IOCs should work with government to check insecurity, says Membere-Otaji
• Sees restructuring as panacea for economic growth
Dr. Emi Membere-Otaji, the President, Port Harcourt Chamber of Commerce, Industry, Mines and Agriculture (PHCCIMA). In this online interview with Clara Nwachukwu, he discusses the need for government to offer incentives to investors in the Niger Delta, as a means of stemming the insecurity and unemployment situation in the oil-rich region. Excerpts:
Tell us who you are?
My name is Dr. Emi Membere-Otaji. I am the President of the Port Harcourt Chamber of Commerce, and also the Managing Director/ CEO of Elshcon group of companies.
Economic recession calls for re-strategising of businesses and portfolios, and we’ve been told that the downturn is thinning out; do you think businesses are actually faring better?
Yes and No. Obviously, some of the issues are improving and others are still in the downturn. Some of the things improving include access to foreign exchange. This is getting better, even though other critical issues, in terms of infrastructure, power (in particular), security and all that, that affect business are still there.
Unfortunately, in Nigeria whatever goes up never seem to come down, because, all the improvements in foreign exchange and the strength of the naira, doesn’t seem to significantly affect the price of goods and service in the market. However, I believe that things are gradually and slowly getting belter. There are stints of improvement and no longer a free fall.
What has been the experience of your members in tackling recession challenges?
Before even Nigeria went into economic recession, we in the organised private sector were aware that the economy had been on consistent decline. As a chamber, and a group of businesses, we’ve tried to tell ourselves that we have to think outside the box.
As you know, Nigeria, especially Port Harcourt, is almost dependent on oil and gas. Every business directly or indirectly is impacted by the oil and gas business. Presently, there is a shortfall in global oil price; hence there are fewer contracts, fewer opportunities in the oil and gas industry. So naturally our members, among others, are feeling a lot of pinch.
But as the government has said, we must diversify. Even before the government made the pronouncement, every right thinking business should know it was time to adjust; not just adjust, but adjust to glaring realties. The reality is obviously diversifying to alternatives to oil and gas. In Rivers State, we have our own natural alternative: Agriculture, agro-processing, and other services beyond oil and gas. This is something that is very key.
Even in some areas which might not apply so much to us in Port Harcourt, but to places like the northern region, there is solid minerals, which can provide the needed alternatives. There are alternatives that we have lived with for ages untapped which we take for granted. In fact, in parts of Northern Nigeria, I am aware that for generations, they had been doing artisanal mining of solid minerals.
Here (Port Harcourt), we now have to look at alternatives. It is quite unfortunate that the Oil boom days ruined us and made us lazy. If we had explored other areas, these are things that could have gone pare-passé with the oil business; because, as they say, you don’t put all your eggs in one basket.
As a country, and as individual businesses, we did put all our eggs in one basket by concentrating only in the oil and neglecting other keysectors. Hence, when the basket started shaking, naturally, things happened that affected everyone. What we are saying is that before the country actually went into recession, the economy went down, and we all felt the heat, and when eventually recession crept in, it jolted the government, and some of the business operators, to now think outside the box. In the course of thinking outside the box, we now begin to do things that we would not normally have looked at like agriculture and other viable areas.
Before, up until say 10, 20 years ago, a farmer is described as a poor man. Today, you see Ph.D. holders, you see people in diverse areas of endeavor go into farming. I belong to a group called PETAN, (Petroleum Technological Association of Nigeria). Most of them, beyond their oil and gas service, have a subsidiary agriculture-based business – a farm or agro-based business. So it tells you the extent people are going to think outside the box. The richest man in Africa, Dangote, runs agro-based business. You can see it (agriculture) is no more for the poor alone. The toga of saying that farming is for thepoor is gone for good. For instance, People are now looking inward and appreciating homemade shirts from Aba, and these shirts are so good that you may not spot the difference between what is designed here and what we buy on 5th Avenue, New York.
What I am saying is that the recession and scarcity of dollars have made us think outside the box, and this applies to several other businesses. Instead of going to Shell, Chevron, Agip for contracts every day, you look for glaring alternatives because these companies can no longer produce as much as they used to, coupled with the fact that the dollar price has fallen. The opportunities are not so much. You are not going to stay in your home and tell your wife you can’t feed or your children that they can’t go to school.
We are happy people are beginning to do things differently. Nigeria is so blessed. I can tell you Nigeria is such a good place for investment with a large population of over 170 million people, large arable land, stretch of coastal lines and intelligent people. If everybody is farming something, even by their backyard or any space, nobody will go hungry. Nigeria soil is quite remarkable, if you just drop something it grows. You don’t need to come and tend it, before you know what is happening, you have something for your own food. So the money your wife is supposed to go to market with is reduced.
People are basically beginning to do other things outside oil and gas, not just in obedience to government’s economic diversification mantra, but because that is the reality and alternative, because you have nothing else. Even if government does not make pronouncement about it, we are left with no choice.
Businesses in the Niger Delta, especially Rivers State, seem to be relocating to Lagos; investors are moving out in trickles. What do you think is responsible for this, and what possible solutions do you see will stem the tide?
Very unfortunate, this had been happening for a while. In fact, the key reason deductible had been the issue of security. Incidentally, the key security challenges that started in the Niger Delta, with of course Rivers State as the capital of the Niger Delta, is now a national problem. This of course, is not including the Boko Haram issue in the North.
General insecurity has become a national problem. In fact, the National Bureau of Statistics 2016 report on crime incidents was quitestartling. They disclosed that the first, second and third states where you have the most crime are actually not even in the Niger Delta. So, it is unfortunate when people nurse it in their sub-consciousness that the names ‘Rivers State’ ‘Port Harcourt,’ ‘Niger Delta’ portend ‘Insecurity.’
Sadly, this perception is affecting business and a lot of businesses are relocating to so-called safe havens. For those of us who also go out to meet investors and partners, especially foreign partners, they insist we meet in Lagos or Abuja, and we had to face the pain of flying in. In fact, most of us have to keep offices in Lagos or Abuja, especially Lagos, and do back-to-back, shuttling; this is expedient if we still want to keep our business.
So that is a problem. The insecurity issue which is borne out of perception is a key national problem and is not exclusive to the Niger Delta alone.
The rumours and sensational headlines in the media concerning insecurity are threatening investment foundations and business interest in the Niger Delta and Rivers State.
Given the security situation in the state, how can multinationals and other big businesses support government’s effort to make the region a safe haven for businesses?
First and foremost, what was the genesis of this insecurity issues in the Niger Delta. You need to look at the genesis, fundamental causes. How did it start? It started with oil and gas. People’s land, oil fields, were taken and allocated out, and there was not much development. The military governments that came after the first coup set up a system where the powers and control lay in the centre. It means that they just take your land, if there is oil they cede it out, without consideration that there are development issues to address. The wealth is taken out to the centre with no commensurate development sent back.
The oil companies also didn’t help matters, because the youths and some vocal adults were appeased with some sit-at-home pay. They will say: “sit in your house and we will pay you money,” or “we will give cleaning contracts,” and all sorts of things, as against really empowering the people to also compete in the national and global sphere. So, a time came when the young ones started carrying arms to protest. You remember how it started. They were kidnapping oil workers. And then they had to damage oil equipment, oil installations and all that.
This was the genesis of the insecurity problem; and from there, one thing led to the other and it became Niger Delta problem, and now metamorphosed to a national problem. Now, with that, a lot of oil companies, businesses relocated from the Niger Delta. Unfortunately, even the oil companies that I will say contributed to the genesis of this insecurity, following the wrong handling of the problem, also relocated. Even as they relocated the oil servicing companies followed. It is like ant and sugar. If you put the sugar, that is, the oil producing company in a place, the oil service companies will just follow them like the ant.
Basically, that is how the incidence of relocation from the Niger Delta now gathered momentum. Instead of staying there to solve the issue that was ab-initio handled wrongly by them, they acted like ostrich, you remember the story; they buried their head in the sand, and moved out from the Niger Delta.
Let us take a case study from Iraq and Libya, two major oil countries; when they were at war, the managing directors of the international oil producing companies managing exploration and production at the time lived there (in the countries). They never ran away. If their MDs were able to live there, why wouldn’t it be the same here?
A popular Chinese saying goes thus: if you give fish to a person, you feed him for a day. But if you teach him how to fish, you have succeeded in feeding him for life, including all his dependents.
Assuming the Niger Delta is a country of its own, where would the MDs of Shell, Chevron, Total or ExxonMobil reside? They will stay in the Niger Delta, because the oil is here. That is the point we are making. So their departure to the so- called safe haven was uncalled-for. Why, because if they work in tandem with the various governments, the security problem can be nipped in the bud. It is easier for the MD of any of these oil majors to see the President of Nigeria, the Inspector General of Police, the governor or chairman, than for an ordinary person. By staying in the area and working in tandem with the governments, they can help salvage the situation. Secondly, there is a need for political will to address issues of insecurity. But the first thing is to stay.
You’ve heard of the Somali pirates. Few years ago, the horn ofAfrican, a shipping lane through Somalia was held hostage by these pirates, ships passing through there faced various degree ofcriminality. But you know what, if they don’t pass there, they risk taken a longer route and spending weeks, before they can go from Europe to Asia.
Stakeholders in the global shipping business said “no, we can’t take the long route when there is a shorter route, we must address this issue; demolish these pirates and make the waterway safe.” There was a strong show of political will to end the criminality, and today, that area is relatively safe; not because the Somali pirates have all died, but because whatever it is that was the issue, they have got a solution to it. Every sickness has a cure or treatment to it. Our take is that they should go back to the drawing board. That is why I am very happy with what the Acting President has said that the oil companies should relocate their administrative headquarters to where they are producing the oil.
Do you think there are enough government incentives for businesses to thrive to attract investors to remain and weather the storm?
As I said, it has to do with the political will. The first step isthe political will, being what the Acting President, Prof Yemi Osinbajo, has said, that oil companies should relocate. Having done that, there has to be some incentives. We need to put in some incentives, so as to get the businesses back.I was looking at statistics on first quarter new investment funds into Nigeria. Out of over $900 million; over $800 million aggregated went to Lagos. The other parts of the country shared the remaining. That shouldn‘t be, because this concentration is going to cause problem for Lagos later. I think there should be incentives, so that you can ensure equitable distribution. For instance, there are solid minerals in the North. The government should give incentives to companies that are residing and doing business in those areas. Look at the agricultural belt – Benue among others, all those areas are potent, government should give incentives to companies operating and also residing there, to stimulate those economies and create multiple strings of jobs.
Similarly, it should apply to the areas with oil companies, because some persons are investing in that area despite the challenges, they deserve incentives to cushion whatever extra cost they are getting resulting from such challenges. Only a few weeks ago, as part of the Rivers at 50 celebrations, we had a Corporate Day event, where we invited businesses to chart a way forward for a progressive Rivers State. Some of the companies present shared their challenges and achievements and some the success stories are amazing amidst the sensationalised insecurity in the media. A lot of companies are increasing capacities; new ones are springing up and expressing interest to invest. Look at Indorama. From the Eleme Petrochemicals, they expanded the petrochemicals plant and went into fertilizer plant. Look at Saipem Contracting Nigeria at Iwofe, Port Harcourt here. They have a nearly 1 million square meters of fabrication yard, one of the biggest in Africa. And they are still investing.You need to give them incentives. Look at the Egina oil field development. Zabazaba, OPL 245 by Agip is coming, and other companies like that. There are many other fabrication yards employing thousands of people. These companies that have invested in the Niger Delta, where the oil and gas is coming from should be given priority and incentives for keeping faith in spite of the odds. We’ve made our point known to the various agencies, including the NNPC, the Nigerian Content and Development Board, stating that people who are investingin the Niger Delta are indirectly solving the insecurity issues through employment and invigorating those economies.
Some will say, “oh there are security issues.” But it is like the egg and the hen, which one comes first. You say oh let the insecurity be tamed first before investment can come. If you don’t do that, the security situation would be worsening. But if you invest here, these boys that are perpetuating criminality and militancy will be gainfully employed. In fact, some of them would be the contractors and this would help solve the insecurity issues.
Port Harcourt was founded in 1912 as a Port city. And I know Port Harcourt as a nice place, a Garden City. Before oil became what it is today, the city was a shipping hub. Today, most of the importers and exporters in the South East and South South do their business through Lagos. So, why do you have Port Harcourt? This is the reason why we must encourage and help develop the city to what it used to be as envisaged by the founding fathers. How? First, give incentives to the businesses that are going into shipping, so you make sure that shipping thrives. Look at Singapore, that small island country. Singapore has become a world class economy country, without any mineral resources. They don’t have the population we have, they don’t have the advantages we have in human and natural resources. But they rely heavily on shipping, because through the shipping lane through their territorial waters, they have sustained their economy. Compare us to them; they harp on incentives. We complain about insecurity and flee the region.
There are things in our purview; things like port charges and pilotage charges government can work on to help kindle the economy and create employment s for youth while generating soft landing for investing companies. For example, we expect as a measure to save the Eastern ports, government should save shipping companies that are doing their shipping operations in the Eastern ports. They should have their port charges reduced by the Nigerian Ports of Authority because of infrastructural issues, caused by long years of neglect; or institute a differential rate to make up for the security challenges faced by the companies so that they don’t close shop and leave. I am talking about Port Harcourt, Calabar, Warri and so on.
Let us go back on history lane. Port Harcourt was founded as a port city. So the shipping potential here is quite high. If you give these incentives and reduce the port charges and pilotage charges paid by these shipping companies, they would say ok, the extra cost I bear on other things like infrastructural deficit, insecurity challenges, I will make up with my reduced government charges for my ship to come here. This will also decongest the ports in Lagos, and spread resource equitably to other ports in the country.
Now, they are saying they want to make shoes with the leather business in Aba. Do you expect these shoes, after they are ready, to be trucked to Lagos for export due to port charges? When there is a nearby port that is 30 minutes away to Port Harcourt for export that should have been revitalised to make business more seamless and increase economic activities in the area.
Same applies to Onitsha and Nnewi that are manufacturing hubs. So there must be incentives to these businesses and such proactive decisions lie with the Federal Government. For those using insecurity as a disguise to stay away from the Niger Delta, the truth is that they can be the remedy. Don’t say until insecurity is brought to a halt before you invest, because while waiting, insecurity could be worsened, and might not even stop. If at the beginning, this kidnapping and insecurity that started in the Niger Delta had been curbed, it wouldn’t have been a national thing. Some of us were shouting our voices hoarse, but they didn’t treat it well. So, we need to revisit where it all started – the Niger Delta. Curb it, using the carrot-stick approach, because there is the genuine agitation and there is criminality. So you need to know the difference. The criminal aspect, you deal with like any other crime; the genuine agitations, you deal with the carrot approach.
With these, businesses will thrive, and if businesses thrive, it will take us back to the pre-oil boom days when shipping was big here, or even to the oil boom days before the insecurity became a challenge. I must commend the government. A lot of work is going on, on the ease ofdoing business. The Port Harcourt Chamber of Commerce is also happy to be part of the quarterly Presidential Business Forum. Though one thing is to put down beautiful policies, but the implementation of the policies is very important. We need to walk the talk. The goods ideas behind the policies should percolate to implementation, so that the operators (the business man) can feel the impact.
Restiveness is a fall-out of joblessness; do you think government is doing enough to keep the youths engaged in terms of skills acquisition and gainful employment? Also, what are your members doing to assist the government in this regard?
There is a mentality that has been ingrained in the people over the decades. A rent-seeking mentality, where the oil companies at the beginning, in order to be allowed to operate peacefully, resort to the option of appeasing them, something that is not sustainable. That takes us to the popular Chinese saying that if you give fish to a person, you feed him for a day. But if you teach him how to fish, youhave succeeded in feeding him for life, including all his dependents. I believe that the first step should be the re-orientation process. The people have to be re-oriented. The community people, the youths, should be re-oriented to partake in whatever proceeds or processes that is in their community. Thank God the whole country is talking about restructuring. The North, West, East, the South South, are all taking about restructuring. Because, you don’t come to my backyard, take my land with oil, allocate it to somebody else to explore and produce oil and the chunk of the money goes to the centre. If I have oil in my backyard and I am producing it, just as it happens in other countries, let me be the one to drill the oil with my partners and pay taxes to the state and federal governments. That way, the community will feel that they are part owners of this and whatever God has blessed them with. So restructuring is the first step.
Before the first military coup of the 1960s, that was how the groundnut pyramids of the North came about and of course the cocoa in the west; which enabled the Late Chief Obafemi Awolowo to provide free education to the people in the west. That was how Nigeria then was opportune to have the first television station in sub-Saharan Africa, because money was there (at the region). Imagine if we had beenoperating this current system all the money would go to center. Chief Awolowo won’t have the money from cocoa. Sardauna of Sokoto won’t have the money from the groundnut pyramids. So, let us go back to the drawing board, let us restructure the system. Then, while that is going on, there has to be a mentality change.
Obviously a lot has gone wrong with the thinking of the people – ‘oh, I am being oppressed,’ ‘you’ve come to take my land,’ ‘you are anenemy.’ So even if a tailoring company comes to my community, an oil producing community, the company is seen as the enemy, and so it must settle me, because the oil companies used to settle me. So an innocent tailoring company that has nothing to do with oil is forced to come and settle. There is a lot of orientation problem that has gone wrong; first, there must be some re-orientation. Then, pari-passu with orientation, you can now have the empowerment and entrepreneurial skills impacted. So you are being re-oriented and you are being made to understand that you can be the next Dangote. Of course, for the security challenge, use the carrot and stick approach. All these can be done in a holistic approach, in one basket, and then we can get desirable impact. Otherwise, as it is now, if you just go to the community and say, ‘I want to give girls sewing machines, and buy buses for the boys, so they can become transporters.’ By the time you reach your destination, they would have sold everything. This is the life they are used to, whereby the oil companies give them money to eat.
PHCCIMA has been engaged in advocacy along this lines helping out through the various trainings conducted to build capacities in collaboration with foreign and member companies, and providing access to collateral free loans and business ideas to support SMEs.
Finally, apart from oil & gas, commerce and industry, PHCCIMA appears to be docile in the areas of mines and agriculture, though the Federal Government is diversifying into these areas. What have your members done to take advantage of the inherent opportunities in these sectors?
I beg to differ, we are not docile. We are the second largest and most active chamber of commerce in Nigeria, coming second and trailing Lagos (LCCI) closely. Of course, the reasons for the edge Lagos has over us are easily deductible. Lagos was the capital of Nigeria, and ordinary businesses would like to be domiciled in Lagos to be close to the centre of government, and this significantly played a critical role in the socio-economic life of the state.
PHCCIMA was established in 1957, so this year we are celebrating 60years of its existence. No doubt, PHCCIMA has left indelible footprints as the mouthpiece of the organised private sector in Rivers State and in the entire Niger delta. Like other organisations, we have had our fair share of challenges, nevertheless, we have surmounted them and developed further in the last 60 years, culminating in a tremendous evolution in promoting business interests of the private sector; economic viability of our dear state and region, enhanced growth of current businesses and development of new ones locally. We have been able to position ourselves significantly in the role of providing the business sector with a common voice, and ensuring that businesses continued to thrive with foreign business link up and valuable networking within our domain.
Following the advent of the recession, which followed suit with the federal government call for diversification, we have not rested on our oars; we have held various advocacies with strategic government agencies like the Nigerian Export Promotion Council, NEPC, to see how we can harness locally made goods for export and support MSMEs. We have valuable synergies with the Nigerian Investment Promotion Commission, Nigerian Shippers Council, to see how we can revive the eastern ports, collaborations with various federal and state ministries among others.
Some of our members who are critical stakeholders of the oil and gasindustry are now investing in agriculture and agro allied businesses among other areas. We have been organising free seminars for our members and non-members alike to open frontiers of economic opportunities, and to showcase new dynamisms and business innovation. So we are not docile but active. We have taken advantage of the potential in agricultural and agro allied businesses in furtherance of effort in mitigating the effect of oil downturn.
.. And your parting words?
Rivers State and indeed the Niger Delta is an investment nerve centre, serious investors must take advantage of inherent opportunities to invest massively in the state, especially now that government is engaged in impressive infrastructural development. There is also work in process for the harmonisation of the state and various local government tax regimes among others to encourage investors. The federal government must look critically at issues bothering on incentives to encourage companies, who, in spite of challenges in the country have invested. This will make up for the other areas of shortfalls.
Real opportunities exist for Nigeria to inject new dynamism into its economy through a productive, investment and incentive-led transformation with effort in diversification to non-oil sectors of the economy to help ensure future growth, employment, and prosperity of the country. I believe, faster productivity growth requires better business regulation and more openness to competition, trade, and investment, diversification to agriculture and solid minerals.