As one of the keynote speakers at the 4th annual West Africa Property Investment Summit, Dr. Andrew Nevin, Partner and Chief Economist for PwC Nigeria shared high level insights ahead of the region’s leading property investment conference taking place on 15 & 16 November at the Eko Hotel, Lagos. Featuring more than 90 speakers and 500 delegates from over 200 companies, #WAPI2018 will set the agenda for West Africa’s real estate’s executives.
As a respected regional and global authority on Nigeria and West Africa, Dr. Nevin’s presentation is titled: THE GLOBAL VIEW ON GEOPOLITICS, OIL & MACRO-ECONOMICS: How are these impacting investment in West African Real Estate?
In an increasingly volatile world (Trump, China, Turkey and more), emerging markets have been significantly impacted. But the question which Dr. Nevin, will help Nigeria’s executives answer is how volatility, government policy and oil will impact investment and development in Nigeria?
Why is Real Estate fundamental to growing an economy?
Real estate makes up 60% of the world’s global assets and in developed countries, real estate buttresses the financial sector, enabling for the creation of asset backed loans and securities. Nigeria’s real estate system cannot work without a proper land registry; banks cannot lend against a property without evidence of ownership. The current land titling system is onerous and excludes many people from formal ownership. Based on these facts, real estate is one of the most critical sectors that if reformed will propel growth and alleviate poverty in Nigeria.
Global volatility and the local Real Estate Market?
Foreign exchange and inflation have stabilized in Nigeria amid emerging market pressures. However, crude reliance continues to leave Nigeria vulnerable to external shocks. This creates persistent uncertainty for investors in Nigeria, which is affecting all sectors in the economy, including real estate.
In urban areas, commercial real estate occupancy has declined as a result of low demand in an underperforming economy. Consequently, office rent has declined by 20% over the last 3 years in the high-end market , while co-working spaces are becoming more popular, consistent with the growing number of tech start-ups and entrepreneurs.
In the premium residential market, demand has shifted to less expensive semi-detached houses and apartments. There is also persistently huge demand for affordable housing in Nigeria. Nigeria’s population is set to exceed 250 million people by 2030 (roughly 50 million households), and by 2025, our housing deficit will be approximately 20 million . We are not building enough houses for people to live in.
Global volatility has increased the oil price, which has benefitted the immediate public sector coffers, but is this a good thing? Some have argued that a lower oil price will drive economic reform, but won’t $70 – $80 oil keep reform at bay?
The economy is benefitting from rising oil prices. The reality is that Nigeria requires capital to invest in critical sectors and fund long-term structural changes. Over the last three years, we have seen government debt grow from 12% of GDP in 2015 to 20% in 2017. A further indication of the high demand for government revenue is the Voluntary Asset and Income Declaration Scheme (VAIDS), which was implemented to grow tax revenue.
Failure to diversify the economy is a result of bad policies and poor implementation of good policies. Oil prices have fluctuated since the first quarter of 2016 (over 2 years ago) and we still have not achieved a diversified economy. There is no reason to believe that persistently low prices in the future will make this happen.
How have macro-development factors impacted the real estate sector – has there been less transactions, or investment, and has Nigeria bucked the trend?
The real estate sector has not seen positive growth since the start of the recession in 2016. The sector continues to lag behind overall growth, recording a growth rate of -3.88% in the second quarter 2018. Nevertheless, this is an improvement from the -9.4% growth of the preceding quarter.
The tight monetary environment – high interest rates and currency restrictions – are huge contributors to the slow growth in the real estate sector. Heavy government borrowing has crowded out the private sector, making it difficult to investors to finance the capital-intensive projects of the real estate sector. This issue reinforces the need for the government to undertake structural reforms that will improve capital stock and business environment.
If we look further ahead to 2019 – what are the major concerns going to be?
The 2019 elections will revolve around the economy. There is growing frustration over slow growth, high unemployment, low liquidity and poor infrastructure. Foreign investors who
have low confidence in the economy are also keeping close watch. Thus, the election outcome will have some effect on Nigeria’s economic health in the short run.
Over the last year, the ease of doing business has risen 25 places to rank 145 out of 190 countries, however, the absence of major reforms in infrastructure, power and land ownership will ultimately stifle advancements in improving the business environment in the long run.
Where do you see the investment case for Nigeria and the region in the next 12-18 months, and do you think we are about to see a continued growth curve?
In the absence of sweeping structural reforms, Nigeria will continue to experience slow growth through 2022. The critical takeaway here is that income per capita will decline each year over the next five years as population growth exceeds GDP growth, if no action is taken. Investor confidence will be largely determined by the elections and the ongoing security situation in Nigeria.
To register for West Africa’s largest real estate event, visit www.WAPISummit.com/register as seats are limited.
APC: Oshiomhole bows, says he accepts dissolution of NWC in good faith
Former National Chairman of the ruling All Progressives Congress (APC), Comrade Adams Oshiohmole, says he has accepted the decision of National Executive Committee (NEC) to dissolve the National Working Committee (NWC).
The NWC was dissolved on Thursday following the recommendation of President Muhammadu Buhari. Yobe State Governor, Mai Mala Buni, was thereafter appointed the Chairman of the party’s caretaker committee.
Addressing a press conference in Abuja on Saturday, Oshiomhole said he had also directed his lawyers to withdraw his appeal pending at the supreme court. He was challenging his suspension as the party’s National Chairman.
According to the former governor of Edo State, he had no regrets for the role he played in the party. He also highlighted his achievements as party chairman.
“The APC under my chairmanship has done its best and the results are there. Of course we have now been dissolved and I have accepted that dissolution in good faith,” Oshiomhole said.
“I’m not going into the question of legality or illegality. The bottom-line is that the president who invited me to lead the party and who mobilised all the support for my emergence as chairman also presided over the meeting where the NWC has now been dissolved.
“Mr President graciously invited me to run for the office of chairmanship of the party in 2018 precisely about two years ago. The president told me then that if we do not reform the APC, we can as well forget about the party.
“You know that reforms are challenging and it will entail taking difficult decisions. Mine has been a life of trouble and I accepted this and I believe I did my best.
“I’m happy that at the end of the day, 2019 elections have come and gone thanks to Nigerian people, our president had more votes in 2019 than we had in 2015. We have more members in the senate and house of representatives.”
BreakingNews: Senator Abiola Ajimobi Burial Set for Sunday
Burial arrangements for His Excellency Senator Abiola Ajimobi
Details of the funeral ceremony of His Excellency Senator Abiola Ajimobi have been released by the family.
In close consultation with the governments of Lagos and Oyo States, the date for the burial ceremony has been announced. Barring any changes, his body will be interred at the Senator Ishaq Abiola Ajimobi Central Mosque at Oke Ado, Ibadan at 12noon on Sunday the 28th of June 2020 after the traditional Muslim prayers.
To ensure that strict COVID-19 protocols are adhered to and in light of the current circumstances of our national health challenges, the family appeals to the public to observe strict adherence to COVID-19 protocols in their participation. Furthermore, details of the live media coverage of the funeral ceremony will be made public by tomorrow.
In the near future, details of a larger funeral gathering will be announced where a lot more of his well wishers will have the opportunity to pay him their respect.
26 June 2020
$2.8 BILLION AKK PIPELINE PROJECT: BUHARI STRIKES AGAIN!
By Femi Adesina
Something good is already happening. Something marvelous is in store, as Federal Government kickstarts the $2.8 billion Ajaokuta-Kaduna-Kano (AKK) National Gas Pipeline Project next Tuesday. It’s another humongous signature milestone by President Muhammadu Buhari, which will leave his footprints inexorably on the sands of time.
Roads. Bridges. Rail. Airports. Social Investment. And many others. Buhari is doing great things, which will pedestal him in the pantheon of great Nigerian leaders. And now, he has struck again. He is kicking off the AKK pipeline project, which will carry gas between the southern and northern parts of the country. The project will eventually extend to North Africa.
The Nigerian National Petroleum Corporation (NNPC) initially announced tenders for the project in July 2013. A project proposal was submitted to the Infrastructure Concession Regulatory Commission in June 2017, and the Federal Executive Council granted approval in December 2017. I tell you, this President Buhari has the heart of a lion.
If the intention was to continue to run the NNPC as an automated teller machine (ATM), as we have seen before in this country, will such staggering project ever be approved, not to talk of taking off? And some people are still asking for Change, when it is right before their very eyes.
The 614 kilometers-long national gas pipeline is Phase One of the Trans-Nigeria Gas Pipeline (TNGP) project, to be done on build and transfer public-private-partnership. It will transport 3,500 million metric standard cubic feet per day of dehydrated gas from several gas gathering projects located in southern Nigeria.
The project will be in three phases. Phase One is 200 kilometers-long, between Ajaokuta and Abuja, at a projected cost of $855 million.
Phase Two is 193 kilometers-long, between Abuja and Kaduna, to cost an estimated $835 million, while Phase Three is 221 kilometers-long, between Kaduna and Kano, at an approximate cost of $1.2 billion.
The project will eventually reach North Africa in subsequent phases.
What will AKK pipeline project do for Nigeria? Great and wonderful things. It will create steady and guaranteed gas supply network between the North and South, and will enhance power generation capacity. The industrial sector will be strengthened, local usage of gas will be promoted and increased, and the country’s revenue generation boosted through export of natural gas.
Nigeria is ranked the 7th most endowed natural gas country in the world. She sits on about 180 trillion cubic feet of natural gas deposits, which can be utilized as gas to power, gas to petrochemicals, liquefied natural gas (LNG), liquefied petroleum gas (LPG), compressed natural gas (CNG), among others.
Over the years, Nigeria has exploited its oil resources more, to the detriment of gas, which incidentally fetches more revenue, but is also more expensive to prospect.
One big advantage the average Nigerian can look forward to is the evolvement of compressed natural gas (CNG), which is still at pilot stage in the country.
While presenting his performance report to the Federal Executive Council recently, Minister of State for Petroleum, Timipre Sylva, spoke extensively about CNG, and what it can do for Nigeria as an alternative to petrol.
He listed the challenges of the oil and gas sector to include; under-recovery, crude theft, insecurity, high cost of production, very low LPG penetration, refineries shutdown, long contracting cycle, among others.
Sylva stressed that the oil and gas sector remains critical to the Nigerian economy, even as we strive to diversify. He identified CNG and LPG penetration as priority.
Said the Minister: “The switch to CNG will help reduce the burden of petrol subsidy on the finances of the country, and government should encourage Nigerians to use CNG as fuel for transportation.”
CNG began as a pilot project in the country in 2006, but target for conversion workshops was not met till 2015. About 4,000 vehicles run on CNG in Benin, Edo State, and it’s about 50% cheaper than petrol.
Vehicles running on CNG, statistics show, save about N1,143 daily, compared with petrol. This amounts to over N30, 000 monthly. The cost of converting the car can thus be recovered within six months.
Gas is cleaner energy, cheaper than petrol, and more friendly to the environment. Global warming will, therefore, be slowed down.
More than 175,000 vehicles run on CNG in America today, and 23 million worldwide. Nigeria will join the number, and boost productivity.
The Buhari signature projects will remain landmarks in Nigeria. Help me count them: Roads, rail, bridges, airports, agriculture, AKK… and may more.
Surely, we will always remember this President for good.
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