Archive | January, 2015

Nigeria Loses Over 10 Billion Dollars Annually in Parking Revenue

29 Jan

David O. Kuranga, Ph.D. The author is the Managing Director and Principal of Kuranga and Associates, a full-service investment, political and economic risk consultancy, and asset management firm that specializes in Africa. He is also the author of The Power of Interdependence with Palgrave Macmillan Press.

Currently, the Nigerian government is running low on revenue due to the steep decline in oil prices to less than 50 dollars a barrel. This has led many analysts to question how the national and state governments are going to fund their development when 90% of their revenue is derived from oil exports. Many have called for a diversification of exports, which is indeed a major issue, since 70% of Nigeria’s export revenue comes from crude oil. Looking beyond a diversification of exports, since 90% of government revenue still comes from oil revenue, the real issue is that public officials and lawmakers throughout the country have failed to develop alternate ways the state can increase revenue and diversify its funding structure so that they rely far less on oil revenue. Even the ministry of finance with all their claims of efforts was only able to increase tax revenue by half a billion dollars, (see the minister of finance brag about a paltry increase of half a billion dollars in taxes: https://www.youtube.com/watch?v=UeJLf9XwPec) There is a measure floating among state lawmakers to double VAT taxes, but this measure will do little more than put a tiny band aid on the gushing wound caused by declining oil revenue.

One key overlooked area is parking revenue. Throughout the entire developed world, governments at all levels generate substantial amounts of rents and fees from charging motorist fees to park on public streets. Those who travel abroad know, that meters are placed almost everywhere to collect parking fees, even in towns as small as 7,000 residents. Today in a city as large as Lagos, it is mind boggling that motorists are still able to park for free on some of the most prominent well traversed public streets on the planet. Motorists are the primary users of the road, and are known in Nigeria to deliberately ram and speed into pedestrians with no regard to the right of pedestrians to traverse the streets alongside them. Accordingly they should have no issue with paying parking fees to maintain those same streets and help sustain the state that helps to regulate them. By not charging motorists appropriately Nigeria’s states and local governments are robbing themselves of billions of added revenue that they could generate instead of relying primarily on handouts from the Federal government.

To look at the numbers closely, in 2009 Lagos State had over 1 million registered vehicles. Every year the state was registering over 200,000 more vehicles. Today there is estimated to be over 2 million vehicles registered in the State of Lagos alone. That amounts to 1 car for every 10 people in the state. This number does not include the hundreds of thousands of vehicles on Lagos State roads that are registered out of state. If half of these vehicles paid 300 naira to park their vehicle every day for 1 hour only, the State of Lagos would generate over half a billion dollars a year. In reality the density of street parking usage throughout Lagos would likely be far greater than this estimate. In fact it could reach as much as 4 times this level of usage for Lagos State alone. In addition to Lagos State, in the 36 states, the FCT, and in each of the 774 local government areas there are no less than 3 towns and cities where paid parking meters could be implemented immediately. By not doing this, local and state governments across the federation are sitting on their hands like little babies waiting for handouts from the federal government, and robbing themselves of no less than 10 billion dollars annually.

Given the current propensity of micro-corruption among underpaid civil servants throughout Nigeria, some of whom go months without receiving their due salary, there are many who question the viability of trusting these same civil servants to reliably collect parking fees and remit them accordingly. Even more daunting a question is if civil servants actually do remit the parking fees they collect, will the internal revenue collection officials across the federation honestly report how much revenue they are collecting from the meters within their territory? If you ask the average Nigerian, the obvious answer is no! With good reason, nobody has any confidence in public officials to handle this process professionally and honestly, and in a manner that would benefit everyone. Fortunately, technology has a solution for all of this. Parking meters in much of the world are outfitted with auditing and tracking systems that can be independently verified, tracked, and reported. It is virtually impossible for any of the meter maids to get away with not remitting funds collected from meters on their route. Further, the auditing technology also allows for third-parties to independently verify and track usage. By taking samples on random dates analysts can reliably project annual revenue in entire towns and cities to within a couple percentage points utilizing basic statistical models. Accordingly, it is actually very difficult for even “the oga at da top” to manipulate revenues that would benefit them personally beyond basic pocket change.

Moving forward, local and state governments are going to have to implement revenue diversification measures like these immediately. It is actually quite pathetic that even some of the largest cities and states in the federation are yet to do so, but perhaps the current budget pinch is a perfect catalyst to get public officials to start doing their jobs.

Kuranga and Associates Limited is an investment management advisory firm and an asset manager with a principle practice area of Africa. To learn more about Kuranga and Associates go to www.kaglobal.net. © Copyright 2014 David Kuranga. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

David O. Kuranga; Ph.D.

Managing Director
Kuranga & Associates Limited
Phone: 212.363.0936
david.kuranga@kaglobal.net
https://kurangaandassociates.wordpress.com
http://us.macmillan.com/thepowerofinterdependence/DavidOladipupoKuranga

Nigeria: Neglect of Financial Services Dooms Ministry of Trade to Failure

28 Jan

David O. Kuranga, Ph.D. The author is the Managing Director and Principal of Kuranga and Associates, a full-service investment, political and economic risk consultancy, and asset management firm that specializes in Africa. He is also the author of The Power of Interdependence with Palgrave Macmillan Press.

The Ministry of Trade and Investment along with the Nigerian Export Promotion Council recently announced 13 non-oil export products that Nigeria should develop to pull the nation out of its reliance on the exportation of crude oil which amounts for over 70% of its exports. Crude oil has tumbled to record lows due to decline in global demand and a massive increase in oil-production from fracking in North America. The dynamic is causing Nigeria’s foreign reserves to decline rapidly, putting increased strain on the Naira and Nigerian capital markets. To diversify Nigeria has sought to promote its mining potential as well as other commodities in agriculture and small-scale manufactured goods and downstream petroleum products as opposed to exporting raw crude oil. (SEE: http://sunnewsonline.com/new/?p=100820) Noticeably missing from all of this was the service sector, in particular financial services. Compared to its size, Nigeria is far from being a leader in Africa with respect to financial services and asset management. Typically when institutional and individual investors want to invest capital with Africa-focused asset management groups they look toward western-based firms or companies registered in South Africa or Mauritius. Despite this, increasing financial service asset managers in Nigeria by a small number can single handedly make up for the loss of foreign exchange the country currently has due to collapsing oil prices, while at the same time invest in agriculture, mining, small-scale industry, downstream oil production, and SMEs. By ignoring the massive deficit Nigeria has in financial services as the single most important export product that Nigeria needs right now, the Ministry of Trade, and the Nigerian Export Promotion Council are doomed to fail in their effort to quickly shift Nigeria away from its reliance on crude oil exports.

In addition, Nigerian development finance institutions (DFIs), that work in concert with the Ministry of Trade and Investment, are all ignoring the paramount importance of promoting financial services as an major export product. The Nigerian-Export Import Bank, the Bank of Industry, the agriculture and housing government backed DFI lenders, as well as the sovereign wealth fund all ignore financial service providers and make no attempt whatsoever to promote their utility as vehicles for small-scale and institutional foreign-direct-investors to access privately held investment opportunities in Nigeria. By so doing, Nigeria remains relatively closed-off to small-scale global capital investors who are hungry for high-growth investments in frontier economies but are not able to source capital into private investments without a financial service provider. Both the Ministry of Trade, the DFIs in Nigeria have the capacity to much more to shift Nigeria from its reliance on oil exports, if they galvanized their efforts and made a strategic partnership with financial services exporters to promote and establish more firms in Nigeria. Many of the few financial service exporters operating in Nigeria are actually Mauritius registered companies and not Nigerian. So long as these obstacles remain, Nigerian industry will remain starved of global capital investors that would be open to investing in them in there were enough financial service providers exporting their services to assist them in sourcing capital investment. The lack of understanding among DFI’s and current administrators in Ministry of Trade and Finance to this dynamic is staggering.

Moving forward, as Nigeria seeks to quickly rebound from its slumping economic performance since the collapse of oil prices, bolder more insightful steps are required to build Nigerian financial service and investment management exporters in order to promote and facilitate global capital investment in Nigerian industry, agriculture, mining, and SMEs. While the DFIs and the Ministry of Trade are fully equipped high-performance vehicles, their current drivers seem satisfied with cruising in first gear even in the face of worsening economic conditions. Their continued neglect and failure to recognize the paramount importance of financial service exporters in attracting FDI from global capital investors may leave them spinning their wheels while their counterparts in other parts of the continent and the rest of the developing world are moving their economies forward and diversifying their export portfolios.

Kuranga and Associates Limited is an investment management advisory firm and an asset manager with a principle practice area of Africa. To learn more about Kuranga and Associates go to www.kaglobal.net. © Copyright 2014 David Kuranga. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

David O. Kuranga; Ph.D.

Managing Director
Kuranga & Associates Limited
Phone: 212.363.0936
david.kuranga@kaglobal.net
https://kurangaandassociates.wordpress.com
http://us.macmillan.com/thepowerofinterdependence/DavidOladipupoKuranga

United States Continues to Undermine Nigerian Security

15 Jan

David O. Kuranga, Ph.D. The author is the Managing Director and Principal of Kuranga and Associates, a full-service investment, political and economic risk consultancy, and asset management firm that specializes in Africa. He is also the author of The Power of Interdependence with Palgrave Macmillan Press.

In the wake of the heightened attacks of Boko Haram in Nigeria, much blame has been cast upon the Nigerian armed forces and the Nigerian government in their handling of the security situation in the northeastern region of Nigeria. Ironically very little blame has been cast upon the United States and their role in undermining security in Nigeria:
1. (http://www.jpost.com/Israel-News/Report-US-vetoed-Israeli-sale-of-attack-helicopters-to-Nigeria-388985)
2. (http://www.punchng.com/news/group-faults-us-refusal-to-sell-arms-to-nigeria/)
3. (http://allafrica.com/stories/201501281427.html).
The Nigerian security forces have sought advanced weapons systems and particularly attack helicopters in order to patrol the northeastern region and rapidly respond to assaults, similar to the ones that were launched on Baga recently. In their quest for the helicopters, the Nigerian government has been blocked by the United States repeatedly. The situation became so dire that the government resorted to trying to procure the helicopters on the black market, which was blocked by South African agents, reportedly with a tip from US intelligence, who has been intent on blocking all avenues for the Nigerian government to arm itself with advanced weapons and helicopters in order to patrol and safeguard its northern territory. This is the same tactic that the United States used in Mali, when the US blocked international intervention there for months until France unilaterally intervened when Islamic militants made a move on the Malian capital, Bamako. It is clear that undermining African security is a core agenda of the United States, until African states relent and allow the United States to establish military bases on African soil. Attempts to establish bases are underway in Ebola stricken Liberia. Any attempts by Africans to individually or collectively improve their security has been met by sharp resistance from the United States. The consequences of this diabolical agenda could very well be catastrophic in terms of human lives lost. While Amnesty International, the UK Foreign Secretary, and others concerned are understandably casting their gaze upon Nigerian authorities, more attention needs to be placed on the US agenda to undermine Nigerian and African security.

Kuranga and Associates Limited is an investment management advisory firm and an asset manager with a principle practice area of Africa. To learn more about Kuranga and Associates go to www.kaglobal.net. © Copyright 2014 David Kuranga. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

David O. Kuranga; Ph.D.

Managing Director
Kuranga & Associates Limited
Phone: 212.363.0936
david.kuranga@kaglobal.net
https://kurangaandassociates.wordpress.com
http://us.macmillan.com/thepowerofinterdependence/DavidOladipupoKuranga

New Serviced Office Incubator in Ikeja GRA!

13 Jan

Lagos-skyline

Kuranga and Associates is opening our new serviced office incubator in Ikeja GRA. The facility will feature 150 executive office suites, and 150 workstations. The Executive offices can hold 2-4 workers, while work stations typically accommodate 1 person. All members will have access to the shared conference rooms, reception, and other common elements in the building. Spaces can be customized with any number of executive office suites and workstations desired. Members will also be able to subscribe to our virtual office programme and utilize the facility, its amenities and services.

All incubator members will have access to our locations in London and New York, and will be able to schedule and hold meetings, receive mail, and can list all three addresses in their company’s profile at no extra charge. Members will also receive a suite of business support services including legal and accounting services to improve their business structure, make them more attractive to investment and secure financing for growth and expansion. The Starting price for each workstation is N35,000 a month, and starting price for an executive office suite is N75,000 a month.

Prospective members that desire parking spaces should also indicate that in their pre-lease application so
that we can accommodate and allocate according to demand. There are no additional fees or service charges.

Any companies, start-ups, individual professionals, interested in applying are welcomed to sign-up in advance to
guarantee their spot when the space becomes available, also to enable us to customize the space as much as possible to meet specified needs and wishes. All applicants must have proof of funds for their first year or be able to secure a guarantee from their bank.

For serious inquiries about spaces, please call or email;

kurangahouse@gmail.com

Kuranga and Associates Limited is an investment management advisory firm and an asset manager with a principle practice area of Africa. To learn more about Kuranga and Associates go to www.kaglobal.net. © Copyright 2014 David Kuranga. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

David O. Kuranga; Ph.D. Managing Director
Kuranga & Associates Limited
Phone: 212.363.0936
david.kuranga@kaglobal.net
https://kurangaandassociates.wordpress.com
http://us.macmillan.com/thepowerofinterdependence/DavidOladipupoKuranga

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