The Interface between Youth Unemployment and Labour Productivity

If a census is taken in any postgraduate class and they are asked the reasons for coming back to pursue academic, many youths will reveal it is the inability to secure a good and accommodating job in the country. Ask the youths that risked everything to cross the Mediterranean Sea in the bid to get to Italy; they will tearfully explain that the labour market has no placement for them. This is no justification for the actions taken by the youths; however, youth unemployment in the country is prevalent and alarming leading to numerous consequences. Lot consequences have been attached to youth unemployment: the crimes rates, migration, brain drain, human capacity under-utilisation, and increase in poverty, weak purchasing power and obviously a negative change in labour productivity in the country.

According to International Labour Organisation (ILO), unemployment can be defined as the number of the economically active population who are without work but are available for and seeking work, including people who have lost their jobs and those who have voluntarily left work. The youth unemployment rate can be expressed as percentage of the total numbers of persons available for employment at any time but cannot get job. This menace has been seen as one of the obstacles to social and economic progress.

Youth unemployment is one of the cancan worms eating deep into the sustainable growth of Nigeria today; it has maintained an upward trend over the years. A high unemployment is one of the critical socio-economic problems battling Nigeria. Despite the increase in the working population, the employment level is inadequate to absorb the increasing youth in the economy entrants. It is sad to note that the term unemployment has graduated to underemployment in the country, in recent years; youths are more likely to work in low quality job, working long hours for low wages, engaged in hazardous work. The end of this menace seems not to be at sight yet. Generally, unemployment has been a headache to the government, policy makers and even individuals in the country.

Unemployment is a sensitive indicator of the conditions of the labour market. When unemployment rate is low, jobs are secured and relatively easier to find, low rate is often associated with improving wages and working conditions as well as employers competing to attract and retain workers. In recent years, Nigeria has witnessed low labour demand and productivity. Labour productivity is very important in any nation, it determines the prices and wages in the economy. Increase in labour productivity has largely be associated with an increase in wages, low productivity leads to instability in prices, reduction in wages. Whenever the issue of youth unemployment is mentioned, labour productivity theories play-out.

Nigeria is the most populous country in Africa and according to the United Nation; it would be the third most populous country come 2050. Large human capacity is seen as strength of any country because it implies large economically active population. However, despite these promising factors, the country high level of youth unemployment has plunged it into low productivity over the years. The low productivity has not only affected the growth of the economy, it has also affected the standard of living of the people living in the country, leading to more people falling below the poverty line.

The world is at its 4th industrial revolution, unfortunately, Nigeria is yet to explore the 2nd industrial revolution needless to talk about the 4th revolution. Empirical investigations have found out that there is a positive relationship between youth unemployment and labour productivity in Nigeria. For any country to improve its productivity and probable drive into industrialisation, the youths have to be economically involved in the building process of the economy. Even the agriculture suffers set back because the youth are not finding their place in the sector, the manufacturing is not left in underdevelopment as a result of the increasing youth unemployment.

In conclusion, after all the programs and policies enacted by the government, the rate of youth unemployment has refused to decline. More youths graduate yearly with no placement for them. It is a crying change that the mandatory service year observed by youths is also suffering from this malady. Youth corps members are rejected in various organisation that are being posted to because no space to accommodate them. Why are all policies and programmes geared towards solving this menace falling flat? When will there be space in the labour market to accommodate the youths? These and more are the puzzling questions that led to one’s lack of sleep not as a result of being a nocturnal but because one just wonder.

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Ethiopia-Eritrea Peace Deal: A New Dawn for Sustainability?

This year is one full of hopes and happiness for the Ethiopians and Eritreans, what a time of relief and rejoicing for them when the border was open. Many families reunited and their joy knew no bounds, for 20 years some many were trapped by war on the other side. For two decades, the border was closed and no one dare moves across, however, 2018 gave them a new joy. The Ethiopia-Eritrea border is bustling once again, revitalising frontiers.

Eritrea gained its independence from Ethiopia in the early 1990s, and a dispute over the border plunged the twin country into war in 1998, locking the two nations in unyielding hostilities that left more than 80,000 people dead. The conflict continued as a cold war after Ethiopia refused to honour an UN-backed commission verdict demarcating the border. Eritrea is the most diplomatically isolated state in Africa, the UN imposed sanctions including an arms embargo in 2009; accusing the government of aiding Islamist militants in neighbouring Somalia which the government denies.

The country was put on hold for 20 years and everything revolved around the border dispute. Prior to the peace deal, Eritrea’s president, Isaias Afwerki has used Ethiopia’s rejection of the subsequent boundary ruling to justify a host of repressive domestic policies. These include jailing journalists and dissidents, refusing to implement the constitution and running an indefinite military conscription program the UN likens to slavery. According to the United Nations figures, hundreds of thousands of young Eritreans have fled across the Sahara and the Mediterranean Sea to Europe in recent years (before the peace deal) to escape compulsory and indefinite conscription once justified by the state of war with Ethiopia.

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This cold war continued and an end seems impossible not until 2018; a year of breakthrough for the Ethiopians and Eritreans. The turning point came in June when the Ethiopian Prime Minister (PM), Abiy Ahmed announced that his country would fully accept and implement a peace agreement that was signed in 2000 but never honoured. After weeks of meeting and deliberations, the formal deal was signed by both parties.

Weeks after the two nations formally ended 20 years of conflict, President Afwerki and PM Abiy met to open crossings in border towns dotted with debris from a war that killed thousands. Many danced and waved flags while families reunited after two decades. Family reunification is the immediate result of the peace deal. But in the long term, what will it translates for both countries economically? Is this a new dawn for sustainability?

Ethiopia has a population of more than 100 million people; it is the second most populous country in Africa. The country has consistent economic growth, however, it is also one of the poorest countries in the region. Eritrea is home to more than 5 million people, the country has reported consistent growth deficits and poverty. The peace deal could also spur foreign investors to consider Eritrea as a business hub and likewise solidify the country relationship on the international scene.

Analysts stipulated that both countries will benefit from the normalisation. Ethiopia is a land-locked country; negotiating access to Eritrea’s seaports could boost sustainable economic growth and development. Since the conflict, Ethiopia has been forced to use the Djibouti’s seaports; the former sends its 90 per cent foreign trade through the latter. The normalisation opened a new dawn out of isolation for Eritrea, PM Abiy made propositions to the UN secretary to lift the sanctions against Eritrea. Today, the UN lifts the ban, lifting the sanctions could help to unlock new paths for investments and sustainable economic growth in the Eritrea.

Both countries are back to business. After the border was opened, business women and men were glad to be back to economic activities. A merchant in the Eritrean town of Senafe gladly said: we have everything we didn’t have before, from the smallest to the biggest products. The report released by EY attractiveness survey revealed that in 2018, Ethiopia’s investment attractiveness is seven times better than previous years. The EY’s attractiveness program focuses on insights derived from understanding growth from Foreign Direct Investment (FDI) perspective into countries and regions across globe.

Furthermore, the peace agreement will creates space to prioritise economic development over security. More resources were diverted to national security than sustainability. Eritrea has a mandatory national service program which is throat cutting but the government saw the program has a necessity to protect against the continued threat of fighting with Ethiopia. Eritrean migrants have reported that they were fleeing the mandatory program.

Eritrea will be the new sweetheart of investors because it has a lot of untapped resources, including vast potash; an important element in modern fertilizers. The country is a producer of Bisha, gold and copper. Bisha is ‘hot cake’ in the industry, whoever owns this resource will have a head start in future mineral licence; so potential investors will see this as a rat race. According to World Bank, Bisha currently consists of 10 per cent of Eritrea’s GDP.

Although, these indicators are in the favour of both countries, it is however impediments for the governments to set the ball of proper and sound policies rolling for the betterment of the economies. All these may not be enough to drive sustainable economic growth, the future economic and humanitarian conditions will be determined by the direction of their home policies. The governments need to employ policies and sound governance reforms that would restore trust between the citizens and the government for a stable economic growth.

The Eritrean government should adopt trade policies that would strengthen the unregulated and unstable exchange rate. Owing to the fact that the Eritrean nafka has an unstable value compare to the Ethiopian birr, the trade scenario has to be guided by some strategies. The economies have to adopt broader economic and regulatory reforms, work dutifully on the cost of doing business, the ease of doing business and also provide basic social amenities to make the economies more business friendly.

Beyond signing the deal, there are more for both governments to embark upon to benefit the economy. Ethiopia-Eritrea peace deal will remain mere deal if proper reforms are not enacted.

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Nigeria’s Investment Attractiveness: A Lost Race?

The reality of economic growth is that business and investment spending are the true indicators of the economy. To understand where the economy is headed, forget about the populace’s spending and look into the interest rates, the productivity level of that country, economic attractiveness and readiness. I would borrow a leaf from the quote of Robert Trout, a successful society is characterised by a rising living standard of its population, increasing investment in factories and basic infrastructure and the generation of additional surplus, which is invested in generating new discoveries in science and technology. Simply put, no economy can succeed without any form of investment.

The EY report revealed that Nigeria’s economic attractiveness has been overtaken by other African countries; the country has lost the race of the investment destination in the continent. Can Nigeria equalize? The EY’s attractiveness program focuses on insights derived from understanding growth from Foreign Direct Investment (FDI) perspective into countries and regions across globe. The survey use custom-designed methodology and explores both developed and emerging markets. The program helps public sector and business leaders to make economically sound strategy and policy decisions.

According to Investopedia, FDI can be defined as an investment made by a firm or individual in one country into business interests located in another country. Generally, the macroeconomic variable takes place when an investor establishes foreign business operations or foreign business assets, including establishing ownership or controlling interest in a foreign company. It is the term that describes investment from one country into another country that involves establishing operations or acquiring tangible assets, including stakeholders in other businesses.

In recent years, Nigeria’s FDI has been struggling. In 2017, it was $981 million, a drastic fall from its previous peak of $5 billion in 2008. Truly, there are many factors militating against the growth of the FDI ranging from, prolonged insecurity, poor infrastructure and the likes. This macroeconomic indicator is highly quintessential because is it assumed to benefit a developing country by supplementing domestic investment, creating employment opportunities, transfer of technology, increase domestic competition and improve the trade openness of the economy.

The report released revealed that despite the drag in economic growth in the country, Africa investment attractiveness has improved. However, Nigeria experienced a decline while South Africa, Morocco, and Kenya showed a stronger FDI gains ahead with more projects coming their way. Nigeria is losing the race to investment attractiveness and hope to improve is dashed with the recent closure of business offices of HSBC and USB; two major global lenders that attract investors.

Here from the horse’s mouth:

We have tracked FDI for a number of years, and while we can easily assess trends in terms of shifts by sectors and geography, there is little analysis that contributes to understanding whether individual countries are under-or over-achieving in attracting FDI. To build that analysis, FDI projects have been tracked against the size of the economy, and its score on the annual World Bank Ease of Doing Business ranking. Through this analysis, it appears that countries with strong growth rates and that adopt more business-friendly policies tend to perform better in attracting FDI. Rwanda is, by far, Africa’s most successful country in terms of attracting FDI. This is evidenced by the fact that Rwanda ranks as one of Africa’s most business-friendly destinations. It is also one of the continent’s most consistent rapid growth economies. Rwanda receives 1.5 FDI projects for every US$1 billion of GDP. Measured on the same criteria, South Africa receives only 0.32 projects, attracting only 20% of what Rwanda does, given its relative size. Major economies, such as Nigeria and Angola trail by an even larger margin, receiving only 0.16 and 0.02 projects respectively. Both countries also rank very low on the Ease of Doing Business rankings compared with their counterparts in the continent. That, coupled with their recent low growth after plunging oil prices in 2016 and the same scenario persisting in 2017, would explain their low score according to this methodology.

The report hinged the falling FDI on the volatility of oil prices which the economy over depended on. The country’s reliance on crude oil for revenue and foreign exchange remains a weak link for sustainable economic growth and development. The lack of diversification puts the economy at the mercy of the dictates of the oil sector which is vulnerable to boom and doom cycles. When oil price is high, FDI inflows increase and when there is a fall, the latter follows suit. According to National Bureau of Statistics, in 2014, during the increase in oil price, the country recorded its highest FDI inflow at nearly $2.7 billion. Shamefully, as the oil price fell, the FDI follows like a lover. The over reliance on the oil sector serves as a dictate to the level of FDI inflows in the economy, Nigeria can no longer continue like this on this race else we lose out.

ALSO READ: Nigeria and Industrial Revolution: Matters Arising

More so, the prolonged insecurity in the country is one factor militating against the increase in FDI inflow, the issue of insecurity in the country has become a war of giants. Insecurity put off foreign investors; safety first. Another, hindrance to the nation’s successful race to investment attractiveness is the poor infrastructure. The lack of stable power supply serves as a deterrent to major investments in the country. The cost of running a company in the country is high as a result of the reliance on expensive alternative energy source and the throat-cutting cost of petrol or diesel. With all these foxes that spoil the vine, it is not surprising to see Morocco, Kenya and South Africa overtook Nigeria.

However, the game is not yet over; all hope is not lost. The federal government has to get down to business and correct these incongruities. There should be efforts to expand the revenue base of the economy through diversification and expansion of tax base. Implement plans to strengthen the regulatory framework for investment. Wonderfully, Nigeria jumped 24 places to 145 out of 190 countries surveyed in the 2017 World Bank Doing Business Index. This is a sign that the business environment of the economy is friendly and ready for business. Nonetheless, is there any hope soon for the country? Owing to the coming 2019 election with all the burahrah of political uncertainty, no wise investor would pitch his/her tent of investment in Nigeria for the time being. The economy is fragile at this stage, so, the FDI will be kept below its peak in the next months or years unless the country experiences a ‘growth miracle’.

The race towards investment attractiveness is within reach, all depends on the strength of the athlete. Can the country race well?

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Nigeria and Industrial Revolution: Matters Arising

For any economy to drive to maturity and industrial revolution, structural transformation must occur. Structural transformation accompanies development; they are interrelated. According to Clark-Fisher model of development, structural change must occur for any economic progress to occur. Structural transformation can be referred to as how an economy transit from agriculture to industry and from industry to services. The initial stage of any economy is the agriculture phase, then gradually moves to industry and then to services. So, it is impossible to transit to industry if the agricultural stage is not well managed. To achieve a structural transformation, the mother sector (agriculture) must be well managed, monitored and explored, hence, no development can be achieved by any country. However, some countries transit from agriculture phase to service phase; this is a faulty transition that will drag the development process of the country. Any country that desire development must experience each phase duly before any transformation can be achieved.

Industrial revolution began in 18th century when agricultural societies became more industrialised and urban. Prior to industrial revolution, which began in Britain in late 1700s, manufacturing was subsistent with the use of crude tools. Britain is seen as the birthplace of industrial revolution and number of factors contributed to revolution in the country. Apart from the fact that it had great deposits of coal and iron ore, which was important for industrialisation, Britain was the leading colonial masters, implying that colonies can serve as a source of raw materials as well as the market place for the sale of the manufactured goods.

During the industrial revolution, other sectors benefited a great deal from the transformation. Industrialisation brought about an increased volume and variety of manufactured goods and an improved standard of living for some; it also resulted in employment and improved living conditions for the poor and working class. The transportation industry also underwent significant transformation during the revolution. Also, the communication industry was not left out in the transformation process during the revolution.

ALSO READ: Zimbabwe: Almost Forty, But Unfortified!

However, the revolution would not have occurred without the mother sector; the agricultural sector, increasing agricultural productivity facilitates industrialisation. The notion is hinged on Engle law which states that as income increases, food consumption reduces. When agricultural productivity increases, the farmers have more income and they demand for manufactured good, leading to more productivity in the industry sector. Also, increasing the agricultural productivity will lead to an increase in the supply of Agric raw materials. To experience industrial revolution, the raw materials have to be supplied in a sustainable manner. Most of the raw materials needed by the manufacturing companies are sourced from the agriculture sector, in a situation whereby the agricultural sector is not sustainable then industrial revolution is impossible and will remain a myth.

In Nigeria, the agriculture sector has remained undeveloped despite the numerous policies and programmes that has been enacted in the sector. Prior to the struggle the sector is experiencing, it had rich history and played a progressive role in the economy, playing a crucial role in the economic growth of the country. This success was achieved through investment in agriculture both at the federal and the regional level, various research institutes were established across the country. These research institutes include; Cocoa Research Institute of Nigeria (CRIN), Ibadan; National Institute for Horticultural Research and Training (NIHORT), Ibadan; Institute for Agricultural Research and Training  (IAR&T), Moor Plantation, Ibadan; National Institute for Oil Palm Research (NIFOR), Benin; Rubber Research Institute of Nigeria (RRIN), Benin; National Cereal Research Institute (NCRI), Badeji; Forestry Research Institute of Nigeria (FRIN), Ibadan; National Veterinary Research Institute (NVRI), Vom, Jos; National Root Crops Research Institute (NRCI), Umudike; National Institute for Fisheries and Fresh Water Research, Kanji; National Institute for Oceanography and Marine Research, Lagos; National Institute for Animal Production, Zaria; International Institute for Tropical Agriculture (IITA), Ibadan; National Institute for Trypanosomiasis Research (NITR), Kaduna; and Universities of Agriculture across the region. This was geared towards boosting the agricultural productivity, however, those are past glory.

Agricultural produce serving as raw materials accelerated the industrial revolution in Europe pioneered by the British. Nigeria which is a former British colony was a source of raw materials for Europe and it aided the industrial revolution experienced in Britain especially. If the country indirectly fast-tracked the revolution experienced in Britain, what is happening now? Owing to the oil boom in the country, 1970s, agriculture experienced a decline. According to statistics, the contribution of agriculture to the GDP in 1960 was about 60%, however, this decline overtime to only about 25% between 1975 and 1979. This sharp decline shouldn’t have been a headache if the productivity level didn’t decline simultaneously with the decline in the sector’s share to the GDP. At the early stage, the share of agriculture sector to GDP would increase but will experience a decline to usher in structural changes; however, this does not imply that the level of productivity will reduce. The sector share to the GDP can only decline, but the productivity level must increase. In Nigeria when the share of agriculture to GDP decline, the productivity level was also stagnated which led to the large importation bill of food.

The above chart shows the contribution of the three sectors (agriculture, industry and service) to the nation’s GDP from 2007-2016. The three sectors represent the transition an economy needs to move from primitive stage to development, which as earlier stated must be gradually to avoid faulty transition. The graph above shows that as the agriculture sector’s share declines, the industry and the service sectors’ share increase which anyone can hastily translates it to mean that the economy is experiencing a structural transition.

The country did not duly explore the industry sector because the agriculture sector productivity level has declines. Rice, which is a common food consumed by larger percentage of the population in the country is yet to be fully produced in the country because of fall in researches and technology. It is difficult for any country to industrialise without technology and quality education, the value system of the economy can affect the pace of industrialisation.

According to economists, for any country to experience industrialisation revolution, labour in the agriculture sector must be moved to the modern sector, however, the sector’s productivity must not decline as a result of the labour migration. The productivity level of the agriculture sector can be maintained through technology, training of labour, investing in factors of production, investing in agriculture researches. The Lewis model presented in 1955 known as the two-sector model and the surplus labour model focused on the need for countries to transform their structures away from agriculture towards industrial activities. The model posited that transferring workers out of the agriculture does not reduce productivity in the whole economy, this gives the industry more workers and there are more profits for manufacturers to re-invest, thereby leading to capital accumulation and economic sustainability.

Every country that has experienced industrial revolution and developed has experienced a movement of labour from the agriculture sector to the industry. During the industrial revolution in England, almost 75% of the population was dependence on agriculture in 1700. By the census in 1841, only 22% of the people worked in agriculture; there was a drastic decline for the revolution to be a blast and it was. In 1830, citizens of United States working in the agriculture sector was roughly 90% but by 1870, the figure declined to 50% and by 2008, less than 2% are employed in agriculture. Also, in 1970 China has over 80% of its populations working in the agriculture sector, however, in 2015; it reduced to about 25%. Puzzling, in Nigeria the percentage of total employment in agriculture has declined from 58.1% in 1970 to 30% in 2017, according to International Labour Organisation (ILO). Nigeria has successfully become a country where lawful law becomes lawless.

The matters arising in Nigeria’s industrial revolution are that the country has not explored its comparative advantage. Agricultural produces have to move beyond the raw and be more value added. To improve and drive industrial revolution, the country needs technology and outstanding researches on how to improve agriculture. To achieve industrial revolution, structural and institutional changes are needed, without which no country shall see INDUSTRIAL REVOLUTION.

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Minimum Wage Agitations: A Search for Gold in a Desert

It is no longer news that the labour market in the Nigeria and the Federal government are at loggerhead on the issue of minimum wage rate. The Nigeria labour congress (NLC) and the government have been on the minimum wage saga for months, unfortunately, a Nash equilibrium is yet to be reached by the two players. The saga has been a back and forth scenario with the government offering to increase the wage to NGN25,000 from NGN18, 000 but the other party is not ready to dance to the tune; it is either NGN30,000 or no party. Okay, the story continues with meetings upon meetings and we can only sit and watch the end of the action film. State

To make our journey through this piece easier, minimum wage is the lowest remuneration that employers can legally pay their workers. In the field of economics there is no clear cut on the effect of minimum wage on the welfare and the economy at large, however, increase minimum wage has been perceived as a means to improve the standard of workers in the country. In the bid to improve Nigerian workers’ livelihood, the NLC sought to fight for an increment in the wage rate. Can this struggle make a difference?

The current minimum wage received by workers in the country is NGN18, 000 which was an adjustment made in 2010. Since 2010, the economic situation has changed and inflation has reduced the purchasing power of workers over time. Think about it, can you value NGN100 this day as you would a decade ago? I guess the answer in NO. Obviously, the current wage rate is not a living wage for workers, the agitation is necessary but is it timing?

The macroeconomic indicators are not showing any sign of a good state, the inflation rate is leapfrogging, and the exchange rate of the country is highly volatile. According to the Central Bank of Nigeria earlier this month, the economy is at the verge of slipping into recession come 2019 if the necessary athourities are not getting their hands ‘dirty’ to drag the nation beyond the mud. The economy is fragile growing by only 1.5 percent in Q2 2018, a fall from 1.95 percent in Q1 after the shock of recession. Also, the foreign reserves have been dwindling and the Debt Management Office (DMO) reports that the debt profile of the country is rising. The former minister of finance, Okonjo Iwela made an illustration about the economy of Nigeria with a cake, she brought cakes of different sizes and demonstrated how the economy will continue to shrink if the revenue base is not grown. She nailed the point really good; how can any economy live on debts without improving on it revenue base? That is a sign of irresponsibility. With all these realities staring at the country, is it safe to increase minimum wage?

The ‘Yeas’ for Minimum Wage

It is saddling to note that if some arithmetic is to be carried out, the current NGN18, 000 received is 6, 00 per day for 30 days. How can an individual with family and huge bills survive on 600 per day? That is the puzzling question. The increase in minimum wage will improve the standard of the living of workers in Nigeria, reduces poverty, reduces inequality and boosts the morale of workers to be more productivity. In the economics world, it is belief that paying high wages to workers boost their morale to exert more effort to work, so, increasing the minimum wage rate is like an ignition.

Over the years, the inflation rate has experienced nothing but a rise. This has reduced the real wage rate of workers in the country; the real wage rate is the nominal wage (the wage individuals take home) divided by the prices. So, increasing prices which is inflation translates to decrease in the wage rate. The increase in minimum wage is more likely to deliver income gains to low-skilled workers, it may also stimulates macroeconomic growth if productivity is shifted toward more highly-skilled sectors, possibly by inducing additional training for low-skilled workers. Some economists likewise opined that when the government increase the minimum wage, it serves as an engine growth.

The ‘Nays’ for Minimum Wage

Who doesn’t want a raise in his/her income? Just as my people will say ‘small work, big money’, but this cannot always be the case, because there are economic repercussions. Increase in national wage rate is not a ‘silver spoon’, there are consequences to pay. The theories of economics suggest that the macroeconomic effect of increase in minimum wage on the gross domestic product is ambiguous. The increase in minimum wage will reduce the level of employment in the country, creating more level of unemployment. When wage increases, the labour cost increases leading to a decrease in firm’s profit and job hours and cause adverse effect on the employment and the working hours.

More so, the increase in minimum wage will lead to inflation as a result of increase in the overall production cost of firms. To offset the increase in labour cost, the firms have to pass some costs burden to the consumers (and sometimes the consumers bear the entire burden, depending on the necessity of the goods). Consequently, the real wage rate of the workers didn’t improve; it is just like a journey in a circle.

Another disturbing factor to consider is the dual nature of the Nigerian economy. The economy has two sectors of labour market; the formal and informal sector. The formal sector has smaller labour force when compared to the informal sector. Minimum wage can only be binding in the formal sector but not in an informal sector, the latter is highly unregulated. Minimum wage cannot be binding in a sector that is not regulated. In Nigeria, the informal sector absorbs more labour force than the formal sector, so, where is the improvement of standard of living?

The Gist beyond the Economics Fundamentals

All the ‘yeas’ and ‘nays’ for the increase in minimum wage will set the ball of decision rolling and anyone can be in a dilemma of where to pitch his/her tent. Honestly, Nigerians need a raise in income owing to the fact that other countries have gone ahead when it comes to minimum wage. South Africa has approved the increase in minimum wage, other Africa countries except war-ravaged countries have a higher minimum wage than that of Nigeria; we shouldn’t be left out.

Presently, the Nigerian economy is unsteady, demanding for an increase in minimum wage now is like building a castle in the sand; what a great fall it would be. The economy is just recovering from recession and there are warnings of sliding into the economic crisis again, increasing the wage at this critical stage will lead to loss of jobs for low-skilled labour. Isn’t it hilarious to note that the country is yet to pay the salaries of its workers and agitations for an increase are made? The labour association confirmed it that at least, 33 of 36 states of the Federation owe workers and yet a raise is requested for. The government is not faithful to NGN18, 000 pledge would they be to NGN25, 000 or NGN30, 000?

How can the government pay NGN30, 000 in an economy where recurrent spending including personnel costs and overhead cost takes the lion share of the national budget? The government has overtime disbursed more funds to recurrent expenditure than capital expenditure, increasing the wage bills will only reduce the funds meant for education, health, infrastructure etc.

The NLC has better challenges to worry about which will serve as a means to an end. The labour should demand for increased investment in major sectors and the social amenities that take a larger percentage of the salary. Another issue of concern the NLC should address is the workers’ protection in terms of working hours, working conditions and job satisfactions. There are many companies in the country that the working environment is not conducive for the workers, neither are the working hours comfortable; but what can they do? Man pikin must chop.

When one weighs the pros and cons of the demand for increase in minimum wage rate, it is obvious that one outweighs the other. In an economy (like Nigeria) where the informal sector is larger than the formal sector, agitating for minimum wage rate is a wasteful journey. The employment laws of the country need reforming for workers to be more protected. More agitation for minimum wage will never satisfy the welfare of the people, stop looking for gold in a desert.

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The Key Factors of Economic Competitiveness

The Global Competitiveness Index is a yearly report published by the World Economic Forum. It measures the set of institutions, policies, and factors that set the sustainable current and medium-term levels of economic prosperity. The index is organised into 12 mainstays; institutions; infrastructure; ICT adoption; macroeconomic stability; health; skills; product market; labour market; financial system; market size; business dynamism; and innovation capability.

Competitiveness is achievable for all countries, provided the necessities are carried out. For countries that intend to set their path into competitiveness, these factors must be notable.

  1. Human capital development is ‘bae’:Physical capital was seen as a driver of growth, policy makers had always believed in accumulating capital through savings and investment. However, over the years accumulation of human capital was later seen as an engine of growth. According to World Bank, investing in a healthy, educated and resilient population is important to competing effectively in the global economy. Education, health and skills of a population are among the key drivers of productivity, mainly in the context of economic and technological transformations.
  2. Economic competitiveness goes beyond trade. Any economy open to trade, calls for more innovation. However, the concept of trade should move beyond just trade to the era of exchange of innovative ideas and expertise. There should be more alliance across borders.
  3. Technology offers a path to economic advancing: Technology is an important tool for growth and prosperity. In African countries, the benefits of technology as a means to economic advancing remain largely untapped. It is quintessential for African economies to provide greater knowledge on and access to ICTs to the majority of the populace
  4. Weak Institution is a cancan worm:Weak institutions continue to be the cancan worm hindering competitiveness, development and well-being in many countries. Any government concerned about economic competitiveness must pay serious attention to the institutions as a major source of efficiency.
  5. The soundness of infrastructure and the financial system. The quality of infrastructure and financial system is paramount to competitiveness. Basic elements of such infrastructure are still missing in many African economies, hampering their competitiveness. The financial system is also still an area of relative weakness for several economies; any economy that lacks sound financial system is vulnerable to unproductivity and retard growth.
  6. The need for a proactive and far-sighted leader. All above, economic competitiveness will remain a tale without a far-sighted and an intelligent leader. Setting longer-term priorities and enacting proactive efforts to create sustainable growth are hinged on the leaders. So, no economy improvement with a short-sighted individual or tyrant as a leader.

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Zimbabwe: Almost Forty, But Unfortified!

A popular notions says; “life begins at forty”, however, a life that would begin well at forty need to start preparing and planning to begin well. The United Kingdom ceremonially granted Zimbabwe independence on 18 April, 1980. The independence ceremony was held in a stadium in Salisbury, the former capital, many dignitaries (foreign and domestic) attended the great ceremony of freedom from the colonial master. What a happy day it was for Zimbabweans to be a free and control her political and economic institutions, unknown to them, the ship is heading towards an iceberg not at sight at the take-off stage.

Many Africa countries fought for freedom from their colonial masters. They fought with all zeal, hoping for a better economic structure, however, some of the countries headed into economic crisis and disasters. Zimbabwe is also falling apart as hope of surviving is nowhere at sight. Zimbabweans are lamenting on the critical state of the economy daily and helps are not surfacing. This economic crisis is not unfamiliar to the people of the country because economic crisis has become identical to the nation.

Things had begun to fall apart as far back as 1998, in the year there was economic crisis accompanied by riots and strikes in the country. The economic crisis persists in 1990 and in 2001 the Finance Minister, Simba Makoni publicly announced that the nation is in an economic crisis, stating foreign reserves have run out and warning of serious food shortages. In 2002, there was a state of disaster declared as worsening food shortages threaten famine. Also, in 2006, the year-on-year inflation exceeds 1,000 % which led many Zimbabweans to be miserable billionaires in 2008. Have you ever seen the pictures of people using wheel barrows to carry cash to make a purchase? The situation was pathetic. One can just hope the economy doesn’t deteriorate again to that state.

Fast track to 2016, a new national currency called bond notes is introduced as a means of payment which led to what economists call Gresham’s Law. This law is about bad money driving out the good money, the bad money here is the bond notes while the good is the US dollar used as a means of payment before the crisis. As the bond notes were introduced the US dollars became scarcer. So soon, the bond notes became scarce too and the government turned to the printing machine to get more bond notes; the beginning of the disaster. In economics, printing more money might translates to inflation which can be bad for the economy.

The campaign slogan of the new president, Emmerson Mnangagwa was “Zimbabwe is ready for business” but reverse has been the case so far. Almost immediately he was sworn in as president the country begins the struggle to gain grounds in the economic world. In the midst of the campaign, the president visited China and we all hoped for a mutual agreement and a favourably take-home from the visit. China has been the ‘saviour’ of Africa, so, why should Zimbabwe be left out? I asked myself, why would China leave the country to such economic degradation and found out that China is unwillingly to provide the immediate funds needed by Zimbabwe, mentioning concerns over the country’s inability to repay existing debts. If China will not help Zimbabwe, who will?

The economic crisis in the country is alarming and something objective must be carried out, what can it be? Prices of food are increasing incessantly and some are in short supply. It is also very expensive to be sick in the country because prices of medical products are also increasing rapidly.  Many apportioned the cause of the immediate crisis to the introduction of a news tax on electronic transactions, however, the foundation has been shaken.  The new levy was introduced to raise revenue from the large informal sector, but it met the economy unprepared and the ship is at the verge to shipwreck. Zimbabweans live in fear, still haunted by the memories of the 2008 crisis, no one want to go down the lane again; it was miserable.

In 2018, the Permanent Secretary in the office of the president and cabinet, Ambassador Stuart Comberbach said the government is working on a new short-term economic blueprint expected to help stabilise the economy. Zimbabwe is targeting to be a middle-income economy and targets a GDP of over $65 billion. The Ambassador said: “there is a short-term plan the government has been working on for economic stabilisation. This is a two-year plan which is now ready in draft form and will obviously go through consideration by the new cabinet and see to what extent it meets expectations”.

Will the short-term plan take the economy from this struggling stage to a phase of maturity? There are a lot of functions that need to be carried out by the government and the newly elected minister finance, Mthuli Ncube, a former chief economist at the African development bank and a lecturer in finance at the London school of economics. The long-standing problem the government should address in the short-term plan is the debts profile of the country which affects it credits rating and hinders aids from international agencies; at least we know why China withdrew its immediate funds. According to the Zim Bollar index, the debt profile of the country is increasing; domestic debt rose by 72% between June 2017 and June 2018. The country still owes World Bank, AfDB and the Paris Club; who else will the nation borrow from?

Another problem the short-term has to solve is level of productivity, the major sectors in the country before the great fall was mining, agriculture and manufacturing. The country once known as the breadbasket of the continent has become the shadow of itself. All hands should be on deck to revive the productivity level of the country, there must be strategies to make sure the importation bill is reduced to the barest minimum and the economy starts participating in economic activities. Also, the plan has to involve how to woo investors into the country, no one will invest in a country awaiting a great disaster.

More so, it is high time, the country had its. Although, this a long time targets but plans can be made towards achieving this goal. Using other countries’ currency for a longer period of time is like losing one’s identity and above all, Zimbabwe’s economy is expose  to any crisis.  The nation has to work towards its own currency in order to curtail imported economy crisis.

The country is yet to be revived from this disaster if the cost of governance is not reduced, a country involved in more non-economic activities than economic activities is going nowhere to happen. If the cost of governance can be halved, from research it has been found that the economy thrives better provided the amount got is disbursed to more economic activities like human capital development, infrastructure etc. Let’s pause and think, is the ruling government ready for the cut in governance cost? Are the government officials ready to pay the price to have a great nation? Hope they are ready to forfeit the large allowances?

Hope the country is preparing to be ‘fortified’ at forty because 2020 is just around the corner?

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Ten Strongest Currencies in Africa

A currency is a system of money in general use in a particular country for trading, according to Oxford dictionary. Money has its own history of evolution, in no particular order, metal coins, cowries, gold, paper money, commodity money, fiat money, bank notes and digital money are the various form of currency used and are currently in used.

A currency is strong when its value is improving when compared to other currencies, when it’s worth more relative to other currencies. When a currency is strong, travellers can go other countries and live like a king and queens, however, when it comes to trading zone, it is an advantage and also a disadvantage -this is a talk for another day.

Globally, one of the strongest currencies is Dollar because of its general acceptability, so, the ten strongest currencies in Africa are compared to the United State Dollar (USD). Find the list below:

  1. Libyan Dinar (1 USD: 1.38 LYD): Dinar is the currency of Libya, a country in North Africa bordered by the Mediterranean Sea to the North, Egypt to the East, Sudan to the Southeast, Chad and Niger to the south and Algeria and Tunisia to the West. The country is popularly known for the vast oil reserves, which constitutes 95% of the nation’s total exports earnings and about 60% of its gross domestic products. The nation is also known for its insecurity, nonetheless, it standard of living is still a top notch.                                
  2. Tunisian Dinar (1 USD: 2.84TND ): This is also a North Africa country, bordering the Mediterranean Sea and Sahara Desert to the North and East, Algeria to the West and Southwest, Libya to the Southeast. The nation has a diversified economy depending on phosphate oil, car parts manufacturing, tourism and agro-food products The standard of living in the country is relatively on average with a high minimum wage rate.
  3. Ghanaian Cedi (1 USD: 4.80 Cedi): This nation has the third strongest currency in the continent and first in West Africa. The nation is known for diverse wildlife, old forts and secluded beaches. It is bordered by the Ivory Cost in the West, Burkina Faso in the North, Togo in the East and the Gulf of Guinea and Atlantic Ocean in the South. The country has a stable diversified economy based on rich hydrocarbon, tourism, solid minerals, and auto-mobiles among others.
  4. Moroccan Dirham (1 USD: 9.44 MAD): This North Africa country has a relatively liberal economy. The country has followed the principle of privatization of certain economic sectors. The nation is the fifth largest economy in Africa by GDP (PPP), it is also a major player of economic affairs in the continent.
  5. Botswana Pula (1 USD: 10.65 Pula): A Landlocked country located in Southern Africa has maintained a strong tradition of stable representative democracy, with a consistent record of uninterrupted democratic elections. The nation is one of the fastest growing economies since independence, averaging about 5% growth per annum over the past decade. The country was praised by the African Development Bank for sustaining one of the world’s longest economic booms. Diamonds, copper, nickel, soda ash, meat and textiles constitute the nation’s total export earnings.
  6. Zambian Kwacha (1 USD: 12.09 ZMW): This is a Southern Africa country, bordered by Democratic Republic of Congo to the North, Tanzania to the Northeast, Malawi to the East, Mozambique to the Southeast, Zimbabwe and Botswana to the South, Namibia to the Southwest and Angola to the West. The nation is one of the fastest growing economies in Africa and depends majorly on copper/cobalt, electricity, tobacco, flowers and cotton as its source of export earnings.
  7. South Africa Rand (1USD: 14.25 Rand): This is the second largest in Africa after Nigeria; it is one of the most industrialised countries in Africa. Gold, diamonds, platinum, other metals and minerals, machinery and equipment constitutes the nation’s total export earnings.The nation is the only African member of the G-20 economic group.
  8. Namibia Dollar (1 USD: 14.58 NAD): It is a country in Southern Africa, the nation gained independence from South Africa in 1990. The economy has a modern market sector which produces most of the country’s wealth and a traditional subsistence sector. Diamonds, copper, gold, zinc, lead, uranium, cattle, processed fish, karakul skins constitutes the nation’s total export earnings. The government of the economy has pursued free-market economic principles designed to promote commercial development.
  9. Eritrean Nakfa (1USD: 15.0 ERN): This horn of Africa, it is relatively small, however, has a stable currency. The nation is bordered by Sudan in the West, Ethiopia in the South and Djibouti in the Southeast. Eritrea has an extensive amount of resources such as copper, gold, granite, marble and potash. The total export earnings of the nation constitutes; food, livestock, small manufactures, sorghum and textiles.
  10. Egyptian Pound (1USD: 17.95 EGP): A Mediterranean country bordered by the Gaza Strip and Israel to the Northeast, the Gulf of Aqaba to the East, the Red Sea to the East and South, Sudan to the South and Libya to the West. The nation is highly centralised planned economy; it is the third largest economy in Africa by GDP (PPP) and one of the most developed in the continent. Crude oil and petroleum products, cotton, textiles, metals products, chemicals, agricultural products are the nation’s total export earnings.

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Ways to Raise Capital for Your Business Idea

To gather the business ideas could require some days of brainstorming and sometimes, those ideas just drop into your heart like a storm and you are sure it’s the idea you need to be the great entrepreneur you have always dreamt to be. However, after getting those ideas, what happen next? Where do I get the funds to get started? How do I raise the capital? Those are the questions that would arise next, except you are ‘OBO’ – you are from a wealthy background.

The stumbling block to every beautiful business idea is capital and the dilemma of how to source for it. So, I got your back here, let dutifully go through the possible options you can explore.

  1. Personal Savings: Many business experts will advise any willingly entrepreneur to raise his/her capital through personal savings. Yes, I know you will want to ask; how can I save? The first thing to ask you is; Am I ready to be my own boss? If yes, then be ready to save even from that seemingly small salary you are getting now. You can start planning on how to start and grow your business, write out plans and during that period, save up to get it started. The size of capital should depend on the type of business you intend to venture into, small size business would require small capital, and so, you do not need to break the bank to get started. Also, most businesses start small but expand as times goes by.
  2. Grants from Family and Friends: In case, your personal savings couldn’t do much, the next available option to explore is your inner circle; your family and friends. They are set of people that trust in you, so, you need to make them see the ‘sense’ in your business idea. You should be able to get grants from them, or loans with zero-interest rate to start your business.
  3. Loans from MicroFinance Banks: Micro finance banks are friends to budding entrepreneurs. They provide micro loans to poor entrepreneurs or small entrepreneurs lacking capital and access to larger banking institutions. In Nigeria, there are different banks like; Accion Micro finance bank, AB Micro finance bank, Lapo Micro finance bank and many more that give small loans to entrepreneurs. The requirements are not throat cutting, some of the process you will go through are; get a guarantor, submission of passports and filling of forms. After all these within days, you can get your funds and your business is alive! But, you must find a way to back the money, be credible.
  4. Partnership: Another option that could be considered by any budding entrepreneur is partnership. Although, this requires a legal process to ensure that the rights of all partners are legally backed to avoid ‘stories that touched the heart’. If you can find someone that has idle cash balances, approach such person with your business idea and form a partnership form of business. Some of the advantages of partnership business organisation that is a disadvantage to sole proprietors are the existences of continuity and more innovation. However, ensure there is a legal protection and backing before starting the partnership business.
  5. Search for Investors: Another available option is to search for investors, I must confess, this is not easy, neither is it a quick way to source funds, however, it can be the biggest means to source for funds. You need to look for that one business-minded individual that thinks your idea is awesome and would take the market by a storm. To raise funds via this means you need to get a good business plan to represent your business idea perfectly.

The headaches most entrepreneurs have are how to bring the business idea into reality and how to raise funds for the business. No business idea can become a reality without the capital, after drafting the plans; it is the next important resource. So, with the above options, you should get that idea started and make sure you thank me whenever I cross your path; I hope to get a discount when I need your service and/or products. Enjoy the business ride!

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Proper Templates for Business Plan

Last week, we discussed tips of a catchy business plan and also the ‘do not’ of a sound business plan. Now that we have a full grasp of the tips to make a business plan scale through, it is time to understand the patterns in which the document has to follow.

Business plan templates are planning tools for start-ups and budding entrepreneurs. Without a proper lay down pattern, the document might be thrown into the trash can which might mark the end of that beautiful business idea. So, here are the proper business plan templates to follow to the latter.

Create a Cover Page

This is obviously the first page that would be seen, it entails the plan name, company name, address, phone numbers and email address. Ensure the details on this page are input correctly and with proper theme font and font size. Do not make it too busy; keep it formal and no unnecessary design.

Create a Legal Page

This is not totally compulsory for all business plans, however, it is necessary.  Write a legal page for confidential agreement. This page contains the guide for the reader or investors on how to keep the content of the document confidential. Ensure concerned parties sign the page. I am sure, you want to protect that wonderful business idea from predators.

Table of Contents

This is a table properly labelled, showing the contents of the document. Outline the chapters, the subtopics and referencing the exact pages where the chapters are in the document.

Executive Summary Page

This is a page that more resource is needed. It summarises the key components of our business plan, description of the company, who the company is and the location of the company. This is just like an abstract page in your project work, it comes first in the document but it is written last. It is like an extract of all other sections.

Summary of Start-up Requirements

On this page, summarise your start-up requirements, expenditures and assets required on the commencement of the business. This can be incorporated into a table format to explicitly show the start-up requirements. Of course, you should not be surprised when the balance sheet reads loss because no profit yet, the business is just starting. In a situation where you seek to expand an existing business, your balance sheet might still read loss. The table should include expenses for starting the business or expanding and also the assets need to start/expand as he case maybe.

Product and Services

This is where your business idea is discussed fully. This segment includes detailed description of the product and/or services being delivered. In this segment explain the benefits of the products and/or services to the consumers convincingly. Go into details on how the products and/or services are produced and tell about the future plan for the product and/or services.

Summary of Market Analysis

This segment is the summary of the market survey you must have carried out. In this segment, describe the various groups of target customers for your product and/or services. Explain in details what qualifies the mentioned target customers to fall into the market analysis. After which you can go ahead to state the nature of the product and/or services in line with the chosen target customers. Identify the location of the target customers and how to get to them. You must carry out a deep research on the product in the market before you can successfully complete this segment. Check the buying pattern of that product and/or service in the market and state the growth pattern you expect your product to follow in years to come.

Strategy and Implementation

In this segment describe and summarise the corporate strategy for target marketing sales and marketing activities and how to develop the product and/or service. Look for a grand style strategic that is very convincing to show how you plan to take over the market with our business idea, however, maintain a consistent sales and marketing strategy; you do not want to be an ‘Oliver twist’.

Sale Forecast

This is the real deal in the document; it is very essential and difficult. It is a forecast into the unit of sales, the rate of sales and also the prices. This also requires in-depth research and strong assumptions to create the sales forecast of any desired number of years (which should be a short term plan). The factors to be concerned are: the market size of the product, the market share, the competition in the market and many others that can pose a great threat to sales.

Management Summary

This will describe the management team and structure for the business. This includes positions and job description and position that need to be filled.

Financial Plan

This is the financial aspect of the document, to be on the safer side if you cannot effectively carry out this segment, it is better to give this aspect to a financial analyst. This segment includes: funding source, financial projection.

  • Start-up Funding

This explains how the business would be funded and sourced (equity, loans, investment).

  • Financial Projection: This include tables showing the projected profit and loss; showing the income generated from sales, key budget items, the percentage increase in sales and profits. This also includes the projected balance sheet showing the current asset and liabilities.

The above segments should be careful included in the business plan. Remember the don’ts of a business plan; keep it formal and do not try your comedian talents in the document. It is for business, make it so.

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The Don’ts of a ‘Catchy’ Business Plan

If you are in to get tips on how to have a great business plan, then you need to see the previous article. It was wonderful to have a lead on how to make your business plan outstanding, however, it is wisdom to know the ‘no go area’ for a good business plan.

Every entrepreneur seeks to impress and to bring out a unique business plan forgetting some common errors that must be avoided. Trust me; you do not want to fall into such category of entrepreneurs. Therefore, here are the don’ts of a great business plan:

  1. Avoid empty claims: Truly, some statements might sounds confusing and intriguing but if you cannot  establish those statements with facts; statistics, charts, diagram or quotes leave the statement out of your business plan. Yes, take it out, irrespective of how sugar coated it might be.
  2. Rumours about competitors: Avoid gathering facts about your competitors based on rumours, dig deep into the real story. If you are certain a competitor is liquidating, you can allude to it but stay away from listing the competitors weakness based on hears-says.
  3. Usage of superlative and strong adjectives: Avoid words like; major, incredible, amazing, outstanding, unbelievable, terrific, great, most, fabulous, best. These strong adjectives do not have a place in a business plan.
  4. Unprofessional financial projections: You do not want to show amateurism in presenting your financial plan which  might mean incredibility on your part. So, if you cannot do the financial aspect of your plan, safe yourself the stress and distress. Get a credible accountant.
  5. Overly optimistic time frame: In no account should you day dream of getting your business running in few months after launching. Starting a venture is never Nollywood neither is it a Bollywood. Do your assignments properly, carry out research about numerous ventures. If it takes the ventures 12 months to get started and running then do not see yours as a super business create allowance for any unforeseen circumstances beyond control. Be conservative in your time predictions.
  6. Overestimation of financial projections: Do not join the clique of happy-go-lucky entrepreneurs; be realistic in your financial projections. It is better to underestimate than set expectations that are not fulfilled.
  7. Long Documents: Some entrepreneurs love to express themselves fully in their business plan. Avoid long documents, do not choke the readers. It is appropriate to keep your business plan short and simple; only relevant information should be included.

The success of a business plan is the beginning of a successful business. A business idea that lacks a great and well outlined business plan is a waste of time and resources. Avoid the listed blunders and get ready to be your own boss!


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Tips for a ‘Catchy’ Business Plan

Do you intend to start a business; small or large? Or you intend to expand your existing business? Guess what, all these will just be a dream yet to be explored without a strong business plan. As the old adage says: “he who fails to plan, plans to fail”, you need a business plan to succeed in business. However, who starts a venture knowing it head towards failure? I guess no one will.

A business planning is the art of crafting strategies and tactics necessary to achieve certain milestones and also to make certain forecasts in line with the corporate. To have your business plan fly some tips are necessary to be known and digested.

  1. Know your competitors: Prepare to name and know your competitors, search for what makes them different and how well to beat them in the market. However, do not belittle your competitors to avoid being taken by surprises.
  2. Know your audience: As an entrepreneur, you can have different business plan for different business purposes. One can be for seeking funds, another for wooing investors and the likes. However, knowing and understanding your audience will give you a step ahead in your business planning.
  3. Be Factual about your claims: While writing your business plan, if you claim that the business idea will take the market by storm then be prepared to provide facts. Mere words will not go a long way.
  4. Be conservative about financial estimates and projections: Make sure your financial projections are more conservative, if you think your business idea can capture 20 percent of the market in the first year indicates the reasons for the thoughts.
  5. Be realistic with time and resources: Do not be like the happy-go-lucky entrepreneurs who are overly optimistic with time and resources. Being realistic means credibility which is a good trait for a sound business minded individual.
  6. Engage a strong management team: The builders determine how the structure of the building will look. Make sure your team has good credentials and expertise. Ensure they have the needed skills to push the venture into prosperity.
  7. Discuss Pay-out options for the investors: Investors are not charity giver; they want to know when they can get their money back and at what rate of returns. Therefore, provide a brief description of options for investors or at least mention you are ready to discuss options with any serious prospect.

With all these, your business idea is ready to take the great fly to success! Executing a great business idea comes with a price and planning is the first price that needs to be paid. The above are all about tips to have a great business plan, how about tips that make a great business idea fall down flat? Next we will go through ‘the don’ts of a business plan’. Stay tuned!

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Economic Growth Remains Sluggish in Nigeria, South Africa and Angola

World Bank has said that the economic growth remains sluggish in Nigeria, South Africa and Angola. Growth in Sub-Saharan Africa for 2018 has been cut to 2.7% from a forecast of 3.1% as outlined by the World Bank, mainly due to sluggish expansion Nigeria, Angola, and South Africa.

The bank stated in its 18th edition of Africa’s Pulse report released this week, Wednesday, October 3, 2018. The report stated that “economic recovery in the region is set to continue but at a more gradual pace. Growth in the region is projected to increase from 2.7% in 2018 to 3.3% in 2019, rising to an average of 3.6% in 2020–21.”

It attributed the cut to the sluggish expansion in the region’s three largest economies, Nigeria » Angola, and South Africa. The World Bank said Nigeria and Angola are currently experiencing lower oil production while weak household consumption growth compounded by a contraction in agriculture negate South.

Read Also; Infrastructure Africa Launches new Business Platform

The rest of the countries in the region have been growing steadily this year including those that don’t depend on commodities, such as Ivory Coast, Kenya and Rwanda, the bank said. Albert Zuefack , the World Bank’s chief economist for Africa, said public debt continues to rise in a number of countries in Africa exposing the countries to new risks.

He urged policy makers in the region must equip themselves to manage new risks arising from changes in the composition of capital flows and debt. In June 218, the World Bank projected growth in Sub-Saharan Africa to rise to 3.1% in 2018 and to 3.5% in 2019, from 2.6% in 2017. The bank had based its report on the pickup in manufacturing activity with renewed government commitments to macroeconomic and governance reforms Angola, South Africa, and Zimbabwe.

It however said that the risks remain tilted to the downside, faster-than-expected tightening of monetary policy in advanced economies could dampen investor appetite for higher-risk assets in frontier markets.

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Infrastructure Africa Launches new Business Platform

The Infrastructure Africa Business Forum 2018 has announced the launch of its new business matchmaking and networking platform; “DealRoom” where various countries around Africa will engage in project presentation, demonstrating the latest opportunities presented by the field of project development.

The Infrastructure Africa Business Forum, in a statement this week, said the initiative served to assist all participants and members of the infrastructure community in fostering valuable stakeholder liaisons with financiers and business partners who are in search of projects to invest in.

Infrastructure Africa said: “By making use of the DealRoom platform, participants can reap the maximum benefits of attending the conference and effectively manage their time through the availability of tools such as reserving meetings with relevant stakeholders from the infrastructure community, along with customising their on-site agenda. ”

Infrastructure Africa Managing Director, Liz Hart said: “Supporting the DealRoom will be Strategic Advisors engaged by the Business Forum to ensure the opportunity to do business is foremost on the agenda. In addition, hosting the Project Owners from various African Countries who are pitching projects brings added scope and potential for business to be concluded at Infrastructure Africa. Our aim is that our participants come to learn, network and do business.”

According to the organisers, the Infrastructure Africa Business Forum is expected to render a positive impact on the infrastructure community by enabling attendees to identify significant participants, speakers, financiers, influencers and leaders, which will give them the means to not only survive but prosper in the highly competitive sector.

The annual conference brings together 400 infrastructure business leaders and investors and has demonstrated invaluable initiatives in fostering significant business relationships and exploring challenges and opportunities to promote innovation in infrastructure operations, which has made it a leading infrastructure-focused event. “Attending this conference is a unique opportunity, providing anyone vested in the infrastructure sector with the understanding, knowledge sharing as well as insight into the latest industry trend,” Infrastructure Africa said.

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KPMG’s South African Chief Executive Steps Down

KPMG said on Wednesday, October 3, its chief executive in South Africa would step down one year after being appointed to restore the auditor’s reputation, which was badly tarnished by its role in the country’s corruption scandals.

KPMG said Nhlamu Dlomu would be replaced by someone from outside the firm who would take over rebuilding the company’s business in the country, while Ms Dlomu would move to a “global role” in KPMG.

KPMG lost major South African clients over revelations last year about its work for companies associated with the Guptas, a business family accused of using their friendship with former president Jacob Zuma to sway state decisions.

The scandal triggered the departure of several partners, including Ms Dlomu’s predecessor, and forced job cuts as the firm’s business in South Africa dried up. KPMG has since apologised and repaid fees from Gupta-related work.

“Given the scale of reputational challenges facing both KPMG and the industry, the board has decided that a new chief executive outside the firm, with strong industry experience, will optimise prospects of rebuilding trust,” KPMG said. The firm faces an uphill battle to win back clients amid the continued public fallout in South Africa over the Guptas, who left the country when Mr Zuma was forced out as president earlier this year.

Read Also; Zimbabwe Announces Tax Review on Electronic Transactions

KPMG also remains controversial in South Africa over its role in a restructuring of the revenue tax service, which was seen as an attempt by Mr Zuma’s allies to capture the service. The collapse this year of VBS, a mutual lender, also compounded criticism of KPMG: the company had given the bank a clean audit, while partners on the contract had had conflicts of interest.

“Although it has been challenging, we have managed to stabilise the business,” Ms Dlomu said. “I look forward to sharing the South African experience with the global body of KPMG, and I’m pleased to be able to continue to support the firm during the transition,” she added. KPMG said the search for a new South African head was “well advanced.”

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Zimbabwe Announces Tax Review on Electronic Transactions

Zimbabwe’s newly appointed Finance and Economic Development Minister Mthuli Ncube has announced a 2 cents per dollar tax on electronic transactions as the country moves to widen its tax base.

“I hereby review the Intermediated Money Transfer Tax from 5 cents per transaction to 2 cents per dollar transacted, effective 1 October 2018,” said Minister Ncube.

He said due to the increase in the informalisation of the economy and huge spikes in electronic and mobile phone-based financial transactions and real-time gross settlement transactions (RTGS), “there is [the] need to expand the tax collection base and ensure that the tax collection points are aligned with electronic mobile payment transactions and the RTGS system”.

While the new tax seems like a downward review, it isn’t, as consumer will now be charged on every dollar transacted, whereas in the past it was 5 cents for every transaction, including those above $1. The new 2c per dollar tax effectively means most Zimbabweans will have to fork out more in tax for every dollar transacted as more than 96% of the transactions currently conducted in the southern African country are electronic.

Analysts have described the hikes as catastrophic for consumers who are already forking out more on value added tax and other bank charges related to electronic transactions. “It’s catastrophic for most Zimbabweans, as most of our transactions are now conducted electronically. It’s an increase in costs on all transactions and the consumer will be hurt,” said Walter Mandeya, an analyst with Trigrams Investment.

Read Also; Taxify Partners Google Map to Ease Bookings

In 2018, 1.7 billion transactions were conducted electronically. The latest Reserve Bank of Zimbabwe figures for the half year to June show electronic transactions done in the country amounted to $64.7bn. This means if 2 cents is charged on every dollar transacted, government coffers would have swelled by $1.3bn.

If similar transactions were to be conducted in the second half of the year, the country’s treasury can expect to collect at least $2.5bn for the year from transaction charges alone. At least $4bn worth of transactions went through Point of Sales machines in retail outlets, which means on top of the 15% value added tax that is charged at POS, most transactions will add another 2% tax charge for every dollar spent at the till.

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Taxify Partners Google Map to Ease Bookings

Estonian ride-hailing company Taxify will now enable customers to access the app and see price estimates upon searching for their destination all while on Google Maps.

Riders will search for their destination, tap directions, select the ride services tab next to the familiar car and walking options and then view information on how far the cabs are as well as an estimated fare.

Read Also; Air Senegal Plans Dakar-Paris route

The Taxify logo will now appear on Google Maps next to other ride sharing options such as Uber. Selecting Taxify will open the ride-sharing application or prompt users to install Taxify and then complete booking the ride.

“Having Taxify as part of the transit options on Google Maps makes it easy for riders, as it offers them comparisons between estimated arrival times, as well as fare options. This saves them time and money,” said Shivachi Muleji, Taxify General Manager East Africa in a statement on Tuesday, October 2nd, 2018.

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Air Senegal Plans Dakar-Paris route

Recently launched flag carrier Air Senegal has announced plans to fly between Dakar and Paris CDG from February 1, 2019.

The airline will offer a daily service using new A330 neo aircraft – two of which were ordered from Airbus this year. According to Air Senegal’s online reservations, flights will depart Dakar at 0950, arriving into Paris CDG at 1615, before returning at 1845 and landing back into the Senegalese capital at 2330.

Read Also; Ivory Coast Raises Cocoa Farmers’ Pay

Air Senegal is the third incarnation of the country’s flag carrier, following on from failed attempts with Air Senegal International and Senegal Airlines. Air Senegal launched operations in May with two ATR 72-600s turboprops and has plans to expand its regional footprint with two Airbus A319 narrow-bodies. The company marks the West African nation’s third attempt at a flag-carrier, following Senegal Airlines and Air Senegal International.

Long-haul operations to France, Senegal’s former colonial power, are seen as a pivotal step in the government’s strategy of restoring autonomy over its skies. The airline currently offers regional flights between Dakar and Senegal’s second largest city Ziguinchor, using ATR turboprop aircraft.

At present all wide-body passenger flights into and out of Dakar are flown by foreign carriers: Air France, Corsair, Brussels Airlines, TAP Portugal, Royal Air Maroc, Tunisair, Ethiopian Airlines, South African Airways and Emirates Airline. Narrow-body passenger flights from mainland Europe and the US are also operated by TAP, Iberia, Vueling, Aigle Azur, Air Italy, Turkish Airlines and Delta Air Lines.

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Ivory Coast Raises Cocoa Farmers’ Pay

Ivory Coast, the world’s biggest cocoa producer, raised farmers’ pay for the new season for the first time in two years after a recovery in global prices.

The West African nation increased the so-called farmgate price to 750 CFA francs ($1.34) per kilogram for the bigger of the two annual harvests that begins on Monday, Lambert Kouassi Konan, president of cocoa regulator Le Conseil du Cafe-Cacao, told reporters in the commercial capital, Abidjan. Minimum pay was 700 francs per kilogram for the last main crop.

Cocoa prices, which have swung dramatically in recent years, are on pace for the first rise in three. Ivory Coast’s pay increase will also narrow a price difference with neighboring Ghana after the neighbors committed to work together to market beans in order derive better benefits from the chocolate-making value chain.

Read Also; IMF Disburses $245m Loan Tranche to Tunisia

Ghana kept its price unchanged and will pay farmers 475 cedis ($95.60) per 64 kilogram bag, or the equivalent of 7,600 cedis per ton, for the third straight season, Agriculture Minister Owusu Afriyie Akoto told reporters in the capital, Accra. At a per kilogram rate, Ghana’s price is $1.53. “We were prudent with the price,” said Ivory Coast’s Konan. “The sector is still in a crisis.”

Last year, Ivory Coast slashed its producer pay by 36 percent after forecasts of bumper crops in West Africa prompted a collapse of almost a third in prices during the 2016-17 harvest. Together with Ghana, the neighbors account for about 60 percent of global cocoa production.

The two countries are targeting similar producer pay and want to set a joint floor price for future cocoa sales, said CCC Managing Director Yves Brahima Kone. “Our objective is to coordinate sales by the end of January,” he said. “We are working toward that date.”

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IMF Disburses $245m Loan Tranche to Tunisia

The International Monetary Fund last week, approved the payment of a $245 million loan tranche to Tunisia, the fifth under its loan programme with the North African country, an official source told Reuters.

The loan programme is tied to Tunisia’s pursuing economic reforms aimed at keeping its deficit under control. The IMF approval will open the way for Tunisia to sell $ 1 billion bonds next month. An official source told Reuters this month that the sale will be early next month after the IMF approval.

Read Also; Radisson Joins Rivals with Hotel Expansion in Africa

Tunisia expects economic growth to accelerate to between 3 and 3.5 percent next year from an expected 2.9 percent in 2018, driven by a recovery of the tourism industry and an expanding agricultural sector, officials told Reuters last month. The government aims to reduce its budget deficit to 3.9 percent of gross domestic product next year from the 4.9 percent it is forecasting for 2018.

The North African country’s economy has been in crisis since the toppling of autocrat Zine al-Abidine Ben Ali in 2011, with unemployment and inflation shooting up.

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Radisson Joins Rivals with Hotel Expansion in Africa

Radisson Hospitality will invest in ten new hotels across Africa, the company said on Tuesday, 2nd of October 2018, the latest hotel group is set to be an eyeing expansion on an underdeveloped continent.

However, Global hotel chains, including Marriott International and Hyatt Hotels, have been increasing their investments across Africa, which has some of the world’s fastest growing economies and a rising middle class.

“We are thrilled to be announcing 10 new hotel deals in just nine months, which equates to a new signing every month,” said Andrew McLachlan, senior vice president for development in sub-Saharan Africa at Radisson.

Read Also; Kenya: Inflation Rises to Highest in 11 months

The deals will include a luxury hotel in Nigeria, Ivory Coast’s first upscale lifestyle hotel and a Radisson Blu in Morocco’s Casablanca, he said.

“So far this year, we will be adding 1,300 plus rooms to our portfolio in Africa and plan to continue this accelerated growth through further expansion in key markets across this flourishing continent,” McLachlan said in a statement.

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Nigerian Oil Unions to Resolve Dispute with Chevron in Two Weeks: Union Official

Nigerian oil unions will try to resolve a labor dispute with the U.S. firm Chevron within two weeks, a union official said on Friday, after the unions threatened last week to go on strike nationwide.

Nigeria, an OPEC member, is Africa’s largest oil producer and West Africa’s largest economy.

Crude sales make up around two-thirds of government revenues, but the dilapidated state of refineries means the country has to import most of its refined fuel.

The Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) and Nigeria Union of Petroleum and Natural Gas Workers (NUPENG) have accused Chevron of attempting to sack thousands of workers in violation of their contracts.

The unions, Chevron and the government held talks on Thursday to try to resolve the dispute.

“At the end of the talks, it was resolved that the unions and Chevron should go back and resolve all outstanding issues within two weeks and come back to the Ministry of Labour for, hopefully, the last meeting, where the resolutions would be ratified,” said PENGASSAN General Secretary Lumumba Okugbawa.Chevron did not immediately respond to a request for comment.

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Nigeria’s Telecoms Sector Lost N1.06trn to Call Masking in two year – NCC

The Nigerian Communications Commission (NCC) says the telecoms industry has lost N1.06 trillion to call masking, call refiling and SIM boxing in two years.

Umar Danbatta, the commission’s executive vice chairman, made this known on Thursday at the 85th edition of the Telecoms Consumer Parliament which held in Lagos.

Danbatta, who was represented by Felicia Onwuegbuchulam, director, consumer affairs bureau at NCC, said the revenue loss started in September 2016 when the NCC reviewed the call termination rate for international inbound traffic from N3.90k per minute to N24.40k per minute.

He said the operators involved in call masking and refiling tampered with international calls and terminate them as local calls to avoid paying the new rate.

“The Commission is set to take the bull by the horn towards putting an end to call masking menace in the country. NCC is leveraging different consumer platforms to deepen awareness campaign on call masking and we advise consumers to report the local numbers through which they receive foreign calls as masked calls to the Commission for proper tracking,” he said.

According to Danbatta, the NCC has barred 750,000 lines assigned to 13 operators in the course of their investigation.

A situation where international call IDs are tampered with and appear like a local number is call masking.

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Zambia: Govt to Increase Mine Royalty in 10th Tax Change in 16 Years

Zambia plans to increase mining royalties next year as Africa’s second-biggest copper producer seeks to reduce its budget deficit. It’s the 10th tax change miners have faced in the past 16 years.

The royalty rate will rise by 1.5 percentage points across the board, Finance Minister Margaret Mwanakatwe told lawmakers in the capital Lusaka in her maiden budget speech on Friday. The current tax rates range from 4 percent to 6 percent depending on the copper price. The government also introduced a 10 percent charge if the metal climbs above $7,500 a metric ton, she said.

Shares of First Quantum Minerals Ltd., the African nation’s largest copper producer, fell as much as 5.2 percent trading before pairing losses to 3.2 percent by 12:07 p.m in Toronto. Copper was trading at $6,241 a ton on the London Metal Exchange.

Facing large fiscal deficits and external borrowing that led the International Monetary Fund to warn that Zambia is at high risk of debt distress, the government is once again turning to copper producers including Glencore Plc and Barrick Gold Corp. to boost revenue.

“As mineral resources are a depleting resource, it is vital to structure an effective fiscal regime for the mining sector to ensure that Zambians benefit from the mineral wealth our country is blessed with,” Mwanakatwe said.

Cobalt royalties will increase to 8 percent from 5 percent currently, according to the Zambia Revenue Authority. In addition, Zambia will introduce an import duty of 5 percent on copper and cobalt concentrates, the semi-processed forms of the metals, which would mainly impact miners in the Democratic Republic of Congo. There will be a 15 percent export duty for precious metals and gemstones, Mwanakatwe said.

The government also plans to replace value added tax with a non-refundable sales tax, which will impact mining companies that are owed hundreds of millions of dollars in VAT refund arrears. Zambia will settle outstanding verified claims, the minister said. She didn’t detail what the new sales tax rate will be, or if it would remain at the current 16 percent VAT rate.

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Kenya: Inflation Rises to Highest in 11 months

Inflation in Kenya rose in September, pushed higher by an increase in fuel, transport and food prices, the statistics office said on Friday.

The Kenya National Bureau of Statistics said the rate rose to 5.70 percent year-on-year from 4.04 percent a month earlier, while on a monthly basis inflation was 1.02 percent from 0.31 percent in August.

The Transport Index rose 7.99 percent from a month earlier and was up 17.29 percent when compared with September 2017 due to increased petrol and diesel prices.

ALSO READ: Nigeria: Inflation Rises for the First Time After 18-month Decline

A liter of petrol now cost upwards of 127 shillings ($1.20) from the previous 112.

President Uhuru Kenyatta signed into law last week the finance bill, which has introduced value added tax on petroleum products.

The levy has proved controversial, drawing protest from lawmakers, anger among commuters, and led to long lines at gas stations, worries about inflation, besides an industrial strike by fuel distributors and suppliers.

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OPEC, Allies End Meeting with no Vow to Boost Supply

OPEC and allied oil producers including Russia ended their meeting on Sunday with no formal recommendation for any additional supply boost.

Oman’s Oil Minister Mohammed bin Hamad Al-Rumhy and Kuwaiti counterpart Bakhit al-Rashidi told reporters that producers had agreed they needed to focus on reaching 100 percent compliance with production cuts agreed at an OPEC meeting in June.

That effectively means compensating for falling Iranian production. Al-Rumhy said the exact mechanism for doing so had not been discussed.

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Nigeria: Oil Unions Threaten Nationwide Strike

The two main oil unions in Nigeria have prepared their members for possible nationwide industrial action over a staffing dispute with Chevron, they said on Saturday.

Nigeria, an OPEC member, is Africa’s largest oil producer and crude sales make up around two-thirds of government revenues in West Africa’s largest economy. The dilapidated state of its refineries means the country imports most of its refined fuel.

The Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) and Nigeria Union of Petroleum and Natural Gas Workers (NUPENG) accused U.S. oil major Chevron of attempting to sack thousands of Nigerian workers in violation of their contracts.

“NUPENG and PENGASSAN will not hesitate to embark on nationwide industrial action on this matter and we have already placed our members on red alert should the management of Chevron remain recalcitrant or adamant to rescind its anti-labour decision,” the unions said in a joint statement.

NUPENG President William Akporeha stated that  the industrial action referred to would be a nationwide strike by members of the unions, who cover a broad range of jobs across the country’s oil industry.

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South Africa: Ramaphosa Outlines Economic Rescue Measures

The president of South Africa, Cyril Ramaphosa,  announced a multi-billion-dollar stimulus programme on Friday, earmarking funds for job creation and infrastructure development as he seeks to make good on a pledge to revive the country’s ailing economy.

Speaking a day after the central bank disappointed some in his ruling African National Congress (ANC) party by not cutting interest rates, Ramaphosa said the government needed to put the funds at its disposal to better use.

“We have to resort to reprioritising our budget,” Ramaphosa stated, adding that there was no room to increase spending or borrowing.

He said 50 billion rand ($3.5 billion) of “re-prioritised expenditure and new project-level funding” would be used to boost economic growth and create jobs, and the government would also launch a 400 billion rand ‘medium-term’ infrastructure fund.

“The central element of the economic stimulus and recovery plan is the reprioritisation of spending towards activities that have the greatest economic effect,” he said.

When he took over in February from Jacob Zuma, whose term of office was plagued by scandal, Ramaphosa staked his reputation on economic revival and he received a warm welcome from investors in part due to his strong ties to the business community.

But having stagnated for a decade, Africa’s most industrialised economy slipped further in the second quarter by entering recession for the first time since 2009, while the rand has weakened.

The local currency briefly extended gains after Ramaphosa’s speech before slipping back to trade 0.31 percent firmer against the dollar.

Ramaphosa said the infrastructure fund would attract finances from development institutions and banks, private lenders and private sector and ordinary investors.

Finance Minister, Nhlanhla Nene told the same event that the 50 billion rand fund would come from under-performing government programmes. He gave no detail and it was also not clear how much of the money would be new funding and how much would be shifted from other projects.

South Africa needs faster economic growth to reduce its 27 percent unemployment rate and alleviate poverty and inequality, which are stoking instability ahead of national elections next year.

But the central bank on Thursday also cut its gross domestic product forecast for 2018 and said there was little leeway in monetary policy to boost the economy beyond the new growth figure while the outlook for inflation had deteriorated.

Land and mining ownership reforms set in motion by Ramaphosa have also unnerved investors, and after an initial rally following his election as ANC leader in December and state president in February, business confidence has wavered.

Ramaphosa said the country’s economy would be put on a firmer footing by the measures he announced on Friday.

“Our economic challenges are huge and our difficulties are severe and in the end will take extraordinary effort and they will also take some time,” he said. “For several years our economy has not grown at the space we needed to create enough jobs.”

Some analysts Reacted

“This was a political speech. There was very little economics in it,” Nic Borain, an independent political analyst said.

“It was a balancing act, although the market and other observers would have been looking for something more decisive. The real details will come in Nene’s budget in October.”

Warren Landgridge, a grain option trader at Riddermark Capital, said investing in agriculture would be a good move.

“It could only be beneficial for the country in the long term if money can be allocated to helping and equipping farmers,” he said.

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Nigeria: Polaris Bank Takes Over Skye Bank

The Central Bank of Nigeria (CBN) has revoked the licence of Skye Bank Nigeria Plc.

CBN Governor and the Managing Director of the Nigeria Insurance Deposit Corporation (NDIC), Godwin Emefiele, disclosed this on Friday at a media briefing in Lagos.

He also announced the change in the name of Skye Bank to Polaris Bank which takes over the bank.

Also read: Nigeria: Inflation Rises for the First Time After 18-month Decline

He said an injection of N786 billion has been made into the bank with the Asset Management Corporation of Nigeria (AMCON) has been directed to commence the sale process of the bank from Monday.

The revocation of Skye Bank’s operating licence follows the Central bank’s decision to pause its injection of funds processes in the lender.

The regulators maintain that customers deposits safe as management and members of staff will be retained under the new ownership structure.

Meanwhile, the share price of Skye Bank on Friday gained 4.05 percent at 77 kobo.

The stock is expected to be placed on suspension from Monday in accordance with bridge bank procedures.

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Nigeria “Suspends” Plans to Launch New National Airline

Nigeria will not be getting a new national carrier in December or early 2019 as previously planned. The national minister for aviation tweeted yesterday evening (Sept. 19) that plans for the airline has been suspended. The plans for the new carrier, named Nigeria Air, completed with a logo unveiling, were announced at Farnborough, a renowned international aviation exhibition in London back in July.

The government claimed it would not own more than 5% of the airline, ceding control to private investors expected to invest $300 million in the new airline at inception. It’s unclear if the government ever found investors for its private partnership.

However, the plan for a new airline was given a lukewarm reception by Nigerians who have seen a string of previous national airline run aground . The most recent carrier, Air Nigeria, shuttered operations in 2012 after running up 35 billion naira ($96 million) in debt.

Undertaking a major capital intensive project with notoriously slim margins in a difficult market was also unlikely to win unanimous public support especially as Nigeria’s government struggles to fund record budgets and pay workers’ salaries. To win public support, much of the government’s rhetoric in pushing plans for a national carrier has been hinged on national pride.

Also Read; Egypt Signs Oil, Gas Exploration Deal with Shell, Petronas

It’s a trend that is prominent across the continent as several countries actively pursue plans for national carriers despite evidence of financial struggles. South Africa’s national airline, for example, has not generated profits since 2011 and has required cash injections to stay afloat. But in solitary contrast, Ethiopia Air has grown to become the continent’s largest and most successful airline.

A quicker way to boost aviation across the continent is liberalizing air routes and cut high airport fees and local taxes, according to 2014 study by the International Air Transport Association (IATA). It projected that opening routes between 12 key African countries could add an extra $1.3 billion to the continent’s annual GDP. And the African Union has finally set on that course with the establishment of the Single Africa Air Transport Market in January.

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Nairobi Ranked Sixth Wealthiest Africa City

Nairobi is East Africa’s wealthiest city and the sixth in Africa after Durban, Cape Town, Cairo, Lagos and Johannesburg, a new report says.

The study by New World Wealth and AfrAsia Bank from Mauritius estimated Nairobi’s privately held wealth at Sh5.4 trillion with its growth driven by financial services, retail, tourism, fast moving consumer goods, telecoms, real estate and construction.

Nairobi attracts high Net Worth Individual ((HNWIs) for business and investments while Mombasa is mentioned as home to hospitality and luxury investments along its expansive beaches as well as highly preserved buildings recognised globally as World Heritage Sites.

Wealthy billionaires’ injection of funds into local investments has propelled demand for lettable space making Nairobi the most expensive city in East Africa where space goes for an average of Sh190,000 per metre square. Mombasa’s lettable space is charged at Sh170,000.

Read Also; IMF Lauds Kenya’s Strong Foreign Exchange Reserves

Tanzania’s Dar es Salaam is home to Sh2.5 trillion privately held wealth followed by Kampala with Sh1.6 trillion while Mombasa has Sh800 billion worth of investments, notably in hospitality chains and affluent luxury beach houses.

Kenya’s open-ended policy allowing capital inflows and property ownership for African billionaires with easy visa regulations appear to have endeared it to HNWI individuals, but its politics adversely affected its growth in the past year recording the lowest growth in the region at two per cent.

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IMF Lauds Kenya’s Strong Foreign Exchange Reserves

The International Monetary Fund (IMF) considers that Kenya’s external position is strong, its representative in Nairobi said on Friday, adding that the Fund would continue to support its reform efforts even though a stand-by loan deal has expired.

Kenya had secured a six-month extension in March of the $989.8 million arrangement. However, the IMF set conditions for a further extension, including the repeal of a cap on commercial lending interest rates which was imposed in 2016, a move that parliament rejected in a finance bill last month.

The President of the country, Uhuru Kenyatta sent the bill back to parliament on Thursday night, but what happens next regarding the rate cap is not yet clear.

IMF representative Jan Mikkelsen confirmed what the government said on Thursday: that the deal was over.

“The second review of the IMF-supported program has not been completed, and the program will expire today,” he stated.

“It should be stressed that Kenya’s external position remains strong and foreign exchange reserves are at a very comfortable level.”

Foreign exchange reserves stood at $8.56 billion at the end of last week, equivalent to 5.71 months’ worth of Kenyan imports, central bank data showed. The bank is required by law to hold reserves worth a minimum of four months of import cover.

The central bank expected the current account deficit to shrink to 5.4 percent of gross domestic product at the end of this year, from 5.8 percent in June, Governor Patrick Njoroge said in July.

Kenyan officials have played down the significance of the expiry of the deal, which was agreed in 2016 to help cushion the economy in case of unforeseen external shocks that could upset the balance of payments. No funds were ever drawn down.

However, Finance Minister Henry Rotich said on Thursday that talks with the Washington-based fund would now focus on the next type of facility Kenya could secure.

“The IMF will continue to support Kenya’s reform efforts through policy advice and capacity development,” Mikkelsen said.

Kamau Thugge, the principal secretary at the finance ministry, had said on Thursday that the expiry would not hurt the economy.

Rotich tried to repeal the rate cap in his June budget, but parliament voted to keep the upper limit while getting rid of a minimum deposit rate it had previously imposed.

The cap was aimed at helping small traders borrow at affordable rates, but has had the opposite effect, with banks saying they cannot price risk to small and medium enterprises (SMEs) properly while the cap is in place.

As a result, lending to the private sector fell from 9.3 percent in 2016 to 2.4 percent last year.

Kenyatta is due to address the nation on Friday, after rejecting the finance bill which also sought to postpone a widely unpopular tax on fuel.

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Egypt Signs Oil, Gas Exploration Deal with Shell, Petronas

Egypt has signed a deep-water oil and gas exploration deal with Royal Dutch Shell and Malaysia’s Petronas worth around $1 billion for 8 wells in the country’s West Nile Delta, the petroleum ministry said on Saturday.

The country also signed a second $10 million deal with Rockhopper, Kuwait Energy and Canada’s Dover Corporation for exploration in the Western Desert, a ministry statement said.

Egypt aims to be a regional hub for the trade of liquefied natural gas (LNG) after a string of major discoveries in recent years including Zohr, which holds an estimated 30 trillion cubic feet of gas.

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Nigeria: Inflation Rises for the First Time After 18-month Decline

Nigeria’s inflation has risen for the first since it started its decline in January 2017.

This is according to the latest inflation report published by the National Bureau of Statistics on Friday.

According to the report, the rate at which prices of goods and services increased in August rose to 11.23% from 11.14%.

“The consumer price index, (CPI) which measures inflation increased by 11.23 percent (year-on-year) in August 2018. This is 0.09 percent points higher than the rate recorded in July 2018 (11.14) percent and represents the first year on year rise in headline inflation following eighteenth consecutive disinflation in headline inflation,” the report read.

“Increases were recorded in all COICOP divisions that yielded the Headline index. On month-on-month basis, the Headline index increased by 1.05 percent in August 2018, down by 0.08 percent points from the rate recorded in July 2018 (1.13) percent).”

In July, Bismarck Rewane, economic analyst, had predicted that the inflation numbers would increase in August.

“The rate of moderation in inflation is slowing which means that we are getting close to the point of deflation,” he had said, commenting on July’s inflation numbers.

“When you annualise the month on month inflation, it actually comes out at 15.94%, that is disturbing and that is going to affect the discussions at the MPC meeting today and tomorrow.

“Also important is 17 consecutive months of annual decline in inflation but it’s now getting to the point when it will start going up again. Month on month inflation is more current than year on year inflation.”

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Zimbabweans Face Hard Times as Bread Price Goes Up

Top food processor Innscor Africa Limited announced on Thursday a 10% increase in its bread prices beginning this coming weekend as signs of a tough life for Zimbabweans begin to show under a new Emmerson Mnangagwa led government.

This was revealed in a company notice to distributors under its bread making Bakers Inn unit by company Sales and Marketing Executive Caleb Musodza.

“This letter serves to inform you that the price list for Innscor Africa Bread Company Zimbabwe (Pvt) Ltd t/a Bakers Inn bread effective Saturday 15 September 2018 will be as follows: standard loaf all variants wholesale delivered $1, recommended retail price $1.10,” read the notice.

The Grain Millers Association of Zimbabwe (GMAZ) has sounded the alarm over dwindling stocks of wheat arguing the Reserve Bank of Zimbabwe has failed to avail enough foreign currency for the importation of the grain.

GMAZ chair, Tafadzwa Musarara told the media Thursday the grain milling industry is currently saddled with a US$87 million foreign debt to wheat, rice and salt suppliers.

The looming bread increase is likely to spotlight on the new Zanu PF administration’s capabilities to relieve crisis-weary Zimbabweans of the hardships they have endured since the economy went on a spiral under former President Robert Mugabe at the turn of the century.

MDC leader Nelson Chamisa, who vehemently disputes his controversial defeat to Mnangagwa July 30, has dared his Zanu PF opponent to rule the country without his blessings, insisting the country’s administration does not enjoy any confidence from business and ordinary locals.

“There would be an economic hara-kiri right now if there was no political rape on July 30. Rape has consequences and this failing economy is what we are now suffering from,” he said.

Chamisa added, “The economy is freezing and even fuel is in short supply. What is more in short supply is market confidence. Business is not settled because elections were tampered with. You can change statistics of elections, but you cannot tamper with figures in economics.”

Apart from price increases, continued hardships have manifested in the cash crunch which remains critical in the country, nearly six weeks since Zanu PF won the election.

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Kenya: President Says Controversial Fuel Tax is Necessary, Proposes 8% Cuts

The President of Kenya, Uhuru Kenyatta on Friday explained that the unpopular tax on fuel was necessary, even as he proposed to cut it from 16% to 8%.

His government faced a strike by some fuel dealers, anger among commuters and a lawsuit after it triggered a hike in transport and fuel prices by imposing the 16 percent value added tax on all petroleum products on Sept. 1.

Kenyatta explained that the Finance Bill 2018 that was presented to him on Thursday was ‘good politics, but bad leadership’.

Kenyatta, who is serving his second and final term, told Kenyans that the 2010 constitution that championed devolution to boost service delivery, substantially increased the cost of running government.

‘”Having transferred over a trillion shillings to county govts since 2013, we’ve seen major improvements in service delivery and improvements in the lives of Kenyans,” said Kenyatta.

The president said his government will ‘protect and entrench devolution’ regardless of the cost.

Kenyan then highlighted the development objectives that have been realised through the revenue collected from taxes, including infrastructure and healthcare projects.

Following the widespread anger that followed the implementing of the 16% tax on petroleum products, the president said he would compromise, describing his actions as “balancing between short-term pain and long-term gain”.

‘”I have heard and understood your concerns, which is why I have proposed, as part of my memorandum, to cut VAT on petroleum products by 50%, from 16% to 8%.”

Explaining that the tax cut would ensure that a financing gap continues to exist, Kenyatta said several austerity measures would be implemented across different departments of the government.

“The cuts target less essential spending, such as hospitality, foreign and domestic travel, training and seminars, and similar categories,” said Kenyatta, who on Thursday announced the restructuring of the country’s police service designed to reduce duplication and waste.

While several Kenyans had argued that they were opposed to paying more taxes because of the rampant corruption in Kenyatta’s government, the president sought to assure that ‘the taxes will be used well.

“I have increased funding to the judiciary to speed up the completion of cases concerning corruption and economic crime,” assured Kenyatta.

“Further, I have increased the allocation to the Office of the Director of Public Prosecution…I expect these bodies to work together to help us restore our faith in public institutions.”

Parliament will hold a special sitting on the bill on Sept. 18 to reconsider the finance bill “together with the reservations of the president”, said a gazette notice signed by Justin Muturi, the speaker of the national assembly on Thursday.

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Australia’s New Treasurer to Get Tough on Financial Regulator

Australia’s new federal treasurer, Josh Frydenberg, criticized the conduct of the corporate regulator and promised it powers to speed up compensation for mistreated customers.

In a round of interviews with newspapers published on Saturday, Frydenberg said he would demand answers from the Australian Securities and Investments Commission (ASIC), over mounting troubles in the financial services sector.

“I’m appalled by the behavior that has been exposed through the banking royal commission,” Frydenberg told Guardian Australian.

Flexing its muscle amid the criticism, ASIC on Friday sued Australia and New Zealand Banking Group Ltd over a troubled A$2.5 billion (1.4 billion pounds) share placement.

Frydenberg, a former energy minister who became treasurer in last month’s major overhaul of the center-right government, told the Australian Finiancial Review Weekend the remediation changes were needed to compensate aggrieved customers.

“A new ASIC remediation power, as recommended by the ASIC capability review, and accepted in principle by the government, is one potential solution to ensure better and speedier consumer outcomes,” he added.

Frydenberg also said he would be willing to extend the Royal Commission inquiry, if needed. The Commission is due to present to government its interim report on Sept. 30th.

He also said company tax cuts for big business, a policy abandoned last month, would not be reconsidered, but the government would focus on a deregulation agenda that would streamline approvals process for big businesses.

“The big focus for me is going to be on the productivity agenda, and the productivity agenda involves cutting regulation which is really important to business,” he said.

Frydenberg told Guardian Australia the government plans a series of big spending initiatives, such as more cash for Catholic schools, healthcare and the national disability insurance scheme. He said, however, that the government still has a target of balancing the budget in 2019-2020.

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Power, Fuel Subsidies Gulping Nigeria’s Resources – US

Nigeria is pouring scarce resources required to fix critical sectors such as education and health care services into subsidies on petroleum products and electricity, the United States Agency for International Development has said.

The USAID Country Mission Director, Stephen Haykin, who represented the US Ambassador to Nigeria, Stuart Symington, said this at the 10th Anniversary. Colloquium of the Financial Nigeria Magazine in Abuja on Tuesday. Haykin said the inability of the country to recover the cost of electricity as well as the failure to recover the full cost of production from pump prices of petroleum products meant that critical resources were being diverted instead of being invested in critical needs in education and health care.

He stated, “One proximate cause of poor health, education and nutrition standards is low public expenditure. This, in turn, is related to very low public revenues due in fact to low tax rates and weak systems for tax collection. “Low social spending is also as a result of transfers from government to petroleum and power sectors, because fuel and electricity tariffs are below cost recovery levels.” Attributing poor social development to crises across the country, Haykin said, “Fiscal, trade and other micro-economic policies tend to act as breaks on private sector initiatives on economic growth. Weak governance due to inadequate capacities or lacks of checks and balances also slows social and economic development.” Also speaking at the event, a former Minister of Health, Muhammad Pate, said that about 40 per cent of under-five children in Nigeria were experiencing stunted growth.

Read Also;  South Africa: Apex Bank Head Warns Against Populist Policies

Pate, who is currently an adjunct professor of global health at the Duke University, in his keynote presentation noted that the Nigerian political elite were serving themselves rather than the people. He said, “After extracting almost a trillion dollars’ worth of oil since our national independence, we have a situation where poverty is going on. We have effectively squandered an opportunity to utilise the natural resources that we obtain purely by chance, not by hard work”.

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South Africa: Apex Bank Head Warns Against Populist Policies

“South Africa should avoid populist economic policies and prioritize strategies that lead to sustainable growth and job creation,” said the country’s Reserve Bank Governor Lesetja Kganyago.

“The central problem is avoiding the temptation to pursue economic policies that have short-term, populist benefits but long-term costs,” Kganyago wrote in an opinion piece in the Johannesburg-based Business Times.

He said that such decisions result in higher public or private debt to finance consumption, which is contributing to recent market contagion.

Africa’s most industrialised economy entered a recession in the second quarter, with the rand weakening to a two-year low.

The currency’s rapid depreciation reflects a perception that “South Africans are discussing policies that risk undermining the macro framework rather than inducing stronger economic growth and job creation,” according to Kganyago.

He said that “another task is to get more out of our public spending — ridding institutions of corruption and improving health and education outcomes.”

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Uber-Rival, Careem Expands Services into Sudan

Middle East ride-hailing firm Careem said on Sunday it had started a service in Sudan, one of few international companies to enter the country since U.S. economic sanctions were lifted last year.

Sudan is grappling with an economic crisis as a foreign currency shortage and an increasingly expensive black market for dollars weakened its ability to import and made prices soar.

Careem, which said its services were now available in Sudan’s capital Khartoum, has hired 10 Sudanese employees and signed up hundreds of drivers to its app to launch operations.

The company expects to have as many as 30 employees in Sudan and be present in at least one other city in the northeast African country by the end of the year.

“My goal and aim is to cover as many (cities) as possible in the next one or two years,” Careem’s Managing Director for Emerging Markets Ibrahim Manna told Reuters by phone.

Sudan has the potential to be one of Careem’s biggest markets in terms of number of trips taken due to the population size and demand for transportation services, he added.

Careem will compete against several local ride-hailing apps, such as Tirhal, but not Uber Technologies itself, which does not operate in the country.

Dubai-based Careem is Uber’s main Middle East rival, competing in most of the region’s major cities including Cairo, Dubai, and Riyadh. Last year it became the first ride-hailing firm to operate on the Israeli-occupied West Bank.

Careem plans to reinvest revenue earned in Sudan back into the country over the next two to three years as its grows its business there, Manna said.

Remitting cash from Sudan can be difficult due to the country’s hard currency shortage.

International banks remain cautious about doing business with Sudan which remains on the United States list of state sponsors of terrorism – alongside Iran, Syria, and North Korea – despite the U.S. lifting economic sanctions.

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China Extends a to Botswana Loan, Cancel Debt

China has agreed to extend a loan to Botswana for rail and road infrastructure as well as writing off some debt, Botswana’s President Mokgweetsi Masisi said on Saturday.

Speaking at the airport on his return from this week’s China-Africa forum in Beijing, Masisi said Botswana had made a pitch to China and “I am happy to report that, judging from what President Xi Jinping told me, we were successful”.

In addition to the loan and a debt cancellation of 80 million pula, China has also offered a 340 million pula ($31 million) grant, he said.

“We got a little bit more than just the loan,” he told reporters.

He did not disclose the size of the loan, but last week the ministry of finance said Botswana was seeking a 12 billion pula ($1.09 billion) loan for transport infrastructure.

Botswana is the world’s leading producer of diamonds by value. Chinese companies, mostly state owned, are largely into construction in Botswana such as dams and roads.

The bulk of the loan is expected to fund the Mosetse-Kazungula railway line project, which will link the central part of Botswana to the tourism hub in the northwest.

The railway line will also promote regional trade as it will connect Botswana to Zambia via the Kazungula Bridge, currently under construction.

China’s Xi offered another $60 billion in financing for Africa on Monday and wrote off some debt for poorer African nations, while warning against funds going toward “vanity projects”.

Speaking at the opening of the forum, Xi said the financing would include $15 billion in aid, interest-free loans and concessional loans, a $20 billion credit line, a $10 billion special fund for China-Africa development, and a $5 billion special fund for imports from Africa.

Equatorial Guinea to Ban Oil Services Companies Over Local Jobs

Oil and gas services firms Schlumberger, Subsea 7 and FMC face being banned from working in Equatorial Guinea if they do not commit by the end of this month to create more jobs for locals, an oil ministry source said on Friday.

The move is part of crackdown by the African country to enforce local content laws that have been in place since 2014 and which has already grounded CHC Helicopter.

Subsea 7 said it is aware of the increased focus on local content. “We continue to work closely with authorities to ensure we meet all applicable local regulations,” a Subsea 7 spokeswoman said.

Schlumberger and FMC did not respond to phone calls or emails for comment.

In July, the OPEC member and one of Africa’s top oil producers ordered petroleum operators, including Exxon Mobil, to cancel contracts they held with Canadian-based CHC Helicopter for flouting local content laws meant to create jobs.

The source confirmed that CHC Helicopter will not be working in the country from next year, ending a working relationship dating back more than three decades.

“The ministry is aggressively looking at the second phase, with three additional companies that will have the same fate if they don’t get their act together in one month, by the end of September,” said the source, who requested anonymity because they were not authorized to speak to the media.

“Schlumberger, FMC and Subsea 7 are really in the last stage of being asked by the ministry for the operators to cancel their contracts and tender new ones for new companies to do the work, especially because they are not complying with local content.”

Equatorial Guinea’s national content regulations of 2014 state that agreements must make provisions for capacity building and give preference to local companies when awarding service contracts in the African country.

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