out some Network Marketing Business Opportunities. You really can make your future what you want. It is a matter of a choice; it is a truly rewarding journey. I will tell you again another time why in the MLM industry the benefits you get go far beyond income. To your amazing success, May God richly bless you and your family.