Date: 1997.

Let’s assume you are a consultant helping a small American bookstore on strategy. The store has $10,000 it wants to invest on expanding its bookstore.

But at the same time, a startup is going public. That firm is named Amazon.

You have two options:

• Put that $10,000 on Amazon shares
• Invest the $10,000 to expand the bookstore

What will you do?

Date – 2018

A $100 invested in Amazon in 1997 would be $120,000 as of 2018. So, the $10k for option #1 would have brought in $12 million for the bookstore if it abandoned the whole idea of running a shop.

The second option would have been bankruptcy since bookstores in most American cities are only available in museums. Yes, he fought but Amazon was too much!

Commentary

This insight came to mind when I visited a big mall in Pennsylvania USA yesterday. This is the picture of a mall that used to host thousands of cars on a weekend [you can see JC Penney there]. It was unbelievable how Amazon has dislocated the mall system – they even turned off the traffic lights because the limited cars coming to showrooms have no need for same.

Yes, the malls are showrooms – you want to buy a refrigerator in Amazon but you want to feel it physically in JC Penney before you click submit in Amazon.

A huge lesson as AI begins its journey into markets and industrial sectors: it may make sense, in some cases, to just save that money and put it in entities that make sense over trying to fight for fighting sake. May your antenna be alert to know when dislocations are happening to avoid taking the second option!

Last year, we told a real estate firm in South Africa to redesign its new mall plan to make it possible, in deep future, to serve as a residential estate in case ecommerce causes paralysis in South Africa. So, the new mall has an element that if malls business begins to crash, the properties can be easily retrofitted into a residential estate.

 By Nnamdi Odumody

As part of the reforms aimed at opening up the Chinese economy, a free trade port is being established at the Shanghai Free Trade Zone. A Free Trade Port is a port that capital, goods and people can enter and exit freely within a national territory and is exempt from custom duties and taxes.

In the Free Trade Port, Offshore Trade will be implemented. Unlike Entrepot trade, the latter does not need the goods transportation pass system from the port of transshipment. The companies operating offshore trade could do business without the limitation of a transshipment port. Offshore trade will decrease the cost of international trade operators.

October of this year, the 19th National Congress of the Communist Party of China (“CPC”) was held in Beijing. The General Secretary of the CPC, Mr. Xi Jinping, announced a very ambitious development plan for China for the coming thirty years. He declared that China will stick to the “reform and open-up” policy. Hence, the government will give more reform power to the pilot free trade zone, and will explore the possibility of establishing a free trade port in China.

On November 10th, Mr. Wang Yang, a member of the Politburo Standing Committee of the CPC and the Vice Premier of the State Council, published an article in the People’s Daily (an official newspaper of the CPC). Mr. Yang defined the free trade port as a special area that is located within the national territory and outside of the customs; goods/capital/people can enter and exit freely.

In addition, most goods are exempted from duties and taxes. This area is a special economic function area at the highest level for an open process. It means that China will use more international and professional standards to establish the free trade port soon.

Offshore Finance is also expected to be part of the operations carried out in the free trade port. The offshore finance policies will include relevant measures to improve convenient procedures for capital flow, optimize cross border capital service for renminbi and other foreign currencies, enhance the innovation on cross border renminbi finance products, and facilitate the new out border finance model.

Nigeria Needs More Ports

The Lagos Ports are over congested causing the nation economic losses in billions of naira daily. Eastern Ports could provide a viable alternative by redesigning them as Free Trade Ports.

The Onitsha River Port which was built in 1983 by the President Shehu Shagari administration is a 1.2 million TEU port of destination that can clear goods from any part of the world, but the River will need to be dredged to allow smaller vessels come to the port from Lagos and Port Harcourt ports.

Oseakwa in Ihiala Local Government Area of Anambra State and Osemoto in Imo State are the deepest natural harbors in Nigeria and can be developed to become free trade ports of destination for goods from around the world. Osemoto has one of the potentially deepest seaports and lies only 18 nautical miles to the Atlantic Ocean. If pursued and completed as Public Private Partnerships by private investors and the South Eastern region governors, Osemoto seaport has the potential capacity of handling over 30 percent of marine traffic in Nigeria. At Obuaku, Azumini, Abia State, a free trade seaport can also be established there since it’s just a few miles to the Atlantic Ocean also.

The Ibaka Deep Seaport and Bakassi Deep Seaport projects promoted by the Akwa Ibom and Cross River State governments, respectively, can also be developed to become free trade ports since they are close to the Southeastern states, whose traders will utilize them to import and export goods, at affordable rates, rather than undergoing the stress of Lagos ports.

All Together

It is a very strategic thing for Nigeria to do urgently. Yes, the nation has to build ports in the South East and the South South to ensure the paralyses in Lagos ports are managed. There is no other better way to grow the economy of Nigeria than by building more ports across the nation. As we write, Lome Port has overtaken Apapa port on container volume. Part of the reason is that Apapa port is underperforming because of traffic. Nigeria can help reduce that stress by building functioning ports in South East and South South regions.

Lomé Port Overtakes Apapa Port as West African Regional Leader

In a previous article, I mentioned that the development and deployment of 5G has often pitched as a race between operators/countries and there seems to be an assumption that the country that dominates this race will gain a technological superiority and dominance. Russia is now formally in the 5G race as it plans to rapidly build its 5G networks and deploy 5G technologies as early as 2020.

In recent times, the United States Government accused Huawei of espionage but did not explicitly cite the development of 5G as a bone of contention. The US specifically mentioned that Huawei’s communication equipment could not be trusted and went a step further in warning its allies to neither trust China nor deploy Huawei’s equipment within their 5G networks.

Despite the warning, the US was unable to cite any evidence of risks/compromise in Huawei’s products. Of course, this creates doubt and makes one begin to wonder if this is an attempt to slow down China’s leading role within the 5G space or simply politics as usual. And if indeed there were a race among countries regarding the development and deployment of 5G, China seems to be leading, as a result of the Government’s support and aggressive technology ambition, which it calls ‘Made in China 2025’.

Countries like Australia, New Zealand, Japan etc. have thrown their weight behind the US stance and formally declared their intentions of excluding Huawei from their 5G networks.

In a further twist of event, the British Intelligence (despite a gruelling Brexit negotiation and a desperate need to formalize trade agreements) came forward with the suggestion that the deployment of Huawei’s equipment within their networks poses a manageable risk. The British Intelligence went further to ascertain that they have developed techniques capable of mitigating these threats within their networks. This is not particularly surprising to those familiar with the UK telecoms sectors as large mobile operators within the UK depend heavily on the use of Huawei’s equipment and technologies for their operations. This is besides the huge grant and funding awarded to higher institutions of learning within the UK to accelerate the development of communication technologies.

Like their British counterpart, the Europeans (especially the Germans), well known for their hard stance on privacy issues, have suggested that they could not find any evidence of espionage within their networks; specifically, that there is no evidence that Huawei is installing back door into its products for use within their networks and as such they may not exclude Huawei from their 5G networks.

Yet, countries like Canada are watching closely and are yet to formally announce their intentions of either excluding or including Huawei from their 5G networks. Canada could have other political or business reasons for sitting on the fence.

If indeed there are no evidence of espionage, as claimed by some of these countries, it makes one wonder if the US stance against Huawei is simply an attempt to stop Huawei’s (or China’s) supposedly ambition to dominate the 5G race or simply politics as usual.

CSR reporting is gradually becoming mainstream in Nigeria and other developing countries for any organisation committed to responsible business practice especially with the support and encouragement from regulatory agencies such as the Central Bank of Nigeria (CBN) and the Nigerian Stock Exchange (NSE). But when done incorrectly, reporting can do more harm than good both to the organisation and society at large.

The following are 10 mistakes to avoid when planning, implementing and reporting on your sustainability efforts:

1. Lack of Sustainability Strategy

Before thinking of reporting, you need to integrate sustainability principles within your organisation, assess through both internal and external audit depending on your operations and improve on performance to enable you collect valid and verifiable data for reporting and assurance. The process can be summarized as follows:

• Know thyself: Assess the organisational attitudes and understanding of social responsibility by leadership. Your CSR strategy must be authentic and must ring true for your organisation and stakeholders
• Choose a globally recognised standard to implement your strategy: An example of such standard is ISO 26000 Social Responsibility which covers 16 out of the 17 Sustainable Development Goals (SDGs). This provides for credibility and scalability.
• Implement and integrate Social Responsibility within all operations of your organisation including your relationships
• Work from the inside out: Implementation of SR strategy starts from within the organisation, for instance ensuring that you have implemented occupational health and safety within your organisation, stakeholder mapping and engagement, labor and employment conditions, fair operating practices, etc. then philanthropic and intervention schemes or activities and communication with external stakeholders.
• Continual improvement: Assess, measure and improve on sustainability strategy. Ensure that data is continuously being collected and verified for management review

2. Mismanaged data

Good data collection is essential to gaining meaningful results from initiatives such as auditing or foot printing. Assign data collection responsibilities to trained people (not just on sustainability reporting but on strategy and implementation as well) – either inside or outside your company – and continuously check the numbers for accuracy. Remember, you must work from Strategy to Reporting.

3. Materiality and Relevance

Avoid disordered priorities. Recognise that the pillars of the triple bottom line are interconnected, and that long-term sustainability goes beyond shareholder profits. A good manager will prioritise sustainability in the CSR reports by weighting it equal to financial performance. As well, implement within all organisational operations but report on things that are relevant. ISO 26000 SR has a procedure to determine relevance especially on field audits which is important in order to collect data for reporting.

4. Discounting feedback

Reporting shouldn’t be a one-way endeavour. Take the advice of third parties such as auditors and stakeholder panels, who can comment on your report and help verify data accuracy.

5. Breaking the rules

Good reporting should follow a trusted framework or guideline. The Global Reporting Initiative (GRI) is a good example. However, never ask your reporting firm to implement your strategy or allow your strategy consultant to be involved with assurance even if they have the skills to do so. Otherwise, the credibility and authenticity of your report or assurance will be questionable; avoid that conflict of interest.

6. Tenuous comparisons

Organisations are inclined to track their progress internally. Accept that you’re one fish in a large sea. Stakeholders will want to know how sustainable you are compared to your industry peers, not necessarily your own benchmarks.

7. Unreachable targets

Targets in CSR reporting should be linked to corporate priorities. Make them relevant and aggressive but still achievable. Always remember that you will still need to report for the next year therefore may be required to report on those targets set out in the current report.

8. Underreporting/overreporting

Don’t limit communication of your
sustainability performance to the sustainability report. Use a variety of media to communicate your progress and challenges. Ensure your message is consistent across media. However, do not make it look like an advertisement for the organisation.

9. Inadvertently greenwashing

While it’s important to convey your environmental and social progress, it’s a mistake to focus solely on the positives or on programmes immaterial to your organisation. Make reporting meaningful by acknowledging the areas where you still have room for improvement and tying your SR goals back to your company mission.

Done correctly, CSR reporting increases share price and bolsters stakeholder confidence in your firm even with the small and medium enterprises (SMEs). Done poorly, CSR reporting opens your company up to consumer derision and stakeholder criticism.

10. Image Laundering

Avoid using reporting as an image laundering tool. Address market, operational or stakeholder challenges with the aim of finding lasting solutions to the issues. Adopting globally recognized standards will help through due diligence to identify salient risks in any part of your operation, mitigate or completely eliminate them.