Business Facts

Contribution by Jerry, Ephraim

Business Facts

Why business failed /best suggested solutions to limit failure in business.

When such question as above is asked “Why business fail” many will conclude it’s due to mismanagement of funds.

But the reasons encompassed that, for business there human, non human, environmental etc aspects of business. The major discussion here will centre on human being, resources and environment.

Causes of Business Failures/Solutions to limit failure in business: Below are confirmed facts why business all over the world failed/Solutions to limit failure in business

1.   Doing business without having an inside into the business: Some startup a business without knowing anything about the business. This is not to say that you can know everything about the business before startup no, but knowledge about each business is necessary. I am in full support about the idea of learning a trade before startup.

2.   Separation of owner from the business: Owners of business should separate themselves and consider that the business is a separate entity. Decisions that will bring better result for the business only should be taken. No withdrawal should be made from capital except to setup other business.

3.   Lack of improper of financial information: It becoming necessary that each business owners should have a least little financial education. Even if the service of an Accountant or other financial expert is employed. These will help in many ways, to understand easily what the Accountant or other financial expert will say. It will also enable to have a rough estimate of expected profit at certain interval expected as return on investment. Some business owners withdraw money from their business without taking records of how much they have used so far.

4.        Lack of proper Internal Audit Department: This fact is more applicable to an entity that trade in Million(s) or less. It is a well known facts .

5.   Lack of trust and confidence in the entity: Trust and confidence is earn over time in business, so for an entity to gain trust and confidence from customers it must keep to all agreed terms and condition of the transactions with customers. For instance Savings clients will lost trust and confidence in a savings banks/institutions if there is always delay in withdrawal of their savings. This can lead to failure of any bank/financial institution.

6.   Losing of major clients without having a better new client can bring about total failure in business. Best option is to get better customers daily, need for marketing strive.

7.   Use of many inexperience staffs: I am not saying inexperience staffs should be employed but, experience is the best for technical knowhow. Inexperience should not be assigned major/important roles less they should be under strict supervision.

8.   Success and Failure of an entity should be well communicated to all the staffs. This will motivate them to work hard. Hard work should be rewarded.

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Good : CBN sells dollars at 305/dollar on spot market

                                         CBN GOVERNOR

The Central Bank of Nigeria on Tuesday sold dollars at N306 for the second time, after maintaining a level around 305/dollar on the official spot market for two months, traders said.

The move was minor, to signal a change in foreign exchange policy, traders said, according to a Reuters report.

The bank last sold dollars at N306 on the spot market in September and had sold the currency as low as 306.65 in July.

Dollar shortages had gripped the economy as crude sales, Nigeria’s mainstay, plunged at the start of an oil price rout in 2014.

This triggered a recession last year and frustrated businesses, which had to find dollars on the black market as a result.

To try to resolve the currency crisis, the CBN has set up at least different six exchange rates, after devaluing the currency for retail users in February and allowing foreign investors to trade the naira at market-determined rates.

The naira was quoted at around 360/dollar for investors, near the parallel market rate and at a level at which it has traded for more than a month.

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Power distributors to pay interest on N120bn debt – FG

Power distribution companies are going to start paying interest on the debt they owe the electricity Market Operator since the commencement of the Transitional Electricity Market in January 2015, the Federal Government has declared.

It was gathered that the government, through the Nigeria Bulk Electricity Trading Company, had started adding up the interest on the over N120bn, which the Discos owe the MO since the past two years.

This is coming as the Discos have demanded that the Federal Government should allow them charge interest on unpaid electricity bills, because the NBET has started compiling interest to be paid by them on debt owed the MO.

On August 18, 2017, The PUNCH had exclusively reported that the indebtedness of the Discos to the MO, in terms of stipulated remittances to the MO, had risen to N120.7bn.

Sources at the NBET, however, stated that the debt had risen beyond the N120bn recorded in August, as many of the firms were still remitting below 40 per cent to the MO.

Our correspondent gathered that the shortfall in remittances by the 11 Discos to the MO had been accumulating since the commencement of the TEM in January 2015.

In a bid to stop the poor revenue remittance by the Discos, the NBET advised the firms to make complete payment for services rendered to them by other arms of the power market and stressed that it had started adding up the interest on the Discos’ debt to the MO since 2015.

The latest decision by the NBET was announced to stakeholders at the 20th power sector monthly meeting and was captured in the meeting’s minutes that were released to industry operators in preparation for the next gathering.

The minutes, which were obtained by our correspondent from the Federal Ministry of Power, Works and Housing in Abuja, read in part, “The NBET advised the Discos to make 100 per cent payment on services rendered as the NBET had already started the process of adding up interest on the amount owed to the MO since 2015.”

The MO, in its report at the meeting, stated that the Yola Disco made 100 per cent payment, while it received only 25 per cent payment from the Abuja and Kaduna Discos on August 15 and 28, 2017, respectively, “which was contrary to the claims made by them in the last meeting.”

The MO, therefore, informed participants at the event that plans were underway to sanction defaulting Discos.

On hearing that the Discos would start paying interest on the debt they owed the MO, a senior official of the Port Harcourt Disco appealed to the MO to step back from enforcing sanctions on the power distributors that failed to make 100 per cent payment.

An official of the Enugu Disco requested to know if it was possible to charge interest on unpaid electricity bills, and was supported by a representative of the Abuja Disco, who, according to the minutes, appealed that the firms be allowed to charge interest on debts owed by government ministries, departments and agencies following the NBET’s comments.

The interim Managing Director, Transmission Company of Nigeria, Usman Mohammed, explained that the MO arrived at the decision to sanction defaulters after it discovered that only the Eko and Yola Discos were making 100 per cent payment to the MO for services rendered.

He noted that the decision was taken in order to sustain the TCN, NERC and other service providers funded by the market.

The Minister of Power, Works and Housing, Babatunde Fashola, who chaired the meeting, advised the Discos to meter customers to avoid instances of delayed payments and not to charge any interest on amount owed.

The meeting also directed NERC to determine the MO’s sanction regarding 100 per cent payments for services rendered and delayed payments.

It also mandated the MO and NBET to synchronise their report on payments for services rendered in future presentations.

Meanwhile, NERC stated that it had done enough consultation with stakeholders to determine the fine on meter bypass.

The commission noted that the fines for defaulters using single and three-phase meters were N50,000 and N100,000 respectively, while that of maximum demand customers was three times their monthly electricity bills.

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Good News: Fidelity Bank expresses support for economic diversification plan

    Managing Director and Chief Executive Officer of Fidelity Bank Plc, Mr. Nnamdi Okonkwo

The Managing Director, Fidelity Bank Plc, Mr. Nnamdi Okonkwo, says the lender is committed to Nigeria’s economic diversification plan, which is expected to enhance recovery and growth.

The managing director said this in his address at the bank’s special day at the 2017 Lagos International Trade Fair.

The managing director said this in his address at the bank’s special day at the 2017 Lagos International Trade Fair.

The trade fair, which had the theme, “Promoting industrialisation for economic recovery and sustainable growth’’, attracted foreign exhibitors and investors from across Africa, Europe and Asia.

Okonkwo said the country’s monolithic economy could be successfully diversified through the empowerment of the Micro, Small and Medium-scale Enterprises.

According to him, the various products and services being offered by the lender to businesses are meant to address the needs of its individual and corporate customers.

The Fidelity Bank boss, who was represented by the Executive Director, Shared Services and Products, Mrs. Chijioke Ugochukwu, said, “Our efforts aimed at aiding diversification of the country’s monolithic economy has been celebrated all over.

“Interestingly, we have continued to channel significant human and financial resources into the real sector, particularly in the area of manufacturing, food and beverages as well as independent power projects.

He added, “When you open a Fidelity Bank account, you begin a partnership that is primarily hinged on growth and trust. We are more than just a business transaction – we are committed to the long-term expansion of your business as we leverage our proven expertise, and highly trained professionals to take you and your business to the next level of growth.”

Earlier, the President, Lagos Chamber of Commerce and Industry, Dr. Nike Akande, had thanked the Federal Government for improved business climate in the country.

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Best Decision By Poultry Farmers in Akwa Ibom State

                                                   Poultry Farm in Akwa Ibom State

The Akwa-Ibom State Chairman of the Poultry Association of Nigeria, Mr Solomon Ekong, has said that the high cost of poultry raw materials, especially grains, has forced his members to turn to maize farming. 

He said the association’s members took the decision to grow maize alongside their poultry farming at the heat of scarcity of maize early this year, which forced most of them to shut down their farms. 

He said during the wet season farming, virtually all poultry farmers in the state grew maize but regretted that army worms destroyed some of the farms. 

Mr. Ekong, who owns Kaiso Integrated Farm in Uyo, said many of his members have also expressed preparedness to embrace dry season farming to grow maize in the state and appealed to relevant authorities to find solution to the army worm menace. 

He said there is high consumption of poultry products in the state and appealed to the state government to assist farmers to enable them sustain the confidence they have in the industry. 

Mr. Ekong also regretted that despite the launch of the Anchor Borrower Programme in the state, poultry farmers were yet to benefit in any form. 

He, however,  urged his members to remain focused and observe farming rules in order to safeguard any possible outbreak of diseases.

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Good News: oil Prices Rise Again

Jerry,Ephraim

Oil Prices Rise Again.
This is one of the best economic information for Nigeria and other OPEC Member Countries.

                                                        OPEC

On Tuesday last week, crude oil prices rose to about $61 per barrel in the international market, its highest since July 2015. There are indications that it rise to $70 and above in the next few weeks. This development is attributed to tightening market due to on-going OPEC-led efforts to cut supplies. The oil production cut pact runs until March 2018 but Saudi Arabia and Russia have voiced support for an extension. OPEC ministers are scheduled to meet at its headquarters in Vienna, Austria, on Nov. 30 where it will consider a possible extension of the cut. 

Ideally, this should be cheering news for Nigeria, especially if we are able to maintain or surpass the current production of around two million barrels. This is because 75 per cent of this country’s government revenue and 90 percent of foreign exchange earnings are tied to crude oil. It is however too soon to celebrate as crude oil prices can drop as fast as they rose. Back in 2014, Nigeria’s foreign exchange earnings was about  $1.4 billion monthly but within a short period, crude oil prices crashed and earnings dropped to as low as  $300-$400 million per month.  This emphasises how unpredictable the oil market can be. 

Even if there is sustained rise in oil prices, it will only be for a short period because US shale oil production and long term technological changes would drive it down again. Therefore, it will be foolhardy for us as a nation to think that with the recent increase in oil prices, all our problems are over and we can jettison the idea of diversifying the economy and all other measures we took to survive the very trying period when the price dropped to as low as $30 per barrel. 

Being a mono-economy that is dependent on oil, Nigeria was totally unprepared for the effect of the oil price crash and as such it was hit below the belt. The situation was so bad that after recording negative growth in the first two quarters of 2016, occasioned by poor revenue generation, Nigeria slipped into a recession.  The national currency was weakened and inflation rose to an 11-year high.  The impact of the crash is still being felt by the country and citizens.

Even though our leaders had often spoken of the need to diversify the economy before oil prices collapsed, nothing concrete was done about it until late 2015, shortly after the current administration assumed office. Efforts were made in the area of agriculture and they yielded results so much so that apart from empowering the farmers, it contributed significantly to the country’s recent exit from recession.

 With the rebound of oil prices, there is the danger that government would now relax and abandon its diversification efforts. That will be a grievous mistake. If anything, the country should more than ever vigorously pursue economic diversification. Any extra money that is earned due to the oil price increase should be channelled in that direction.  

 Greater attention should be paid to agricultural activities and other sectors like solid minerals.  Also, the government should give priority to infrastructure, things that will improve the general living conditions of the masses.   

This is not the time to engage in extravagant expenditures. All the cuts that were made because of the poor revenue should be sustained just as leakages should continue to be checked. Tax collection must also be pursued with vigour. 

 The drop in oil price exposed governors as chief executives who wait monthly for hand-outs from the federation account, as many of them can no longer pay salaries due to the drop in their allocations. That narrative must change. The federal government should not submit to unnecessary demands by state governors. They should be made to intensify their drive towards revenue generation. They should look inwards and harness resources in their various states to generate revenue.    However, with improved earnings, genuine demands like the one made by the Nigeria Labour Congress (NLC) for a higher minimum wage should be considered to encourage productivity.

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Amaeachi: FG to Reconnect Railway with Seaports

Rotimi Amaechi

The Minister of Transportation, Mr. Rotimi Amaechi, has said the federal government will re-connect the country’s railway to  the seaports in a bid to boost economic activities. Amaechi said this during a meeting he had with port professionals monday in Lagos.
The minister said President Muhammadu Buhari’s resolve to diversify the economy had brought to the front burner the need to implement the inter-modal means of transportation in the country.

“We expect that before June or July, we should begin the process or we should start the construction of the Lagos-Kano, and possibly the Lagos-Calabar railway.
“If those two contracts commence, then we expect that they would generate employment (and) economic activities would improve.
“And we say that all of these must terminate at the sea ports, so anybody can import from any particular place in time.

“You can import from Warri sea port; you can import from Port Harcourt sea port; you can import or export from Calabar sea port or any of the sea ports.
“In terminating the railway, we are going to terminate one at Apapa and another one at Tin Can to encourage inter-modal means of transportation,” he said.
The minister, according to the News Agency of Nigeria (NAN), assured Nigerians that appropriate measures would be taken to ensure that the country received the right amount of revenue from the system.

“We also want to know how much is coming in and how much is being spent. Nobody is expected to spend more than the budget has been approved for you so that we save money for the economy,’’ he added.
Amaechi urged Nigerians to be patient with the federal government as it works assiduously to revive the economy, beginning with the implementation of the 2016 budget.

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Crude Oil Price Rises by over 6%

Crude oil prices monday rose by over six per cent after the world’s oil consumer body, the International Energy Agency (IEA), said it expected United States shale production to fall this year and next, potentially easing a glut that has driven prices to their lowest in more than a decade.

Reuters reported that a bounce in global stock markets and the after-effects of a fall in the US oil rig count last week also supported prices.

But as the IEA’s forecast provided some glimmer of hope of a price recovery in the medium-term, it is the near-term that was of paramount importance to President Muhammadu Buhari when he departed for Saudi Arabia yesterday to meet with leaders of the kingdom in order to consolidate on the oil output freeze aimed at pushing up prices.

The world’s two largest oil producers, Saudi Arabia and Russia, agreed last week to keep oil output at January levels – the first cooperation among OPEC and Non-OPEC producers in 15 years – in order to boost prices.

The problem, however, is that the attempt to cap output could be scuttled by Iran, which has hurriedly increased output since US-led sanctions were lifted after it agreed to stop its nuclear programme.

Iran has “welcomed” the oil freeze, but made it abundantly clear that it would not cap output.

Its position also reflects the political tension in the Gulf between Sunni-led Saudi Arabia and its allies in the region, and Shia-led Iran.

Ideally, Buhari’s oil diplomacy in the region would have made more sense with a stopover in Iran, however, the military clash with the Iranian-backed Shiites in Zaria last December has put paid to the possibility of a détente with President Hassan Rouhani and the Ayatollahs of Iran.

Without Iran and even Iraq on their side, cash-strapped oil producers like Nigeria may have to wait a bit longer before oil prices reach levels sufficient to improve their finances.

Yesterday, however, US crude (WTI) futures rose above $31 a barrel, gaining $1.95, or 6.6 per cent, to $31.59 a barrel.

The March contract expires at the end of the session. US crude for April delivery traded at a higher volume and was at $33.46.
Also, international benchmark Brent was up $1.49 or 4.5 per cent at $34.50 a barrel.

IEA, the energy advisor to 26 industrialised countries, said in its medium-term outlook monday that US shale oil production was expected to fall by 600,000 barrels per day (bpd) this year and another 200,000 bpd in 2017.

This fed into data released late last week that showed US drilling rig numbers had fallen to the lowest level since December 2009.
The IEA also said in its report the global oil market would begin rebalancing in 2017.

“Today’s oil market conditions do not suggest that prices can recover sharply in the immediate future,” the agency said.

In the US, record crude stocks of 504.1 million barrels were also weighing on markets, countering a proposed production freeze at January levels by Russia and OPEC.

Russia and OPEC both pumped oil at near-record volumes last month, with Russia reaching another post-Soviet high of 10.88 million bpd.
OPEC member Iraq said yesterday it planned to raise oil output levels to more than 7 million bpd over the next five years, and to export 6 million bpd of that. Oil production in Iraq hit a record high of 4.775 million bpd in January.

Meanwhile, Shell Petroleum Development Company (SDPC) of Nigeria Limited declared a force majeure on Forcados liftings effective 1500hrs (Nigerian time) on Sunday, following the disruption in production caused by the spill at the Forcados terminal subsea crude export pipeline.

The Anglo-Dutch oil firm said it was intensifying efforts on containment and oil recovery after the February 14 spill, while also finalising repair plans.

“Supported by industry group Clean Nigeria Associates (CNA) and other oil companies, SPDC has deployed specialised equipment to contain the spill.

“SPDC has also mobilised clean-up teams and contracted a specialised aircraft to join in the response. Production into the terminal and crude oil exports were stopped soon after the spill was discovered,” the company said.

According to the statement, diving teams which inspected the 48-inch diameter export pipeline, reported extensive damage that was consistent with the application of external force.

Following this incident, Shell said it was working with the relevant government agencies to review the security situation around its critical assets in the Niger Delta.

SPDC’s general manager in charge of External Relations, Mr. Igo Weli, said: “This incident is regrettable but our response is comprehensive including multiple flights over the affected area to monitor the impact and deployment of clean-up experts from within and outside Nigeria.

“Oil recovery will continue while we finalise repair plans pending the conclusion of the ongoing Joint Investigation Visit (JIV) process. We appreciate the support of the communities, regulators and security agencies who are taking part in the investigation.”

In the meantime, SPDC has procured relief materials for distribution to communities.

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