Why North needs more banks - Jani Posted by: administrator (Jan-30-2009)
Ibrahim PDF Print E-mail
Written by Abubakar K. Mommoh
Tuesday, 27 January 2009
You organized the first Northern Nigeria Economic summit last year, what were the lessons you learnt from it?The Northern Nigeria Economic summit that was held in October was very successful, well attended and illuminating. As we promised before the summit it was not going to be a talk shop, we were startled by the deficiencies we in Northern discovered that in education a lot needs to be done, in business most of our people have very limited access to finance. These are key issues that we need to address if we are to move forward economically.
We also discovered a lot of gaps especially in infrastructural development. Some of the things that could have been done jointly by some states in the region are duplicated albeit poorly by individual state, there is need to introduce common services in some areas of Northern Nigeria, these are the issues that will come from our draft report. When the final report is submitted and debated these are the major areas of focus, we believe that our governors who have executive power and other stakeholders in northern Nigeria will support our work to improve development in the region.
You mentioned that your conference would be different from others before it, what steps are you taking to ensure that the decisions taken would be implemented?
I will take one key area, access to finance, what we have decided to do even before this report would be debated and discussed by other stakeholders is to, look at the setting up of a global micro finance bank that will be spread over the region so that rural dwellers will be able to have access to finance to assist them to get out of poverty. The spin off of this micro finance institution will be poverty alleviation, it will lead to employment generation in northern Nigeria; it is also going to help in capacity building, it will also curb rural -urban migration so that people in the rural areas will continue to live a purposeful life when they have access to capital. The micro finance bank will also help the private sector development by focusing on small and medium enterprises.
This is one major step and we are going to take, we will take this campaign very seriously. We are going to ask Nigerians both northerners and non northerners to support this effort by investing in it so that people living in the rural areas will be able to have access to capital.
Who are going to contribute to the capital that is needed to set up this micro finance bank?
It is going to be private sector drive; that is why we are calling on high net worth individuals in the region and other Nigerians to invest that will give us a robust institution that is well capitalized to meet the needs of our rural dwellers. We donít want to have individuals dominating it, in fact we are thinking of limiting it to maximum of 1% ownership per person.
Many of the political leaders in the North, especially the governors were not at the conference, we do not know why but never-the-less, have you made any follow up with the governors?
I donít want to say that the governors did not attend, because many deputy governors, commissioners from different states of the federation were there. Some governors sent their directors from the ministries. All the chambers of commerce in the North were there and some of them were supported by their governments. Like I said before it was not a political conference but an economic conference, the aim was to harness all the information, turn it into a strategy document. The fact is that we are in touch with the chairman of Northern Governors Forum; they are waiting for us to present the report for implementation. We are carrying them along and they have been supporting us. We are working with the Governors forum.
Education featured prominently during the conference, it was suggested that for North to catch up with the South, it must develop human capital. Will your organization be looking into this direction?
I want to state it clearly that there is nothing we can achieve economically without addressing education. In our communiqué which we issued ,we gave a very specific figure that the northern governments must allocate not less than 40% of their annual budgets to education because the educational imbalance between North and South is so wide that urgent action must be taken. If you will recall the late Sardauna of Sokoto, the premier of northern Nigeria while addressing the House of Chiefs in May 1961 said that for rapid development of the North education must be taken seriously, that they should build schools employ more teachers and improve their curriculum.
Therefore, education is very fundamental to the development of the North and we are addressing it squarely and seriously, we hope that all the implementing agencies will support the recommendations of the summit. Based on our initial report after the conference, the Austrian Embassy said it was going to focus on Northern Nigeria in 2009. We are already getting support from our developmental partners.
We have New Nigeria Development Corporation, (NNDC) in Kaduna with its structures , it is well experienced in developmental issues in the region? Why are you not collaborating with it for the development of the North?
NNDC is one of the major institutions that participated in the summit. We have also asked the Northern governors to fund it properly to be able to achieve the laudable objectives. We are working with them and we are also exchanging ideas in areas of investment etc. But you must understand that NNDC is a corporate body and should be able to come up with its own strategies for the development of the region. We are optimistic that with this joint effort and especially with the strategic document we are working on, NNDC will benefit.
How and when did you get into oil and gas business. What were you doing before then?
I have always been in oil and gas business. I got scholarship as BP scholar to study engineering in United Kingdom. At a point I decided to harness the expertise, the experiences I gathered and see how we can duplicate it and grow some other business rather than working with multinational companies.
That was what energized me to go and set up business of my own.
I worked with BP and later AP when it was nationalised. I also worked with Unipetrol and NNPC under a joint venture. After that I became Managing Director of Nigeria Airways and later went to start my own business, LUBCON. It was set up in 1991 as a small business which has grown as a business that is now all over West Africa. LUBCON is into oil and gas; it started primarily producing lubricant, lubricating oil for the industry, becoming indigenous oil and gas to be ISO certified. This is the highest point.
Since then we have gone into distribution of petroleum products; we have filling stations, depots in the country and we are also into aviation, we have aviation depot in Ilorin fueling aircraft, it is the only depot in Ilorin. We have just completed another one in Minna International Airport and are starting the Abuja facility this year. We are also in joint user hydrant in Lagos with a group of companies; we hope that by 2010 the joint user hydrant will be ready in Lagos to begin fueling in Lagos.
User hydrant is to provide jet fuel for aero planes but in Lagos it is done under a joint system where 10 companies came together, you pull all the products together and draw out of it, it is not by trucking you must use it by pipe line that is why it is a joint user, it is hydrant system.
These projects you mentioned must take a lot of capital, how do you fund it?
We are working with some of the banks. There are banks that believe in our abilities and have been supportive, very encouraging , so also are our shareholders and very soon we will be going to the Nigerian Stock Exchange to float our shares, so that it will open for many Nigerians to participate and be part of our success story.
You said earlier that LUBCON is in many West Africa countries, which are these countries
We are present in Liberia, Niger Republic, Burkina Faso and Benin Republic. We have a major lubricant plant in Ghana, we are the only independent international company, the other plant is owned by about 7 major international companies. From Ghana we produce and market to other West African countries, it is a rewarding experience.
What have been the challenges that you encountered?
Working in Nigeria is a herculean task because at every point you have hurdles to clear.
First, you find out there is no encouragement; in fact, people are more likely to wish that you fail in any business; this is a very negative attitude.
Government does not encourage its indigenous entrepreneurs whereas in Europe they celebrate theirs. Here in Nigeria people are after you, they are suspicious. Entrepreneurship can not grow if the system does not give you the encouragement, in other countries there are people who will come to give you kind words. In Nigeria it is rare and far between, encouragement is key and unless you cross the threshold people are not interested.
What has happened is that we remain resolute to quality we donít compromise; we guard quality jealously even when it means us losing some market shares. Because of our insistence on quality over the years, we have been able to surmount obstacles and as a result the product has now become a brand. People in any situation must remain quality conscious, donít cut corners it is difficult lot of people do it but at the end of the day it becomes an albatross. These are the major challenges; of course, other challenges are there for every body, we run on generators we have 2000KVA generators on our facilities.
What about the bankís interest rate?
Interest rate in Nigerian banks is a major disincentive. Banks in Nigeria have not been too supportive of the real sector, the manufacturing sector because of the fund. I am not making excuses for them because it truly affects our business. If you have to pay that high interest rate there is no way that you can break even and remain competitive. That means you live on narrow margin, which means that growth is incapacitated. We observe that Nigeria banks are more likely to fund businesses that are short term trading in nature or speculative than to give to real sector that takes time to mature.
How do you see LUBCON in 10 years?
In 10 years God willing LUBCON should be a multinational company and be competing with the majors and also begin exploration activities even in countries outside Nigeria. With the support of Nigerians and government because government must promote her indigenous brands that is the only way it can work. Therefore we call on government to support Nigerian companies both operating within and those that decide to venture out.