Remarks By VP Osinbajo During Interaction With Nigerian Community In South Africa

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REMARKS BY HIS EXCELLENCY, PROF. YEMI OSINBAJO, SAN, AT THE INTERACTION WITH NIGERIANS RESIDENT IN SOUTH AFRICA ON 8TH OF NOVEMBER 2018

Thanks for this opportunity to be here and to be able to share this period with you and also hopefully answer some of your questions to the very best of my ability. Some of them are very useful advice and I think that they are already very well put.

But I think it was the first question, which was on infrastructure, empty silos etc. Well, yes there are several silos, many are empty but many are also occupied. We have a few, especially the ones that are in the North, that we had to use for strategic storage and all that. But, clearly there’s a need for some private sector participation in running those silos. Some of the state governments wanted to take them on, and as you rightly said, there are some in locations that don’t necessarily have that much activity.

The whole idea is that practically anywhere you can actually grow maize, you can grow a lot of these things. So for example, there’s one in Ogun state, there’s one in Southwest, where already, there is quite a number of activity around maize growing and all that. There are two plantations that are growing and they hope that they would use that silos but one of the critical problems we have is the fact that these are government run silos. And really that for me, is a problem because the government simply doesn’t do business that well, so it makes more sense for the private sector people to get more involved. So, if there are management companies, South African management companies that are interested, why not?

We were privatizing some of them already and Ministry of Agriculture has been talking to some state government, and some private sector people. So, I think it makes perfect sense if they’re interested in doing such. You talked a bit about free trade, and the fact that we’re working in different currencies, but what we’ve seen is that, for us, the new African Continental Free Trade Area and all that; what we’ve tried to do in the meantime is to actively engage with our private sector people within the industry – with Manufacturers Association of Nigeria, and many of the critical stakeholders.

Some of the concerns that we have to redress and in order to be effective, you need to strengthen cost, especially cost locally. The cost has to make sense, production has to make sense locally, in fact, the local environment has to make sense. Otherwise, what you’re going to find is a completely uncompetitive situation. And one of the chief fears that people have is the whole idea that third parties to trade agreements may take advantage of origin rules and trans-ship and dump. So, there are those kinds of concerns that people have. So, we’ve been trying to work through that, as a matter of fact we had an African Trade Forum meeting last Friday in Nigeria, where a lot of the stakeholders, these are the parties from all other countries in Africa, who of course, are interested in seeing that this document is signed and that we begin to implement.

I think quite a few of the countries now agree that there has to be a rigorous process of consultation, especially with the principal stakeholders in the countries and that’s what we’re trying to get done before take the next step. But there’s no question at all that there are advantages of free trade, the questions are always going to be there, different currencies. In fact, some of the regional economic agreements at the moment are not working very well, so people have problems with that as well and think, why do these big ones when the local ones you have are not working very well. But we think that ultimately, we must come to a point where we’re using the Africa Free Trade Agreement, and where we’re implementing it. There’s no question at all that the African market is where we all ought to play, its a big market, diverse and all that, and it makes sense ultimately for all of us.

Deola Adesanya wanted to know about quarries and what our mining interests are. I’ll just take that with part of the questions asked about mining. Now, we have a good mining framework and really, we’ve made a lot of song and dance about the mining framework and I’m a bit quite surprised that you say that people are still not happy. But you see, I think the process is very open, with what we’ve tried to do. And one of the critical things that we’ve done is to ensure that with the Ministry of Mines and Power, not only did we write a new mining policy, we invited stakeholders to contribute to this new mining policy.

A new mining policy that has been approved by the government, and there are several persons who are coming in. Several expressions of interest, Canadians, Australians, I believe the South Africans also have come in. Except if you have specific concerns, very specific issues, otherwise, the framework in my view, is working very well. I don’t see the problem with the framework; I think the framework is working well. There may be specific issues, specific concerns and what we did where we had specific concerns was a lab. I don’t know whether any of the companies I used to speak about attended the Focus Labs.

We had a focus lab, for investments in Nigeria that were huge investments that may have some administrative or regulatory challenges. And what we did was we brought everybody into the room, for a six-week period, all the agencies, all the ministers, all the regulatory agencies and the concerned private sector companies were all there. And what we tried to do was work through specific issues, specific problems. As a matter of fact, there’s a gold mining company, I’m not very certain of the name, it was one of the principal companies that had some issues and those issues were resolved in the area of mining.

There was yet another company doing coal in Enugu, so if people are specific about their problems, we can look at those specific problems. And the focus labs are continuing. This is a framework for ensuring that if you’re a big investor and you have problems, everyone is brought into the room to try and resolve what those specific problems may be. But I may not be able to say much unless those problems are very specific problems that you may want to highlight.

There was some talk about Ajaokuta and the problems around Ajaokuta. Ajaokuta is peculiar because as you know, there has been litigation over Ajaokuta and what has happened over time is that it has been extremely difficult to resolve those litigations. As a matter of fact, just last week, we held a series of meetings, over the mediation that’s been going on. So, after the transfers were done, some of the new investors went to court and this is a long-running thing, it’s almost five years old.

In terms of the conflict between the parties who invested there and what their concerns have been, there’s a process of mediation that’s been going on, we hope we’ll be able to resolve that, to free up that investment because that’s a huge investment that’s been left out there for years, on account of the fact that there have been disputes over the concession and what to do with the concession and the disputes, unfortunately, between two investors. One who feels that they have some priority over the other and that’s been an issue we’ve been trying to resolve.

With respect to the “Adapt IT”, I won’t be able to answer that at all unless you’re able to give some more specifics, I mean if you have a contract that you’re trying to get for the financials of public sector companies in Nigeria, that’s a very narrow issue. I think if we might be able to talk about that on the side. But obviously, anyone who wants to do their public sector financials, looking at annual statements and trying to increase transparency, will interest us.

I’m sure you already know that we have the IPPIS, which is geared toward financial transparency and all of that. And then also, we have the GIFMIS, which is another of the facilities we have been using. But it will be interesting to see what you have. That’s a discussion I think we can take offline. Housing, MOU again, I think we have to look at that offline as well. Though I don’t know what the details of that are, but obviously, it would be interesting to see what the exact details are. But I really can’t, without knowing exactly where you are and what’s going on, I may not be able to make a real comment on that. But I don’t know whether you are familiar with the fact that we have a Family Homes Funding, a major project on social housing that we’re building up a fund, a N1trillion fund. I think we can take that conversation a little further if we’re able to meet and talk about this, I have one or two people here with me who might be able to help with following up.

The business climate uncertainties – I don’t think there are any uncertainties in the business climate in Nigeria. The mere fact that MTN has a problem doesn’t mean that there’s uncertainty in the business climate in Nigeria. MTN’s situation is an unfortunate one because as you know, they had a previous situation, which led to a fine. But this particular one is one that I think we must resolve and that is already going on.

We’ve already put in place a committee that is looking at how to resolve this amicably. I think that when all is taken to account, I do not think that this is a situation where MTN would be on the back foot at all. And I think most of us have agreed that this can be resolved amicably and without any great damage or loss being done to the company. I don’t want to preempt what is going on, but only to say, that we have it in hand and I’m sure MTN themselves are quite satisfied with the pace of the resolution with what is going on. But frankly, it is difficult to say that there are uncertainties on account of the fact that one company has a problem with the regulatory authorities. I don’t think that is enough to be described as uncertainties.

With what we’re doing in Nigeria, investors are here and there, we’re trying to work with them closely but where there are problems, we also try to solve them. I chaired the second meeting of resolving this MTN issue and we take all of the regulatory problems of all of our investors have seriously, and that’s how I chair even the meetings to resolve some of these issues.

So, on infrastructure and the maintenance, first, let me say that yes, you’re right, about challenges around maintenance of public infrastructure and all that but with effect from 2016, every infrastructural contract must come with a maintenance component. So that’s a rule now. But the real question is what to do with all the other public infrastructure and I think that it really must be on a case-by-case basis because there must be contracts. And in companies such as yours, maintenance, facilities management must enter into contracts with the public sector companies that are concerned.

Asides from every new infrastructure coming with a maintenance contract, or maintenance component, in order to do whatever else, it must be on a case-by-case basis with the public sector companies. But I think it is a very important issue, extremely so. Especially because we’ve found with several of the infrastructures and that’s really why this rule came into force, you find that the cost to the government, the cost to the public revenue of trying to maintain or rebuild or rehabilitate public infrastructure that is damaged or hasn’t been maintained, is huge. Especially in comparison to if we made the sensible choice from the beginning of ensuring that there’s a maintenance component to the contract.

Regarding Nigeria Air, and the suspension of the project – what has happened is really the question around how this project should go forward. Now, we had the original concept which would be purely private sector driven but somewhere along the line, we found that the Ministry of Aviation, and the ICRC which is a government concession agency, felt that perhaps they should start by a government-owned SPV that would initially start the Nigeria Air and then a year down the line, invite private sector participation. Now some private sector persons had indicated that they would be interested. But we thought that would be a completely wrong model. We thought that anyone who wanted to participate in Nigeria Air should come forward from day one. Because we have the roots and we have the Bilateral Air Services Agreement with everyone. So really, we thought it should be purely private sector driven. Of course, there will be some government component but we thought that shouldn’t be any more than five – ten percent, just to enable the airline to fly the Nigerian flag.

So, really it is more around trying to find a re-developed model to ensure that it is purely private sector driven and that the government doesn’t start it and then invite the private sector. So that is really what accounts for the suspension. It certainly is still very much on the cards, the government of Nigerian definitely intents to do a Nigeria Air, because we have all these roots and we have all of the capacity in there. Nigerians are forever travelling and this is a very major market for air travel. We’ll definitely come round to it as quickly as possible; we’re working on the new model.

About improving health systems, at the moment, we’re working with all of the various funders, the PEC funders, the USAIDS and all that, practically everybody. Now, we always have challenges with funding healthcare. But for us, I think that we’re very concerned about wrapping up our own healthcare financing. And that’s why one of the chief issues that we’re dealing with now is the whole issue of the NHIS, the National Health Insurance. We’re ensuring that we’re able to make health insurance compulsory, and government being able to make the payments for those who cannot afford to make those payments. So, we’re really rethinking the whole National Health Insurance because we think that long-term, you cannot have funding and budget funding for 200million Nigerians growing at about 3% every year.

So the NHIS really is our way of ensuring that we’re able to fund practically the healthcare going forward. And one of the things that Mr. President has said, is that the mere idea of that we’re taking so much aid-funding for healthcare in Nigeria, is unacceptable. And this is why we’re focusing a great deal on NHIS and try to get health insurance working.

For the first time in years, we’re complying with our Healthcare Act 2014 that says 1% of our CRL, which is the Consolidated Revenue Fund, all of our revenue, 1% of it, must go to healthcare. So, in the current budget, 1% of our entire revenue is going to healthcare and we’re trying to ramp that up. But budget cannot do it. I’m sure you’re familiar with the health challenges and the healthcare challenges, especially with the financing. So, those are the steps we intend to take. Of course, we’ll like it if the funders were more helpful and more cooperative but we think that the problem really is ours and we need to solve the problem as much as possible ourselves.

After the second set of questions were asked…

I want to say that by and large, if you look at the Nigerian community here in South Africa, I think that the vast majorities are really doing very well indeed. I know there are several, even in the Universities, several professors, several persons in research agencies, and all of that. I think that always, our emphasis as you’ve said, must be on celebrating and highlighting these individuals who are doing so excellently here and who are doing so well, while working with respect to the very few who obviously make the news but are clearly not representative in any way, to the vast majority of our people.

But I also want to mention that the last time I was here in South Africa, I had a meeting with the Nigerian business community and I’m a bit surprised in this meeting, that the same issue is not raised about the enabling environment for Nigerian businesses here. Well, I expected perhaps that Ibikunle might want to mention but obviously, he might not want to be controversial amongst his host here. But frankly, I think this is an issue that we all are supposed to look at.

Nigeria is open for business, in a very real sense, you can be a 100% owner of a business and repatriate all your dividends. I think that goes to the question that was asked on local content. In Nigeria, you’re allowed to, if you sell property you can repatriate it. So, we are certainly open for business and we’ll like to see the same here in South Africa, we’ll like to see the same sort of, even if it is not on a reciprocal basis, certainly we’ll like to see Nigerian businesses doing very well here and being accommodated in much the same way we accommodate South African businesses in Nigeria.

I want to take the point also, about the local content, the young man who asked about navy, land, navy and air defence contracts. First, defence contracts tend to be, in terms of procurement, what we’ve tried to do is to make them as government-to-government as possible, in terms of procurements. But it is almost invariably is private companies that the governments put forward anyway, but we really would prefer to work with governments, with respect to defence contracts. But then, several private companies come forward but we usually, especially in the past two years or so, we usually prefer that governments are also involved in that whole process.

But, it’s not to say that there are no contracts that are between ministries of defence and private companies, but as I said, it’s a bit of a policy that we’re trying to evolve on account of the fact that many times, there’s always some involvement.

In some cases, political involvement in the sale of defence assets and we just prefer that we deal with all the issues round the table at once, so we don’t run into problems as we go on. But with respect to local content, we don’t insist that a private company coming into Nigeria must have any kind of local content or local participation, you can be completely 100% owned.

Foreigners can own companies 100%. So we don’t insist that there must be local content. What we insist on, we have something called Executive Order 005, which really is looking more at technology issues. So where a company is doing a contract in Nigeria, where it’s executing infrastructural contracts in Nigeria, we expect a certain component of Nigerian engineers, Nigerian science and tech people will be factored into such contracts. That really has nothing to do with ownership, it’s more to do with the execution, we expect a certain percentage of Nigerian participation from the point of view of those who are engaged to do the engineering works and some of the works around science and technology. But asides from that, there is really no local content required. The local government requirement we have is more for Oil and Gas procurements and Oil and Gas contracts. We have a law for local contents for Oil and Gas procurement.

There is also an Executive Order 003, which also talks about public procurements and local contents in public procurements but that has nothing to do with what you’re saying. My attention was just draw to Executive Order 003 but that’s more public procurement. So, if the government of Nigeria or any of its agencies want to buy anything or wants to procure contracts, you expect that a portion of it will have local content but that has nothing to do with foreign investors coming into Nigeria.

I think it’s Chief Benjamin Okoli, President of the Nigerian Community, well, if you’re not a chief yet, I’ll make you one, wanted to know about diaspora voting. First there are two problems around diaspora voting. The first is that we need to have some certainty as to the number of residents of Nigeria resident in a particular country.

We need to know how many Nigerians, for example, are in South Africa, how many are in the UK, etc.  Generally having up-to-date data of Nigerians, where they are and where they’re located, is one.

The second, is that of course, we need a law. Because the law at the moment does not allow diaspora voting. And I’ve heard several of our people in diaspora who want to participate in voting, now we have the good fortune of Abike Dabiri being appointed the Executive Chairman of the Diaspora Commission and one of the principal things that the diaspora commission would be looking at are all of these sorts of issues and she’s one of the principal proponents of even diaspora voting.

I think we’re in a good place now to advance that cause, but it would require legislative change, there has to be a law because, at the moment, the law only allows you to vote if you’re within constituencies as delineated under our electoral laws. So if you’re not in Nigeria, you obviously can’t vote at the moment, so there’s a need for a change.

The last point of course on that is that we need to also work very hard about electoral integrity generally, and you know the sort of disputes we’ve had over elections, rigging of elections and the sort of controversies we’ve had over time. So, while trying to grapple with the local issues in the past three years, I think that has really reduced in the last 5 years. We’re getting a bit more confident about the integrity of the whole electoral process. But I’m not so sure that anyone is in a hurry to immediately bring in the added dimension of diaspora voting.

Where for example, we may have been reasonably certain about the number of votes that we have, suddenly somebody comes from South Africa with 5million votes!  I think we really have to watch and bring this in as carefully as possible.

But in truth, I think it is an issue we must address, I believe that with the kind of enthusiasm that many of our people in diaspora have about voting, I don’t think it would be too long before we actually have an amendment. Especially now with electronic voting.

The young entrepreneurs – I’m sure you’re quite familiar with all of the work that’s going on with young entrepreneurs in Nigeria, especially in the technology space, FinTech in particular, there’s a lot of excitement around there, a lot of work going on too. What we’ve done is about early this year, we set up a Technology and Creativity Advisory Group which I have the privilege of chairing.

The group is really meant to formulate policies around technology and creativity, especially entertainment, these are two areas where there’s a lot of very excellent stuff that’s going on and we’re all very excited about what we’re seeing. Now, we brought all of these young people together, many of them entrepreneurs with this Technology and Creativity Advisory Group, basically to formulate policy. Because the kinds of things that we’re seeing, is a whole lot of disruption going on especially in the financial space.

Now you have the banks that are extremely worried, about what is going on with the FinTech companies, and the FinTech companies are of course aggressively expanding the scope in financial inclusion, going to the places where banks wouldn’t go, doing the sort of things banks wouldn’t do, and generally creating a great deal of excitement in the space.

Now, in order to ensure that we don’t stifle that, and also assuring the banks and reassuring the entire financial environment that they’re still going to have some lunch at the end of what is going on, we’re working on all of these policies and we’re working with the principal players, in both technology and creativity.

Recently also, the Bank of Industry established a 10billion Tech Fund, basically to fund innovation and creativity. So, that is also something that can be accessed. We’re also talking to FDP, as a matter of fact, between yesterday and today, we’ve held further discussions on an innovation fund that we’re hoping the FDP can work with us on. As you know, Rwanda and Ivory Coast have innovation funds supported by the FDP and we’re looking at somewhere along those lines, we’re looking at a 500million dollar fund, which we hope if we’re to get half of that, we would leverage that for the entire sum.

We’re really looking at how to effectively fund entrepreneurs, innovation, technology etc. We think that this is certainly for us, the way to go and the way of the future.

Thank you.