Monthly Archives: August 2012

LAGOS NEW TRAFFIC LAW: 11 MORE VITAL THINGS YOU MUST KNOW

I wrote an article on the seven vital things you must know about the Lagos new traffic law a couple of days ago.  Since then, I have been besieged by people asking for more clarifications and analysis of other areas of the law. So I decided to add eleven more key issues worthy of note to you as a driver on Lagos roads. There is clearly no substitute to reading the over 80 pages of the law yourself, but I will try and highlight eleven more salient things you must know about this well intentioned but badly drafted law.

  1. Smoking is prohibited while driving. Schedule 1, item 10 make you liable to a N20K fine for a first offence of smoking while driving. So you have to suspend the habit until you arrive your destination if you are not to infringe the law.
  2. There are lots of new restrictions on motorcycles in the new law. A typical example is item 21 of schedule 1 that makes it an offence to use a horn designed for a car on a motorcycle. So all motorcycle riders should read this law in full or obtain legal advise on its provisions. It has a lot of new liabilities for motorcycle riders in the state.
  3. Tailgating an emergency vehicle is now an offence based on item 24 in schedule 1. So think twice before trying to sneak behind an ambulance when you are stuck in traffic. You could be N20K worse of for a first offence.
  4. You are liable to pay N50,000 fine if your car breaks down on Lagos roads and causes obstruction. In addition item 36 of schedule 1 also make you liable for the cost of then towing your car away from where it breaks down; and this starts from N10,000.  While I can understand the need to pay for the towing away of a broken down vehicle; I cannot understand why Lagosians must now pay N50K as fine for a broken down car. By nature many broken down cars cause traffic obstruction. That is because they are unexpected and unplanned incidents. But it is now a traffic offence in Lagos for your car to break down. This will be used to exploit the people and must be repealed in my opinion.
  5. In addition to 4 above, Failure to display reflective warning sign at the car breakdown point attract an additional N20K fine. This is stated in item 42 of schedule 1. It seems drivers of old vehicles are now in trouble in Lagos. But get yourself a reflective warning sign (Triangle) if you want to avoid this penalty.
  6. It is now an offence to drive a Right Hand vehicle on Lagos road. Schedule 3, item 28 prohibits driving of right hand vehicles in Lagos; without giving any exemption. So I wonder how you get your imported right hand car to the mechanic village to have it converted without breaking the law. I guess you may need to tow the car from the port. So importers beware.
  7. It is now an offence to drive without a Spare Tyre.  Item 36 of Schedule 3 makes it an offence to drive without a spare tyre in your car. SO beware; otherwise you are liable to a fine of N20,000 for a first offence.
  8. Any staff of Lagos State Ministry of Transport can technically enforce any of the provisions of this law including arrest and impound of car. The law defines Authorised Officer very broadly indeed as including LASTMA, State Vehicle Inspection Service officials and any staff of the Ministry of Transportation. This is a recipe for abuse and confusion and a mischief charter. So beware.
  9. Contradiction exists on the issue of production of drivers licence on demand. Schedule IV section 15(p) states that a driver will have 24hrs to produce his licence at a designated office in Lagos. But this contradicts other sections of the law. With this contradiction in place, I will carry my licence around if I were you. Implementation will depend on the quality of LASTMA official you get.
  10. There is no explicit prohibition of eating or drinking while driving in my reading of the law. But Schedule 1, item 40 makes it an offence to “count money or otherwise engage in other activities when driving”. What exactly are other activities we are not told? So this is another broad provision that can be interpreted at the discretion of Lagos state official involve. Who draft laws like this? With so many vague provisions and broad interpretation of possible infringement. It is the worst legal drafting I have ever seen.
  11. Every private vehicle 5yrs old (from date of manufacture); must submit to an annual roadworthy test and obtain MOT certificate from Lagos Ministry of Transport. This certificate must be carried in the car at all times as failure to produce it will be an offence under Schedule IV section 11. No exemption is stated for visitors to Lagos from other states.

It is quite apparent that there are many good provisions in this law; but its bad drafting and poor use of language (added to an overzealous LASTMA) means it is going to be hell for many drivers in Lagos. But I reserve my greatest pity for visitors to Lagos from other states in Nigeria; given that many of these restrictions apply only in Lagos out of 36 states.

Lessons have not been learnt by the state government from the problems besetting the poor implementations of previous legislations, like the Tax laws; yet more are being created. There is little independent adjudication available and the officials are always reluctant to use the established dispute resolution afforded by the courts in their quest for speedy collection and meet their targets.

If Governor Fashola focuses purely on revenue targets being met and not on how they are making it happen; then he is burying his head in the sand. And as for LASTMA and its shenanigans; a whole book can be written about the atrocities of its officials. This is made more petrifying when you realise that many of the LASTMA officials were the Area Boys and Thugs of yesterday who got the job purely on the basis of political patronage; without much training and clearly without paradigm re-orientation. LASTMA Officers covering road signs indicating one way road limitation and then hiding behind trees to catch unsuspecting motorists. Lagosians whose cars breakdown on the road only to have unsympathetic LASTMA officials tow the car to their impound for obstruction. The list goes on and on. And the stipulated fines in some of these legislations for road offences are iniquitous. When a law imposes a fine of N20,000 and above (which is more than basic monthly salary) for simple road contravention; it is an invitation to corruption for the officialdom and penury for the people. The implementation realities are just wrong; regardless of the intentions of the government.

The state government should stop enacting any new legislation (in these areas) for a period (except there is an emergency) and focus its attention on getting the implementation of existing statutes right.  Independent Tribunals should be established if need be to facilitate an independent oversight of disputes on the road traffic and on tax and planning matters. People should be treated as innocent until proven guilty. They should be accorded the respect they deserve in a democratic society. And definitely more officials should be brought to book for acting beyond their powers and abuse of their office.

The state government need to win the hearts and minds of Lagosians if it is to succeed in its noble dream of transforming the state. So simply reeling out more laws will not succeed if proper implementation is not the focus of executive attention by the governor.

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7 VITAL THINGS YOU MUST KNOW ABOUT LAGOS NEW TRAFFIC LAW.

The new traffic laws in Lagos has generated a lot of news footprint over the past few weeks and I also wrote about it in a previous article on the need for effective implementation to avoid chaos on Lagos roads.  I am a fan of Governor Fashola and I believe he is well intentioned. But I also feel he is either misinformed or disinterested as to the level of atrocities committed daily by his henchmen and officials under the various agencies he has set up over the years. For instance; LASTMA is an agency many Lagosians will agree is needed but majority will also disapprove of the way it is currently managed and the manner in which they constitute themselves as terror to many law abiding Lagosians.

So to be more constructive and to help Lagos motorists; I decided to put on my Legal hat and read in full the new traffic law of Lagos; and here are the seven main areas and issues people need to be aware of about the new traffic law in practice.

  1. The new Law allows you to make and receive calls while driving; despite the erroneous information to the contrary printed in the media and misinformation by some government officials. Item 39 of Schedule 1 of the new law makes it an offence the “Making or receiving phone calls when driving without Hands Free”. So as long as you are using a hands-free kit and you use voice activated calling system; you are within the law and have not committed any offence.
  2. There is Danger of Double Jeopardy prosecution; this is contrary to natural justice in this jurisdiction. Section 20, sub section 1 and 2 creates the danger of prosecuting motorist more than once for the same offence. This is either bad legal drafting or an intentional invasion of citizens rights. Section 20 implies that if a person is charged with Careless or Inconsiderate driving; and the court is of the opinion that the offence is Not Proven; then the court can entertain the same charge again immediately after the first case. Although the law gives a small get out clause for the courts by stating: “…the Court shall, if it considers that he is prejudiced in his defence by reason of the new charge being so preferred, adjourn the hearing”. This section needs to be redrafted for clarity; but motorists need to be aware of this provision.
  3. The Law criminalizes driving while drunk; but there is no objective measurement of what being “Drunk” is. Section 21, (1) and (2) of the new law, refers to driving while under the influence of Alcohol or Drugs as being criminally liable. The problem is there is no reference to how to objectively determine these things.  The law simply stated that: “Any person who when driving or attempting to drive, or when in charge of a motor vehicle on a highway is under the influence of alcoholic drink or a drug to such an extent as to be incapable of having proper control of such vehicle, shall be liable on conviction…”. This is a highly subjective provision. How do you determine the level of impairment necessary to be liable. There is no mention of a drink drive limit or the use of any breathalyzer. So as a motorist you will have to go by the judgment of LASTMA and other officials; many of whom are drunk and drugged up themselves while on duty. This is a license for official abuse; hence the Lagos State government should be more precise on its provisions here to avoid uneven application of the law and subjective harassment of Lagosians.
  4. LASTMA or State Officials can now arrest a motorist if you do not produce your Drivers Licence on Demand. Section 28 of the new law gives state officials power to arrest without warrant anyone who is suspected of having committed an offence, who fails to produce a drivers licence on demand. So it is now illegal to drive in Lagos without having your drivers licence physically with you. This is the hallmark of a police state. I am sure the state government will refer to section 22 of the law, which refers to proof of identity when arrested. That section refers to “any other evidence of identity acceptable to the officer”.So what exactly is that? What is acceptable to one officer may not be to another. This is quite alarming. So be aware; you are better advised to hold your drivers licence in your wallet anytime you drive in Lagos to avoid undue harassment; unless this provision is amended.
  5. Owners will be liable for un-roadworthy Commercial vehicles even if it was taken without the owner’s permission or knowledge.  This is the most unfair provision of the entire law in my opinion.  So if your wayward Cousin takes your taxi car on a joyride without your consent or knowledge; you will still be criminally liable if your car is found to be unroadworthy; if you were aware it was in that state before it was taken without your consent; according to Sections 31 to 34 of the new law.  So if you park your unroadworthy commercial vehicle in your private garage; there is no law broken. But if someone takes the car unto the public highway without your knowledge or consent; you are criminally liable for your car being unroadworthy on a public road. This is madness. It is looking like Fashola has invented a strict liability crime here. Owners should have been indemnified if they can proof they were not aware or nor give consent to their vehicle to be taken; regardless of the state of the vehicle.  There is potential for unfair convictions on this ground and the state should look at amending these sections of the law. It seems the only way out of liability is to make sure your commercial vehicles are always in roadworthy conditions even if it is not in use and on your private land.
  6. The Commissioner for Transport has too many secondary powers of enforcement and can single-handedly change many traffic enforcement provisions. In addition to the noted provisions of the new law; the commissioner is empowered by section 38, to make vast changes and introduce new crime and enforcement instrument without recourse to the House of Assembly. This is called secondary legislation powers. For instance, section 38 (1) (q) gives the commissioner the power to change the speed limit in any area of Lagos state and criminalise those that exceed it. So the worry here is that these powers should be closely monitored to avoid abuse. You could be committing a crime driving at 40km per hour on a Lagos road because the commissioner changed the speed limit yesterday from 30km per hour. Any exercise of the secondary powers MUST be fully publicized to inform the public of developments and time must be given before changes take effect. The saving grace on this provision is that its use can be subject to Judicial Review  as it is an executive order rather than the primary Act of the Legislature. So jobs for the lawyers there.
  7. State government officials can be dismissed if they are proven to Demand or Receive any personal gratification in cash or kind according to Section 37 (1) and (2). This is a provision I want all Lagosians to exploit to the maximum by making sure all encounters with LASTMA or any state officials on the road is secretly recorded by video or audio. You must get your evidence and let us get the bad eggs out of uniform on our roads. So an official is liable to dismissal if he demands for bribe or accepts it when offered by the motorist. This is a good provision of the law that motorists can use to help sanitise the LASTMA bandits terrorizing honest Lagosians on a daily basis. As LASTMA management are known for backing their staff regardless of public accusations; watertight evidence will be needed to put pressure of them to act according to the provisions of the law by dismissing all officers that are found to be taking or demanding bride.

As you can see from the foregoing; there are areas to worry about in the new law and there are areas to commend the government for. So I will seriously admonish the government to review the entire law in practice in six months time to amend sections that are not working or too vague (of which there are a few) and make the law more precise and clearer to all concerned. I trust you have found this article useful.

Accordingly the mantra in Lagos state governmental institutions at the moment should be people friendly implementation. In 90s when Tony Blair became the Prime minister of the United Kingdom; he was asked what would be the focus of his new administration. His response was; Education, Education, Education. Thus emphasising the focus on Educational transformation in England schools. Governor Fashola should learn from that and make his own focus now to be; Implementation, Implementation, Implementation. Let us get right the laws that are already on the books, implement fully, study their effects and consequences; make adjustments as necessary, before more legislation is pilled on an already recalcitrant, over reaching and perhaps overworked government machinery.

We all support the drive for a new Lagos and ultimately a new Nigeria; but we should take care that we do not try to get there at a cost to the health, wellbeing and morale of the people. Nigerians already have enough to cope with, please don’t add any more aggravation Mr Governor.

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Abati: The Jonathan they don’t know – A REJOINDER

I read today’s piece in the Sun Newspaper by Reuben Abati titled: THE JONATHAN THEY DON’T KNOW.  (Link is: http://sunnewsonline.com/new/opinion/abati-the-jonathan-they-dont-know). As official spokesmen go; Abati has done a bland job of promoting his boss and his administration. But clearly what is good for GEJ is not necessarily good for Nigeria. I am surprised at the naivety or deliberate misdirection of Abati in his article. In the world of real politics; Presidents wins or loses elections not because of what they do right per se; but the significance of what they do wrong or don’t do at all.

That is why the famous Clinton cliché comes to mind with regards to American politics. He said: It’s the Economy stupid. What that simply means is that if the nation’s economy is bad and people are in pain; it does not matter how many wars you won as president; how many women you appoint into your cabinet or how many hours a day you work; you will NOT win an election and you will not be popular with the electorate.  So rather than Abati telling us all this good things about his boss; why does he not tell us what he has done on the salient issues to Nigerians; Unemployment; Collapsing Infrastructure, Corruption, Government waste; Inefficient public services and so on.

I agree that sometimes the critics of Jonathan’s administration try to portray him as a man that has never done any good at all for the nation. That will not be true and I am not in that category. Nobody can be a hundred per cent bad; we all have some good in us. Also nobody has a monopoly of knowledge.  Hence the issue is not whether GEJ has done some good for the nation since his assent into office; but the vital consideration is what has he done on the Major issues affecting Nigerians and is the country heading in the right direction.

So this administration will be judged by how well it performs on the main issues affecting ordinary Nigerians and not by many of the banal statistics and credits that Abati seek to amplify. We care less how many times the President eats if he creates an economy that allows Nigerians to put food on their own family table. Nigerians don’t care about how many megawatts of power you generate; they will only judge by how regular their power supply is. And if this administration has fixed the power sector; Abati will not need to say so; Nigerians will know for themselves in their daily living.

There is a Presidential election in the USA in November this year and despite many of the excellent things Obama administration has done for the USA; he risks losing that election simply because of the bad economic climate in the country. So Obama is not being judged by the many good things he has done; but by his perceived inability to fix the American Economy. This is the real politics Dr Abati. Your boss will not be evaluated by Nigerians based on many of those things you stated; but by the basic human need for economic progress, survival and advancement. So, based on the major issues topmost on the problem list for Nigerians; GEJ administration is not performing; although he may be performing well in other subsidiary areas.

Some of the things Abati stated in his article are laughable if not ridiculous. Abati stated for instance that: He (the President) knows Nigerians want infrastructure. That is why he is telling Bi-Courtney to fix Lagos-Ibadan Expressway or get out”. What a joke. This is the President of the Republic we are talking about. He is “Telling” a Bi-Courtney….. after many years of inactivity. A better leader would have sacked the buggers and allow new people to get on with it. After all, Bi-Courtney has breached their contractual timeline by many years. Abati makes his boss sound like an adviser rather an the all-powerful Executive President.  Abati further stated; “That is why he has directed the relevant agencies to get corrupt persons to answer for their misdeeds”.

So where is the proof or outcome of these directives?  How many have been arrested? How many cases has prosecution started? It’s all talk, talk and talk. We know the president can talk, but can he act? That is what Abati failed woefully to demonstrate in his piece. Showing us a president that can talk is not good enough; we need one that can act. Abati defended his boss by saying he does not eat much and does not get drunk. But what did GEJ need feeding allocation of almost N1Billion for in his 2012 budget. I know this was latter cut to over N700Million after many outcries. So the facts do not support Abati’s assertions.

But for all of us; Nigeria is what matters. Not GEJ or anybody else. So it is in our interest to help the nation succeed and not be blinded by partisan curtains. I believe the best way Abati can represent his boss is for him to do a SWOT (Strengths, Weaknesses, Opportunities & Threats) analysis of this administration.  An opposition will be more credible if it credits the government with some of the things they have got right; while still criticising them for what they have not done or got wrong. In the same way, a Spokesman for the President will be more credible if he does not insult our intelligence by making GEJ sound like the best thing since slice bread; but admit his mistakes, errors, corrective measures and of course successes as well. This will create more credibility for his views.

Finally, from my analysis, Abati and company are not using the right strategy to convey the message of their government in a vertically and horizontally complex media and communication landscape like Nigeria. It has already been said that politicians campaign in Poetry but govern in Prose. In an attempt to win the last election, GEJ promised the earth to everybody; now he is in power his performance is not meeting the expectations he helped to create. There are clear strategies to fix this imbalance and I will write about this in a future article. Not because I am a particular fan of GEJ; but I am a lover of Nigeria and will like to see this nation move forward for all our sakes. But in the meantime the spin-doctor should avoid spinning himself out of relevance.

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EFCC AND THE MAGIC OF SELECTIVE PROSECUTION

I have observed quietly the activities of the EFCC since inception. A perusal of the statues that set up the anti graft agency gives a seeming clear goal to the agency in terms of function and boundary of its activities. But while I was contemplating writing this article; I recollected the conversation I had with a former Senate President in Nigeria under Obasanjo regime that established the EFCC. This larger than life politician has been a friend of mine for many years and we spent time together in his London home from time to time. I remember challenging him on why the Nigerian Police is being disempowered by the successive government in Nigeria through the constant outsourcing of its traditional duties to new agencies.

First, the Federal Road Safety Corps (FRSC) was carved out of the Nigeria Police to look after traffic and road safety matters. Then came the ICPC and the EFCC to investigate and prosecute financial crimes. In fact there is a blur between the role of ICPC and EFCC as EFCC has sought in the past to prosecute public officials; which I thought was the duty of ICPC. But that is not my focus in this piece. It is sad to see the once strong and competent Nigeria Police reduced to a shell of itself through neglect and continued reduction of its remit. But that is a matter for another future article.

My focus here is the response of my Senate President friend  to my challenge about the many duplicated and even triplicated bodies all dealing with the same arena of crimes. I remember he answered glibly “ That is Politics for you my friend”. Not satisfied, I probed him further. He went on to explain that Politicians need to have various tools at their disposal and that Nigeria police was getting too ubiquitous (and too many hands to satisfy before you can get your way); so smaller agencies are easier to influence by the government. In smaller agencies you can get your way by simply sorting out one man (the head); but with the regular police, there are too many people to bring into line; he asserted.

So for instance, if a politician in power wants to deal with you (a public office holder); he could call the police on you and if that does not yield any result, he will then have the choice of ICPC and EFCC to set loose on you. It is interesting to see how many of our politicians in Nigeria think.  The truth of this assertion seems to have become more obvious to me in the past few weeks of observing the Farouk-Otedola saga.

It is my assumption that the EFCC was set up akin to the UK’s Serious Fraud Office; which specialises in prosecution of large, international and complex financial crimes only. But any casual observer of EFCC cannot help read weekly how EFCC is prosecuting people for stealing as little N100,000 from their employers. How is that a complex crime? Why can’t the Nigeria Police prosecute such minor and bog standard crimes? Yet when it came to Farouk-Otedola; a financial crime that involves hundreds of Million of Naira; it is the Nigeria Police that is doing the investigation and possible prosecution. I thought EFCC was set up especially for cases like Farouk-Otedola; and not for the minor cases they seem to waste their specialist skills on.

So the question is why is EFCC not dealing with Farouk-Otedola. Then my discussion with my Senate President friend came back to me. That the politicians choose the agency that they can most control to do their bidding in any given situation.  So it is clear that EFCC could be less controllable to pursue the agenda of the government in this particular case; so it was given to the Nigeria police. I thought EFCC was established to deal with matters like this as a “Serious Fraud” office equivalent. Why is EFCC prosecuting N100,000 financial crime and yet not allowed to deal with a major case of almost half a Billion naira fraud?

This is a deliberate mess created by the politicians to give impression they are waging real war on fraud and corruption when in fact they are only interested in selective prosecution of their opponents.  To restore public confidence; The government should immediately publish again a clear guidance of when EFCC, ICPC and Nigerian Police can lead the prosecution of cases. EFCC with its specialised assets, training and skills should concentrate on major, large and complex crimes only. The Nigeria police should deal with minor and straightforward financial crimes. As for ICPC; I am not really sure what value that brings to the table. It should just be scrapped and EFCC should be strengthened to do its work.

I believe one of the main reasons EFCC has not been as successful as it should be is the fact that it is becoming jack of all trade and master of non. It is prosecuting a N100,000 thief and a N100Billion thief at the same time.  Human nature means many of their staff will be more interested in the smaller and simpler cases; to be able to raise their conviction statistics. But that is not why they were established. EFCC should from now on focus on serious financial crimes and go after the “big guns” and stop chasing thieving drivers and houseboys.  They should leave that to the regular police.

And EFCC should assert its jurisdiction over cases that fall within its remit. It is a surprise to many Nigerians why the regular police are investigating Farouk-Otedola when such a complex case is exactly what EFCC exists for. But then; I see the hand of the government in this subterfuge and confusion.

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A TRAVELLER’S GUIDE TO TRANSFORMING ARIK AIR

Ms Ijeoma Nwogwugwu wrote a brilliant article on Arik Air in Thisday Newspaper on Monday , 9th April 2012.  She titled it: Pulling Arik from the Brink. It is a recommended read. In her excellent piece; she focused on the external macroeconomic factors affecting Arik; from its financial challenges, to regulatory drag in the Nigerian aviation sector and issues around need for new and competent senior management team. I cannot disagree with any of the points raised in her article.

But I will like to address some of the internal microeconomic obstacles and challenges facing Arik and how internal transformational steps (in addition to the erudite advise of Ijeoma) can change the fortunes of Arik and make it the most profitable Airline in Nigeria. I will call my analysis the seven sins of Arik Air.

I must begin with a confession; Until February 2012; I had never flown Arik at all. I have read lots of bad press reports about the airline; so I simply stayed away. But my trip to Nigeria in early February 2012, was arranged at a very short notice; so my host in Nigeria could not get a seat for me on Virgin Atlantic, so he (without notice to me) bought Arik Air ticket for the trip. My initial reaction was that of horror; but I decided to brave the experience and see what happen. My flight to Lagos from London was actually a better experience than I expected. The staff were polite and lovely; and the food was excellent in the Premier cabin that I travelled in. So I was looking forward to my trip back to London a week later.

Just after take off on my return journey; I noticed that the seat next to me was occupied by a face I had seen before. It was Dr. Michael Arumemi-Ikhide, the Group CEO of Arik. So after an hour into the flight, I decided to venture a short conversation with him. We ended speaking for about three hours. I raised many of my concerns for Arik with him and he listened well and responded frankly and with candour. I was impressed by his openness to admit the errors in Arik’s operational proposition and explain the changes planned. For the sake of confidentiality I will not repeat all he told me in this article; but I can say confidently that he was not lacking in ambition for the airline. But it seems to me that his excellent intentions and the reality on the ground don’t always match. I ended the conversation by saying that I was not sure I will fly Arik again after my first and only round trip on it. My concerns are many. So we ended the conversation by exchanging numbers.

Two days later; I received a message on my office line in London from Michael. I returned the gesture and we exchanged pleasantries and he then offered me a complimentary ticket for a flight to Nigeria anytime I wished. He wanted me to experience Arik again in the hope that I will be converted to become a regular. Incidentally I was due to travel back to Nigeria few days latter for a short visit; so I took him up on the offer. On my way to the airport in London; I got a call from an old friend who was a former Nigerian Ambassador to Brazil. I told him I was on my way to Lagos. He glibly asked which airline I was going with. Hesitating a bit, I said Arik. His response was swift and sharp “You are bold” was his retort. Needless to say he was not a fan of Arik. But by now, I was a man on a mission. This time; I travelled again in their Premier class; but as a mystery shopper. I deliberately took notes of all the failings I noticed and problems observed. These observations make it easier for me to make these recommendations to Arik; in the spirit of patriotism as a supporter of anything Nigerian.

The First problem I believe Arik has is a Branding one. They have not branded themselves in a way that sells them well to any particular demographic of the travelling public. Their economy class is OK; but their Premier/Business class is not exclusive or premier in experience. With their generous luggage allowance; they offer the best luggage allowance of any airline flying the Nigerian route. So this should appeal to certain demographics; but the cost of their ticket does not fit the budget of the same demographics. I have been monitoring Arik’s flight cost weekly since February and it seems to me; they are deliberately pegging themselves just bellow the BA and Virgin in Economy; but not enough to sway those that travel on these foreign airlines to switch. In one case I tested; Arik was just $30 less that Virgin. This is not enough to overcome the reluctance of doubtful travellers. Their Business prices are not significantly different from the competition. Also their lounge in Lagos is bog standard, low class, lacking in facilities and badly furnished; compared to BA and Virgin lounges.  There is no clear Business Class check-in desk in Lagos; despite the overhead sign saying otherwise. I had to queue behind economy class passengers to have my passport checked before I was ushered  to a check-in desk. It also seems from the staff reaction that Business Class passengers are rare commodities on the airline.

This image problem means Arik is attracting good number of economy passengers due to their generous luggage allowance; but their Business class cabin in practically disserted. From my four flights on Arik this year; the maximum I counted were eight passengers in a business cabin that sit at least forty. In my last flight back to London; we were only three in the Business class cabin. So Arik need to decide if it wants to be the Rynair  (low cost, high volume travel) of Nigerian International Flights or if it wants to attract more business and premium passengers (where more money is to be made). There was a report I read a few years ago that stated that BA makes 70% of its profits from Premium travel cabins. Right now Arik, is not winning the battle for hearts and mind of either travel class. So there is a need for a rebranding of Arik in terms of marketing message and positioning. BA caters primarily for the Elite and there pricing and facilities shows that; economy is just a necessary evil for them. Virgin positions itself midway as a good Business airlines (below BA of course) that also do decent economy travel. Arik is current a terrible business traveller airline; but not cheap enough to attract the volume needed in economy either. It is currently seen as offering the worst of both worlds it seems. So it is make your mind up time.

Secondly; I believe Arik need to sack their current PR company and get a new one. The company is always in reactive fire-fighting mode. As a market leader in any industry; you need a pro-active PR machine. The media will not hunt you down for good news; they thrive on the bad news. Hence many of the bad press Arik has been receiving are due to poor PR and marketing operations. For instance I asked Michael during our chat in-flight why Arik’s flight to New York the day before was cancelled last minute as reported by all the media in Nigeria. He explained the problem they had; but then said that all the passengers that needed it were put up in a nearby hotel at Arik expense, including their feeding and transportation back the next day. But guess what; None of these positive acts were reported in any of the news report about the incident. It is when Arik does not do the right thing that the media carry the news; but when they do well, Arik does not push its own achievement in a proactive way. So there is a need to begin to lead and set the story agenda by being pro active and not wait for the media to report bad news and then respond to it; sometimes badly too.

Thirdly; Arik need a revamped Frequent Flyer Programme (FFP) as a matter of urgency. Most of my friend that fly Virgin do so largely as a result of their successful frequent flyer club programme. I know people who will insist on their company flying them on Virgin throughout the year on business trips; with the aim of using their miles/points for a family holiday later that year. A programme such as this will begin to build a nucleus of loyal customer base that Arik can then build upon for greater success.  A FFP is the reason many people fly First or Business class but without paying the full fare. For Arik, you have to go a local ticketing office to get a paper application form for their Wingsplus programme.  What planet are they living on? On most other airlines; you apply online or get the form in-flight. It is even promoted onboard. Non of these happen on Arik. Arik, get yourself a viable FFP right away.

Fourthly, Arik need to revamp its Duty Free shopping programme in-flight. Currently; many of the prices in their in-flight shopping magazine are more than high street prices; so what is the point. In fact on one of my flight the lead stewardess agreed that it was not cheap buying on Arik. Added to this problem also is the fact that all the products in the magazines are priced in US dollars. How can the leading Nigerian airline not have prices in Naira on its in-flight magazine? Arik need to create a good revenue stream (just like BA and Virgin) from its in-flight shop. To become profitable; every little helps.

The Fifth concern I have relates to Arik’s banal website. The website is so basic and lacking in added value functions. You cannot check in online; you cannot see or reserve your seat or meal online as is possible with Virgin and BA.

The Sixth issue is perhaps to some the most important problem with Arik; and that is Poor Communication. Both internally amongst its staff and externally with customers. During one of my flights out of Lagos; we were kept waiting at the gate for over thirty minutes. The Captain then came out angry and I saw him shouting at the supervisor at the gate asking why the passengers were not boarding yet. She in turn said she was waiting for a clearance from the captain. Well it was not a pretty sight. I also have a friend who is a Captain with Arik and he confirms this problem with poor internal communication is evident all the time. But worse is the pitiful communication with customers. Why must everything be done last minute? Why can’t passengers be warned in advance where possible?

Finally, my Seventh issue with Arik, is its lack of reliability. This is the number one reason everybody I know in business do not fly Arik internationally. Of my four flights with Arik so far this year; only one has been on time. The other three went way over the time that I missed a meeting in London last time when we arrived almost two hours late. This needs to be sorted by Arik. Time is precious for business travellers. And they will pay extra to fly with a reliable airline than fly with an operator that does not have a record of reliability no matter how cheap. Moreso, Arik is not that cheap in comparison.

If Arik can sort out these seven sins I have identified and resolves its macroeconomic challenges as identified by Ijeoma; it will see an upward turn in revenue and safeguard its future as truly the wings of Nigeria. With Air Nigeria  international travel to London in operation now; Arik has a very short window indeed to redefine itself and mount a major fight-back and place itself on the road to profitability. We in turn, as Nigerians need to become more patriotic and fly Nigeria; even with its challenges. This is the only way we can all benefit by reaping the benefits of a more competitive aviation sector and also do our country proud. Come on Nigerians. Yes we can!

FINAL NOTE: I initially wrote this article for a Nigeria Newspaper (Businessday) as a way of alerting Arik’s management to some pertinent issues and also encouraging Nigerians not to give up on the airline. I believe we need to support our own, despite the imperfections. Despite being contacted by the PR firm working for Arik, thanking me for the balanced contribution; Their Chief Executive, Dr. Michael Arumemi-Ikhide; who was keen to take all my calls before the article, decided he only want to talk to sycophants and YES men who will not tell him as it is. Well, I am not one of those. He stopped taking my calls. So I too stopped calling. No Whahala like Nigerians say. It is impossible to find the Truth guilty.

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The Dread of Compulsory Stock Market Floatation

The current debate in Nigeria about the House of Representative’s plan to enact a law forcing some big corporations to go public on the Capital Market is full of fallacies and assumptions that shield the promoter’s true intentions. The problems identified about the parlous state of our Capital Market are true; but the medication proposed would create new illness that will need subsequent medication. The desire to revive the capital market and the accompany sector of the nation’s economy is commendable; but the current proposals will create more problem that it will solve. Entrepreneurship is a risky business, and nobody like the rules being changed in the middle of the game. One of the main criticism and concern from foreign investors into Nigeria (for many years) has always been lack of stable political, fiscal and legal framework within which to plan long-term; as well as poor infrastructural development of course. Just when we seem to be overcoming these imponderables; we are now seeking to set ourselves back as a nation of stable investments and regulatory climate. Companies should consider the many dangers before running to the stock market for public listing. Many have given up trying to work out what is happening with the Nation’s stock market over the past few years; because the harder you try and examine the facts, the less sense they make.

For the past decade in the Global financial markets; everywhere you look, across sectors and sizes of companies, the name of the game is IPO and going public. Facebook was the biggest so far when it went public (at least partly) few weeks ago. But is it always such a good idea? At first glance, yes. A respectable track record, profitability and increasing revenues are sufficient reason. There is no better way to expand the business than putting it on the stock market, many experts will assert.

Allow investors get a share of the action, while gaining literally hundreds of millions of naira for expansion. With the capital market in Nigeria recovering from its burst of a few years ago, there is no enduring sign of robust regulatory reengineering and enforcement of global standards that will drive lots of new regular investors into the market. Also many politicians and their cronies awash with plenty of stolen public funds are looking for ways to legitimately transform the loot into traceable legitimate financial transactions. So a listing by many of the large profitable private enterprises in the country will be just what the doctors ordered.

That said, entrepreneurs and our established business investors who took the risks and now oversee hugely successful private businesses should think long and hard before giving up their companies to the gods of capital market.

For every success story, the IPO or public listing road is littered with cases of chaos all over the world. As many entrepreneurs have found to their cost, once you go down the stock market highway, your company is run by shareholders and its future often depends on the mood of faceless analysts. Short-term growth becomes everything, usually at the cost of long-term viability. The market analysts either love or hate you and your market valuation follows that mood. That is why you see a company like Facebook (who has no tangible product to showcase) is being valued a thousand times more than many traditional companies that produce the world’s favourite tangible household and industrial products and goods.

As a simple rule of thumb, the more creative and innovative you or your businesses are, the less likely you are to be successful in the stock market in my view. Remember what happened to Sir Richard Branson and Tommy Hilfiger? These are two of the business world’s most creative geniuses, but as they have said many times before, they would never go near the capital market again. They were badly burned, and ultimately let down by investors pursuing immediate share price gains.

Even if a company meets the many stringent requirements of statues and market regulators on floatation; should it do it? That is the million-naira question. And based on the current economic circumstances in Nigeria, I will strongly advise against it. Clearly if a company is terribly short of cash and sees no other way; then go ahead. But if the company is making money and not starved of investment funds; my advise will be stay clear of the Capital Market and remain private for the foreseeable future. After all; there are lots of ways available to raise investment capital that does not involve taking your company public.

It is necessary to note that even when a business is suited to being listed, it may not be the right choice. Admittedly, being a public company can present a range of benefits. The advantages of stock market flotation could include; the giving of businesses access to new capital to develop; allowing the company to offer employees extra incentives by granting share options – this could encourage and motivate employees to work towards long-term goals. Floatation can also increase the public profile of the company, thus providing added reassurance to customers and suppliers. Public listing can allow the organization to do new business – e.g. acquisitions – by using quoted shares as currency. But many of these advantages are in my view, Floatation Fallacies. Histories of many floated companies have shown these benefits are not automatic and do not always last.

Despite the foregoing advantages of going Public; the dangers far outweigh these advantages for many companies.  The disadvantages of becoming a public company on the Capital Market are many and to help you understand my arguments better; I will list them as follows:

Market fluctuations – The business may become vulnerable to market fluctuations beyond your control – including market sentiment, economic conditions or developments in your sector especially given the shaky state of the Nigerian stock market.

Cost – The costs of being quoted can be substantial and there are also ongoing costs of being a public company, such as higher professional fees.

Responsibilities to shareholders – In return for their capital, you will have to consider shareholders’ interests when running the company – which may differ from the company’s objectives. The fundamentals of the company might differ from the perception of markets thus influencing management decisions and availability of funds, as investors are erratic in their perceptions.

Demands on the management team – Managers could be distracted from running the business during the flotation/listing process and through needing to deal with investors afterwards. Also, market pressure often abound for public companies thus luring some managers to adopt creative accounting methods as well as distort reports to conceal actual performance. Enron, Worldcom, Intercontinental bank plc, Oceanic bank are cases in point in recent memory.

Exposure to Hostile Takeover actions. Listed companies can be taken over through hostile actions of competitors or other venture capitalists.

Regulatory Drag. Listed companies face much more regulatory constraints and demands than private companies. This could constitute a drag on decision-making and innovation. The agency problem is often exacerbated in listed companies as a result of the significantly increased reporting requirements as well as the increasing cost of control and ensuring compliance including audit and assurance. Also from a Government standpoint; increased cost is incurred in monitoring publicly listed companies because they involve public finance and can have strategic significance to the economy depending on the sectors. Hence government and her agencies focus more searchlights on Plc’s than other private firms. While this is understandable; it can collectively constitute a drag on speed and innovation.

Loss of Agility. Private companies have the advantage of quick decision-making and fast turnaround compared to most public companies. There are also more statutory regulations to conform to. In addition, decisions, due to bureaucracy, take longer and there may be disagreements. On floatation; private entrepreneurial instincts will have to give way to a more democratic and bureaucratic way of doing things. Hence creativity would often give way to defensive ways of doing things to please markets.

Loss of Control. With loss of agility comes the loss of control by the original owners of the business. Your company is now public property, so the personal touch will be lost. Listing can lead to loss of control of the firm by the owners, as bureaucracy replaces entrepreneurship, short-termism of employed managers replaces long-term concern for growth that owner managers have.

Possible Lower Risk Profile. Due to the pressure to maximize shareholders value; many listed companies tend to become less risk enthusiastic thus stifling innovation in the short term at least. Also market pressure may lead employed managers to engage in short term growth strategies at the expense of long-term survival.

Possible Loss of Competitive Advantage. Financial affairs must be disclosed publicly (this information could be used to competitorsadvantage).

Increase Operating Cost. Listed companies have more statutory related cost imposed on them than private companies. For instance; the strict requirement on published accounts that must to be prepared can be time consuming and costly. Also the initial ability to cut cost closely by owner managers is replaced with the retinue of employed professional spenders in the name of managers.

Profit Sharing. With more people sharing the profits of the company, there will be less income for the original owners to make from their business. This is a disincentive to future investors who could feel they will be denied the opportunity to enjoy the deserved reward of the risks they plan to undertake.

Guilt by Association. With the reported fraud, misrepresentations and figure tampering that took place in the Nigeria stock market few years back with regards the valuation of many companies; the public backlash to such deceit could rub off on all companies listed in the market. Once the public gets a negative impression of the Market; they do not distinguish between the good and the bad. They simply paint all companies with the same brush. This can result in a “guilt by association” scenario for the innocent companies.

The foregoing are risks that no business should be forced to take; particularly not by the government that owns no single share in the business. The current debate on compulsory listing by big private companies is full of some assumptions that I consider misleading. For example; it is not a certainty that a company growing at x% while private will continue to grow at that same pace when it goes public. So all shareholders could be the poorer for it. Also public listing could lead to easier market consolidation in a given sector due to easier share ownership and takeover framework. This could lead to less competition if there are fewer players in a particular sector.

It is also manifestly unfair to compel a successful business to float on the stock exchange while not doing so to loss making businesses (possibly competitors) that started at the same time. It looks like penalising success in my book. Clearly people will not buy shares in loss making companies; so the focus will be on the successful ones. This has the capacity to create an imbalance in every sector concerned.

Some are also making the argument that compulsory Capital Market listing by these big companies will ensure that National economic growth is engendered. This cannot be far from reality. Capital markets require people to already have money to buy shares with. So in the current economic climate; where will an average Nigerian get the money he/she must be prepared to bet on the markets; when paying essential bills is hard for many. So the capital market rides an already growing economy rather than by itself create the growth.

So the general ideas of the framers of this debate are commendable. But their goals can be better achieved, through incentives and encouragement rather than compulsion. If it makes sense to list, most companies will do so voluntarily. How will Nigerians truly trust a Capital Market that is filled with reluctant candidates; enlisted by force of law passed by the National Assembly? What happens if the next House decides to change course. After all what politics give, politics can take away. And for those who think that is not possible; just look at our educational system over the past thirty years and you will see the many reversals of policies and u-turns on practices. As it is becoming clear that this debate is as much about politics as it is economics; one cannot ignore the political context of this exercise.

On many occasions, the desire to expand greatly is one that every fledging private enterprise has to deal with. However it should be done voluntarily and without duress. Going public as we can see, has many pitfalls for lots of these private firms; so I say that the dread of compulsory capital market floatation is indeed the beginning of corporate wisdom. If you want to stay private; you should be free to do so. A government fiat that compels floatation will send the wrong signal to future investors and could reduce enthusiasm for and flow of new investment (with its attendant risks) in additional areas of the economy that need bold long-term investors; such as the power sector. And if a company must go public; let it be on their own terms, in their own time and not state imposed.

The basis of capitalist economic model is the power of market forces to determine the direction of travel with minimum state intervention. The Market is self-adaptive and will be able to attract new entrants into the capital market once it has cleaned up its act and put appropriate incentives in place. Don’t let us allow government needless intervention to distort the equilibrium of the Market. Government interference should be directed elsewhere.

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IMPLEMENTATION, IMPLEMENTATION!

The key to Transformation of Lagos State

I wrote a recent blog on  the danger of Lagos state government speeding ahead and leaving the rest of the nation behind in progressive developments and proactive legal framework. I am a supporter of majority of the new laws Governor Fashola’s administration has enacted.  But I also feel the key to the achievement of the desired outcomes is Implementation. The confusion created by the false murder accusation by LASTMA against Mrs Yinka Johnson in August 2012 speaks to my concern about how the doctor administering the medicine can kill the patient very easily.  A good law that is badly implemented will lead to unintended consequences that will portend danger for the state’s continued prosperity.

Take the tax policies in Lagos as another example. There is an aggressive tax collection posture in Lagos state, which in my view is in danger of becoming counter productive; not because the law is faulty; but it is being badly implemented. A friend of mine had a factory in Lagos and was given a tax bill of N20Million, which he vigorously disputed through his accountant and lawyer as inflated and unreasonable. He made a case that his additional tax liability is only N4Million which he then promptly paid. But Lagos tax collecting machinery rejected his position; so my friend expected that he will be taken to court for a judicial decision on the matter. Alas, a week later his factory was invaded by a team of gun-carrying Policemen and Lagos state government officials. They literally broke down the gate and locked up the premises, closing the factory. He was told that unless he paid their original tax assessment; his business will remain closed. Lagos state officials became the judge, jury and executional all in one go. He had to go and borrow money from the bank to pay the bill for his factory to be opened a week later. This kind of extra judicial and improper activities happens weekly all over Lagos I am told.

My friend promptly relocated his factory to Ogun state after this incident to avoid future occurrence. So Lagos lost a factory employing directly 120 Lagosians  (and about 80 more jobs in the supply chain) due to bad implementation of a tax collection policy.  Speaking to many businesses in Lagos you will hear similar stories of harassment by tax officials, planning officials and environmental officials. Surely the end cannot justify the means here. If Governor Fashola focuses purely on revenue targets being met and not on how they are making it happen; then he is burying his head in the sand. Many more businesses will relocated out of Lagos if this continues and the tax revenue will ultimately plummets as there will not be the businesses to harass for payment.

And as for LASTMA and its shenanigans; a whole book can be written about the atrocities of its officials. This is made more petrifying when you realise that many of the LASTMA officials were the Area Boys and Thugs of yesterday who got the job purely on the basis of political patronage; without much training and clearly without paradigm re-orientation. LASTMA Officers covering signs indicating one way road limitation and then hiding behind trees to catch unsuspecting motorists. Lagosians whose cars breakdown on the road only to have unsympathetic LASTMA officials tow the car to their impound for obstruction. The list goes on and on. And the stipulated fines in some of these legislations for road offences are iniquitous. When a law imposes a fine of N20,000 and above (which is more than basic monthly salary) for simple road contravention; it is an invitation to corruption for the officialdom and penury for the people. The implementation is just wrong; regardless of the intentions of the government.

In August 2012; The Governor signed into law; loads of new laws regulating driving in Lagos. I can already see the overzealous LASTMA officials and police making life impossible for Lagosians that run foul of these laws and the cases of non-residents; visiting Lagos will even be worse. Lessons have not been learnt by the state government from the problems besetting the implementations of previous legislations; yet more are being created. There is little independent adjudication and the officials are always reluctant to use the established dispute resolution afforded by the courts in their quest for speedy collection and meet their targets.

The state government should stop enacting any new legislation (in these areas) for a period (except there is an emergency) and focus its attention on getting the implementation of existing statutes right.  Independent Tribunals should be established if need be to facilitate an independent oversight of disputes on the road traffic and on tax and planning matters. People should be treated as innocent until proven guilty. They should be accorded the respect they deserve in a democratic society. And definitely more officials should be brought to book for acting beyond their powers and abuse of their office.

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