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How To End Building Collapse And Build Resilient Cities In Nigeria

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Whether rich or poor, three things are paramount to human existence and survival. Man cannot do without clothing, food and shelter. Out of these basic essentials of life, house or building, an offshoot of shelter, is being possessed and occupied at various degrees and different locations. Despite the significant amount of money committed to the construction of buildings with the intent of protecting lost of lives and wastes, the last two decades have been characterised with incessant collapse.

Between 1971 and 2016, 175 cases of building collapse were recorded in Nigeria with most cases occurred in cities and towns. During this period, Lagos, Abuja (FCT), Rivers and Oyo states had the highest number of cases. They were also the locations with the highest number of causalities. From 2017 to the present year, the trend has not really changed as the two states –Lagos and Oyo continue to dominate the places with the cases of building collapse. Early 2019, Lagos recorded two cases within two weeks, while one was reported in Ibadan, the capital of Oyo state.  This increased the public concern over the building collapse in South West region with the significant interest in Lagos.

In the last 5 years, analysis shows that public has been wondering about the best approaches to end the collapse.  Their concern about the right procedures voiced through the media and public engagement platforms with the expectation that the concerned stakeholders will take decisive action on the collapse remains a mirage as the experts from government to the private circles do not hesitate to reel out the reasons and solutions for the collapse.

Many have cited climate change and laxity of the professionals, who failed to live above board in their professional calling towards saving life and resources, as the main reasons. However, this piece is not about citing or describing the reasons that have been cited in the last two decades. Rather the piece intends to take a critical look at the reasons from local and international perspectives. Among the people, the questions have been that what is the place of the professionals, regulatory agencies and effectiveness of building and professional codes in ending the collapse? Some have equally argued that it would be difficult for Nigeria to achieve the targets of Sustainable Development Goal 11 –to make cities inclusive, safe, resilient, and sustainable.

Place of Built Professionals and Other Stakeholders

Throughout the world, before a building could be constructed, certain professionals are aggregated as a team for planning and execution. These are the people who have been taught the nitty-gritty of putting each component of a building together towards safety and health of the people and materials likely to be kept in the building.

Like other countries, Nigeria has engineers, surveyors, architects, builders and facilities managers who are supposed to be assembled from building construction. But, the recent reports indicate that the professionals or building owners are either skipping one or two professionals from the Construction Value Chain or approaching the stages haphazardly. The consequence has been what everyone is witnessing in cities and towns –building collapse and loss of lives.

How long Nigerians have to continue counting their losses when the building collapsed? Public believe that professionals have more important roles to play than the governments, analysis suggests. From the analysis, it is clear that governments have the right policies and initiatives to end the collapse, but the activities of the professionals, especially those in materials and supplies markets are not enough.

Using the real time data, public interest in how the professionals will end the collapse to save the life of young and old people who are expected to contribute to the growth of the economy has been on the increase in the last 5 years. Between September, 2014 and September, 2019, the more Nigerians had an interest in building collapse, the more they developed more interest in professionals responsible for building construction and maintenance. This result is also recorded for the interest in professionals, suppliers and manufacturers within the building materials and supplies markets. The high interest in professionals and manufacturers indicates that the public wants them to position themselves towards the right processes, people and materials.

Enabling Framework

As pointed out earlier, formulating policies and initiating programmes have never been Nigeria’s disease towards development. The main disease has been a lack of political and institutional will to implement the policies and programmes.  Since 1960, Nigeria has had various professionals and national codes for built industries. These codes have been reviewed on many occasions to meet the trends in the industries.

In 2013, Ms Amal Pepple, former Minister of Lands, Housing and Urban Development, noted that the Nigerian government has reviewed the national building code to check incessant building collapse. According to her, the code provides sanctions for any unethical behaviour in the construction industry. Five years later, the federal government through Mr Babatunde Raji Fashola, Minister of Housing and Works, announced a new national building code, aiming at improving on measures to safeguard lives and property in the country.

“We have come up with the new code because government is aware of the fact that most deaths and injuries caused during building collapse are results of unacceptable ways of building. You can find out that in most cases safety measures are not considered in erecting most of the failed structures,” he said.

Deviating from the normal tradition of asking professionals and concerned stakeholders in the public sector about the effectiveness of the codes –national and professional, students’ views about the effectiveness have been sought and analysed. According to them, in spite of having the right building regulations and standards in Nigerian built industries, the lack of full implementation has continued to endanger life and property across the country.

When they were asked about the effectiveness of the national building code in reducing building collapse, over 39% said it is less effective while 31.4% said it effective. Their responses to the effectiveness of professionals code is mind-blowing, as over 45% said existing professional codes have not really helped in containing incessant building collapse.

From this, one needs to be curious about the basic of constructing or developing standard building being taught in Nigerian higher institutions. Why is it difficult to translate the fundamentals that have been proved to the academics for the award of degrees into practice? The students answered. Forty-nine percent of the students said the fundamentals are practicable, while 11.8% indicated that they are very practicable.

Those who belong to less practicable criterion (37.3%) more than those who believe in the high practicability of the fundamentals in the industries. From these results, it is glaring that governments, professionals and civil society organisations need to come together and map out how the building construction fundamentals, regulations and professional standards should be enforced. This has been further intensified based on the outcomes of the analysis of the country’s Global Competitiveness Sustainable Construction and causes identified by students and professionals (see below chart for further clarification).

Failure to map out and develop the right strategies will continue to be the source of incessant building collapse. The students believe that in the next 5 years Nigeria will experience building collapse more than what she has had in the previous 5 years. Already, available statistics have shown that the cumulative number of lives that would be lost in the next 50 years varies between 1,775 and 1,790.

Can Resilient Cities Be Achieved in Nigeria?

Nigeria really needs to be worried about the building collapse because it will never be left out from the countries that have been projected to have more than 1 billion new houses by 2050. Less than 31 years to the year, many houses and structures have sprung up in cities such as Lagos, Ibadan, Port-Harcourt, Abuja, Kano among others, while the old ones are begging for preventive maintenance.  With the effects of climate change that have projected to have significant impact on buildings with substandard materials, the concern now is can Nigeria build resilient cities in its six regions? How can it be achieved? The results of analysis of the country’s position on global competitiveness index provide the answers.

As the analysis establishes, Nigeria needs to work on her Global Competitiveness Index Sustainable Building Construction Indicators. It needs to work on reliance on professional management, trustworthiness and confidence, availability of latest technologies, firm-level technology absorption, local supplier quantity and production process sophistication.

When the professionals’ identified causes (use of substandard designs, materials, manpower and procedures) of the building collapse are analysed along with the severity of these indicators, analysis reveals that one unit of the causes reduces one unit of having good rankings for the indicators by 38.3%.  Working on the causes (bad designs, wrong foundation, wrong site, bad usage of the structure, poor technology and inexperienced contractors, high population, weak building process and poor physical development control) identified by the students will help Nigeria to achieve a 93.1% increase in good rankings.

These results were further explored with correlation analysis of the indicators between 2014 and 2018. Analysis shows that the rankings earned in 2014 and 2015 were linked strongly. This is also obtained for 2015 and 2016, 2016 and 2017. However, the indicators failed to connect in 2017 and 2018, indicating disparity in the rankings. The implication of this is that in the previous years (2014 to 2016), Nigerian governments’ efforts to improve on the criteria being used by the World Economic Forum for the indicators measurement did not yield important results.

From the analyses, it has emerged that professional codes of conduct, institutional and legal framework are weak to ensure sustainable building construction. As long as these continue to be the pain points, saving lives, money and building resilient cities will remain unattained for the next few years. According to the World Bank, “Building codes and land use planning have proven to be the most effective tools to increase health and safety in cities and reduce disaster risk.”  Yet, Nigerians remain vulnerable to building collapse despite the structured of its code that ensures inspection of  building at pre-design, design, construction and post-construction stages.

With the persistent collapse and the number of people who have lost their lives, it would not be a bad suggestion if Nigeria goes Hammurabi’s way. According to many sources, the Code of Hammurabi is one of the oldest written laws in human history that criminalises poor construction practices beyond the mere prosecution of the offenders. Between 228 and 233 codes, “If a builder builds a house for a man and does not make its construction firm, and the house which he has built collapses and causes the death of the owner of the house, that builder shall be put to death.”

This code simply tries to create proportional justice. When the code is adopted, the family of a building collapse victim will have two options. Having family member of the contractor or builder killed in the same way the victim died or taking blood money, equal to the value of the victim.

 

Why the Nigerian Government Should Stop Encouraging Loans for Small Scale Business

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The loan has been received after numerous application for the meager loan that would soon destroy the lives of the founders. They are thinking it will be sweet experience, they just like other SMEs (startups) don’t realize that they have become prey to the most dangerous mindset that kills even the most successful business. . .

Small and medium-sized enterprises or small and medium-sized businesses are businesses whose personnel numbers fall below certain limits. According to the Central Bank of Nigeria, a SME is a company that employs from 11 to 100 people and has assets between ?5 and ?500 million. There are a lot of SMEs in Nigeria.

Yes, SMEs are cut across the entire nation. Many of this SMEs are Startups. You might ask, what is a Startup? A startup or start up is a company or project initiated by an entrepreneur to seek, effectively develop, and validate a scalable business model. Hence, the concepts of startups and entrepreneurship are similar.

A startup is a business structure powered by disruptive innovation, created to solve a problem by delivering a new product or service under conditions of extreme uncertainty.

Many entrepreneurs and renowned business magnates define startup as a culture and a mentality of building a business upon an innovative idea to solve critical pain points.

Paul Graham, the founder of Y Combinator, has further simplified the definition of the startup and associated it with growth. According to him-

A startup is a company designed to grow fast. Being newly founded does not in itself make a company a startup. Nor is it necessary for a startup to work on technology, or take venture funding, or have some sort of “exit.” The only essential thing is growth. Everything else we associate with startups follows from growth.

As Startups and SMEs grow in their services and scale, there comes the need to boost the revenue of the SME. During this phase, it becomes a critical factor and time for SME owners, they begin to source for funding like workers in a bee hive. While this moment might not be the best time for any business, it is very important to take note as to why seeking a loan for your business at it’s early growth stage could leave you in critical conditions.

What is a Business Loan?

A business loan is a loan specifically intended for business purposes. As with all loans, it involves the creation of a debt, which will be repaid with added interest. Businesses require an adequate amount of capital to fund startup expenses or pay for expansions. As such, companies take out business loans to gain the financial assistance they need. A business loan is debt that the company is obligated to repay according to the loan’s terms and conditions.

Fun Fact: Trader Moni is an Empowerment Scheme of the Federal Government created specifically for petty traders and artisans across Nigeria.

How does a Business Loan Work?

Business loans are offered by lenders. And in exchange for the money, they’ll charge interest on top of the loan amount?—?in the most basic loan structure, interest is charged as a percentage of the loan’s principal. … While business loans work with this basic structure, they do vary by the type of business loan they are.

Small-business owners often need financial help to turn their entrepreneurial dreams into reality or keep an existing company afloat. If you need cash to purchase business equipment, fund your marketing campaign or cover your payroll, it may be necessary to take out a small-business loan. A small-business loan is different from other types of loans, and it’s beneficial to understand how the loans work before you apply for one.

Why You Should Avoid Business Loans!

They say a difference between a good loan and a bad loan can go a long way in defining the outcomes of business. Here are top reasons not to embark on this route that has even taken the heads of big companies.

  1. The Rush to Payback Fast: Many business owners want to pay back their loans as quickly as possible in an effort to become debt free. Again, it’s important to reduce debt, but doing so too quickly can cost your business. That’s because you may leave yourself short of cash. Or the extra money you’re devoting to debt reduction might be better spent on profitable growth projects.
  2. It Put You on Impulse: Perhaps there is a new technology or machinery you think would benefit your business, or maybe you want to remodel or upgrade your facilities. While all of these things may prove advantageous to your business, you won’t be able to reap the rewards if you have leveraged all of your assets and the extra profits you make go toward repaying the loan. If the idea doesn’t bring in extra revenue, you are still responsible for paying back the loan. If you used assets to secure the loan, you may end up without a business at all.
  3. There is Always Interest: Interest, in finance and economics, is payment from a borrower or deposit-taking financial institution to a lender or depositor of an amount above repayment of the principal sum, at a particular rate. It is distinct from a fee which the borrower may pay the lender or some third party. As it goes, you as the SME owner will foot the interest. As you know, interest will always go up and its not constant, so the vibe of if i don’t pay this month I’ll pay later, will lead to your business accumulating a very nice junk of debt which if left unchecked will put you in the rubble.
  4. Your Lines of Credit are Maxed Out: If you have exhausted all other available credit, maybe taking on more debt is a bad idea. When lenders see that you are overextended, you will likely be required to secure the loan with assets. If you are having difficulty paying your existing financial obligations, you are entering risky territory by gambling with your facilities, inventory, equipment, or even worse, your own house.
  5. The Thought of Paying Back: Hmm, it’s no funny when the business is not giving you ROI as expected when projected and then you have debts to pay. The next thing you’ll ask yourself is if you even invested the money well or you are dreaming. Wait, wait, wait. . . Oga/Madam, you’re not dreaming! You’re owing the bank, or that agency that gave you loan oh. This is a reactive stage, and it is mixed with harsh emotions. Nigerian SMEs can tell you the stories of other business owners who allowed loan to put them in the box.

What Should the Government Do?

It’s not funny anymore that the Trader Moni scheme is a joke from glance. But then you come to think of it. What is the Trader Moni? According to the offical website of Trader Moni, TraderMoni is a loan programme of the Federal Government, created specifically for petty traders and artisans across Nigeria. It is a part of the Government Enterprise and Empowerment Programme (GEEP) scheme of the Federal Government, being executed by the Bank of Industry.

While this is just for roadside traders and petty business vendors, there is still much to be done in maxing the credit potential of the financial sector industry. The less loans given out by the Government through Commercial banks and Bank of Industry will pave way for emerging SME’s to grow admist the chaos. Let’s face it, many SMEs can’t bare to withstand the harsh times of initial setup. It’s not really funny. So where do we go from here?

There should more credit maxing systems in place to put things in scope. The need and urgent call for giving out “Grants” to business owners and SMEs cannot be under-emphasized! One major thing to denote is that Grants are free money which does not require repayment. Conversely, repayment of the loan is a must, in equal monthly payments or lump sum or on demand. Grants are non-interest bearing in nature, whereas Loans carry an interest rate, which varies from loan to loan.

How can this be made possible? How can the Government checkmate the activities to deduce the effectiveness of the grants received? Who should receive this grants? These and more will be considered in the next article.

A Masterclass on AI in Business – Oct 18, Lagos

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Through Marketing Research Academy, I will hold a Masterclass on the mechanics of data science and AI in business, for business executives, on Oct 18 in Radisson Blu, Ikeja, Lagos. It is a free event, but by invitation only. 

The evening will be divided into two phases: I will deliver a presentation in the first two hours, then, other professionals will join me for another two hours. 

My presentation will explain how technologies, specifically AI and data science, are enabling new business models and solutions, anchoring improved efficiencies in the utilization of factors of production in fixing market frictions across industrial sectors. I have written how these modern business enablers are redesigning markets in recent articles in the Harvard Business Review.

To request an invitation, click here.

 

 

 

 

Bank CEOs’ Challenge in Nigeria: Collapse of Regulatory Moat

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Last week, I did a two-hour Q/A in an invitation-only event organized by a Fund. At the end, from my perspective, the biggest challenge to Nigerian banks is the collapse of the regulatory moat. In my session, we discussed many things – these three are just a few I want to share.

The term economic moat refers to a business’ ability to maintain competitive advantages over its competitors in order to protect its long-term profits and market share from competing firms. Just like a medieval castle, the moat serves to protect those inside the fortress and their riches from outsiders.In most ancestral African communities, the king would live at the summit of hills or areas surrounded by water bodies or geographic bodies that convey territorial advantages over enemies. 

(If you visit Ovim in Abia State, my clan Ugwunta is the custodian of the Nkwo (a deity), providing the high priest Obi Ovum. If war breaks out, they would beat the ikoro (big gong), alerting the community that war had broken out. Immediately, young men will activate a war dance Anwuriwu which on hearing it young men are transfigured to be in war spirit. Common men can climb palm trees with bar hands (no strappers) and do things unimaginable. As the young men go to war, some stay with rocks which are in abundance to ensure no enemy can make it to Ugwunta. Ugwunta is on a hill, providing a strategic moat. Small history which exists  largely orally these days )

  1. Collapse of Regulatory Moat: Most banks in Nigeria will continue to see erosion of market cap as investors look beyond them as institutions to create leverageable value. Unlike in the past few years where regulatory moat protected banks, we are now seeing the Central Bank of Nigeria (CBN) opening them to new competition. Fintech startups, specialized independent advisors, neobanks, etc will further pick the banks apart. By 2025, more than 60% of “bank incomes” will be destroyed by these new competitors. Yet, the new competitors will capture only a small portion. (If you use a fintech on a transaction and pays $10 instead of $100 with a bank, $90 has been dissipated which the customer keeps).
  2. The Lost Decade: Nigerian banks have shown they cannot create great value for investors. The largest bank in Nigeria by market cap (GTBank) is worth less than $3 billion. The banks have just completed a lost decade where from 2009 to 2019, investors did not see any significant value in the stock market, even in a time when global bank equities performed fairly well.
  3. By 2025: A digital-only-bank will become the preferred bank in Nigeria for young people between 18-30 years. That bank will be fee-less and have superb-service. With no agile business model to match these fintechs, banks will continue to have erosion of value. 

I began the Q/A with a 30-min presentation that examined the bank sector and the fintech world in Nigeria. I will be unable to share more here, unfortunately.

Creating The Sustainable Tripod – Technology, Trade and Tourism

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Financing trade

The 2016 global fall in crude oil prices made economies like Brunei which though not a major global producer like the OPEC countries suffer an economic recession. Despite Brunei’s small size and population with her competitive advantages such as her location, 2nd highest human development in the South East Asian region along with other factors, she can build a smart sustainable economic future beyond oil for her citizens to prosper in the current Fourth Industrial Revolution. I propose a road map to make this possible anchored on technology and tourism below:

Masa Depan Brunei programme should include Future Ready Skills: Just like neighboring Singapore which has launched Skills Future Programme to prepare its citizens to become globally competitive by investing in their capabilities with skills for the current technological era, Masa Depan Brunei initiative for the youths should include trainings in critical thinking, design thinking, emotional intelligence, agility, adaptability and collaboration. Other areas include negotiation, data science, business intelligence, machine learning, deep learning, computer vision, blockchain, robotics, embedded systems development, industrial design, product development, and additive manufacturing. These will make Bruneian youths compete with their ASEAN peers, rest of Asia and the world as an outsourcing hub for global technology giants like Apple, Amazon, Alibaba, Tencent, Microsoft, SAS, SAP, Sales Force, Facebook, Microsoft, Google, and IBM that will employ them to work on their projects and pay them higher wages than the oil industry which most of them crave to work in will.

Establishment of Brunei Young Entrepreneurs Fund and Scheme to boost startups: His Royal Majesty, Sir Haji Hassanal Bolkiah(Yang Di Pertuan Agong) who is also the Honourable Minister Of Finance should establish a $100million Brunei Young Entrepreneurship Fund and scheme. This initiative will groom 2,000 youths in a bootcamp partnership with Microsoft for Entrepreneurs, Alibaba Academy, Google and IBM on how to build and scale sustainable businesses for this digital era. Upon completion of this programme, they will have to come up with innovative ideas to solve the problems of ASEAN, Asia and other key global Islamic markets like Turkey, etc to sell their products. About 8,000 jobs will be created since each of the 2,000 entrepreneurs will be mandated to create 4 jobs.

Brunei Investment Agency should Invest in global Technology companies and startups to increase its Assets: The state sovereign investment vehicle, Brunei Investment Agency should redesign its investment areas and acquire equity in technology companies like Alibaba,Tencent, Microsoft, Google, I-Flytek which develops speech recognition technology for most Chinese tech brands like China Mobile, Sensetime and China’s No 1 Insurance brand Ping An as well as fast rising global startups. With their market value growing exponentially due to their category king status, acquiring equity in these brands will increase BIA’s assets under management to about a $100billion in a few years to come.

Establishment of a Free Trade Zone: Brunei should establish an Industrial Park cum Free Trade Zone which will target investments worth $100billion in oil and gas based industries, light manufacturing, agro allied, industrial equipment, etc. About 20,000 direct and 100,000 indirect jobs can be generated through this project. Their target market will be the ASEAN sub region and Asia Pacific markets.

Partnership with Emirates Airlines or Singapore Airlines to promote Brunei Tourism: The Tourism Promotion Agency of Brunei should seal a partnership with leading airlines like Emirates Airlines or Singapore Airlines to promote Brunei as a global tourism destination which is ready to welcome tourists.

Partnership with Alibaba to attract Chinese tourists: The Brunei Tourism Development Agency should seal a strategic partnership with Chinese E-Commerce giant to promote the sultanate as a destination for tourists from the Middle Kingdom. The Jerudong Resort should be resuscitated while IstanNurulIman Palace which is the world’s biggest and most luxurious can be made an attraction which will attract over 1 million visitors like the Queen of England’s Buckingham Palace.

Marketing Brunei Tourism through Soccer Sponsorship in England: Considering Brunei’s ties with England, its tourism promotion agency should sponsor a top football club in the English Premier League like Manchester United, which is the biggest with a massive global fan base beyond England of over 100million. Rwanda which is now Africa’s destination for tourism related events marketed herself by her partnership with Arsenal Football Club. Brunei Tourism should do the same.

Organize the Brunei UEFA Champions Cup: A Cup tournament sponsored by the Sultan Of Brunei which will involve the leading teams from the top soccer leagues in Europe as pre-season competition will boost tourist influx as fans from these clubs will visit the sultanate to support their teams contributing to boost in GDP.

Organize The Brunei Grand Prix: As a lover of cars and the world’s largest collector, The Sultan Of Brunei should in partnership with Formula One organize an annual Brunei Grand Prix. This will attract the world’s best racers like Lewis Hamilton, Sebastian Vettel etc. boosting its tourism and economic GDP.

Organize The Brunei Marathon: A gold label International Marathon in conjunction with the International Amateur Athletics Federation should be organized in Brunei annually which will feature not less than 100,000 participants from across the globe including elite athletes will also increase its tourism receipts and make it a destination for sports and fitness.

Organize The Brunei Open: As a tennis player, His Majesty should seal a partnership with the International Tennis Federation to organize the annual Brunei Tennis Open which will attract leading stars like Novak Djokovic, Rafael Nadal, Roger Federer, Serena Williams and Naomi Osaka amongst others competing for the prize money which will also be an attraction for tennis lovers across the world.

Brunei needs this economic redesign which has transformed the Emirate of Dubai from being previously oil dependent to a sustainable tripod anchored on technology, trade and tourism.