Global Country Study Report 2012-13

Country: Nigeria

Institute Name:

Shree Saraswati Education Sansthan Group of

Institution-Faculty of

Management, Rajpur, Kadi, Mehsana

Institute Code-764

Zone 2: Gandhinagar Zone

TABLE OF CONTENT

SR.

NO.

PARTICULARS PAGE

No

PART- 1

1. NIGERIA-PESTAL ANALYSIS REPORT

PART-2

2. TRANSPORTATION INDUSTRY:

Transportation Industry of Nigeria

3. PAINT INDUSTRY:

Analyzing Opportunities Through Feasibility Study On

Royal Enterprise In Nigeria

4. PHARMACEUTICAL INDUSTRY:

Present Environment In Pharmaceutical Sector

1. NIGERIA- PESTEL ANALYSIS REPORT

ANALYSIS OF POLITICAL ENVIRONMENT OF NIGERIA

Political environment:-

I. Nigerian politics is influenced by multi political parties.

II. Nigeria has three major ethnic groups (Hausa-Fulani, Igbo's, and Yorubas), which

influence Nigerian politics. III. Nigeria has more than 250 languages. IV. 11 major political parties in Nigeria based on different ethnicity, languages, religion. V. In last 100 years, Nigerian politics is influenced by military, different ideology,

Insurgency, Corruption. causes instability, poverty, Illiteracy and other socio-economical

issues.

Nigerian political trend:-

I. Nigerian culture is cosmopolitan culture. Different ethnic group, religious group etc. influence the Nigerian political trends. II. Nigeria has different religion like Muslims 50% in the northern part of III. Nigerian politics moving around ―Sharia Law‖ due to Muslim majority. IV. Nigeria operated under different political system in different time (Democratic

Parliamentary System Political culture:-

I. Nigerian political culture influenced by different factors, But Nigerian

Political culture has some characteristics Modernity v/s Tradition Religious Conflict Geographical Factor

Political parties and leaders:

11 Major political parties

I. The Peoples Democratic Party (PDP) II. Abacha Peoples Party (APP)

III. The Alliance for Democracy (AD) and many others

Modern era trend in nigerian politics:-

Nigerian Political system was divers in terms of time, System. I. Republic – parliamentary system, 1960-1966 II. Instability or Military Rule, 1966-1998 III. Current- Presidential Democracy, 1998 Resource control & politics:-

I. Nigeria has natural resources like petroleum. Which comes from southern

part of Nigeria mostly Niger delta region. II. Northern part of Nigeria is Muslim dominated, while south Nigeria, Christian dominated.

But Muslims are in majority and government influence by ―Sharia Law‖. Hence these resources

are controlled by Muslim dominated ruling parties. III. All Nigerian political parties ruling around petroleum production & exports because of

90% of Nigerian GDP comes from petroleum exports.

ANALYSIS OF ECONOMICAL ENVIRONMENT IN NIGERIA: Northern cities Kano & katsina, recorded history before 1000 AD. The Hausa

kingdoms & Bornu Empire prospered as important terminal of north-south trade between

forest people & NA Berbers that exchanged ivory, slaves & kola nuts for salt, cloth, and coral.

Weapons, brass rods & cowries hells that they used as currency.

In southwest, the Yoruba kingdom was founded its height from 17th to 19th centuries

they attained a high level of political organization .

Oil-rich Nigeria has been hobbled by corruption, inadequate infrastructure, Political instability & poor Macroeconomic but economic reforms pursuing in 2008.

By oil sector they earning 95% of foreign exchange & about 80% of budgetary revenues.

In 2007-2011, because of growth in non-oil area & tough global crude oil prices the GDP rose strongly.

Nigeria‗s financial sector was damaged by the global financial & economic

Crices.

The President JONATHAN announced plans to increase transparency improve fiscal management and diversify economic growth.

Agriculture:

Nigeria ranks 25th worldwide & 1st in Africa in farm output in 2011, GDP in agriculture is 35.4%.

Nigeria is a major Exporter of groundnuts (peanuts), cocoa, & palm oil cocoa production, from more varieties & extra plants & it is heavy at around 180000

tons annually and before 25 years it was 300,000 tons.

Africa the biggest producer, the output of corporate poultry has been reduced from 40 million birds annually to 18 million.

Industry:

The Nigeria ranks 44th worldwide & 3rd in Africa in Factory output.

GDP in this sector. is 33.6%.and also include coal, tin, Crude oil, rubber products, columbine, hides & skins, Wood, cement & other construction

material, textiles, food products, footwear, fertilizer, chemicals, ceramics, printing etc. in this

sector.

In 2000, 98% exports earning & 83% of federal govt. revenue for oil & gas.

It is the member of the Organization of petroleum exporting countries (OPEC).

In Nigeria the pump price of P.M.S. currently 97₦, but in Nigeria some operating stations particularly in towns far from state capitals tend to sell the product at

higher price from 110₦ to 140₦.

Services:

In 2011 GDP is 31% in services Industry.

Nigeria ranks 63rd worldwide & 5th in Africa in Services Output. In 2007 29% of Nigerians in urban areas did not have their own accounts.

Labour force:

In 2005, Nigeria had a labour force of 57.2 million.

74% immigrants in Nigeria from Economic Community of West African States

(ECOWAS),and Increased from 63% in 2001 to 97% in 2005. In recent times

migration rate could reach -0.4 in 2010.

The number of immigrants residing in Nigeria has more than doubled in recent

dacades—from 477,135 in 1991 to 971,450 in 2005.

ECONOMIC RATES OF NIGERIA:

Details Country (NIGERIA)

GDP(Exchange Rate) $247.1 billion (2011)

GDP- Real Growth Rate 6.9% (2011)

8.7% (2010)

7% (2009)

GDP per Capita (ppp) $2,600 (2011)

$2,500 (2010)

$2,300 (2009)

GDP- Composition by Sector Agriculture: 35.4%

Industry: 33.6%

Services: 31%

Labor force 52.16 million (2011)

Investment (Gross fixed) 13.8% of GDP (2011)

Inflation rate (Consumer Prices) 10.8% (2011)

13.7% (2010)

Industrial production growth rate 2.5% (2011)

Oil production 2.458 million bbi/ day (2010)

Oil- consumption 279,000bbi/ day (2010)

Natural gas – production 23.21 billion cu m (2009)

Natural gas- consumption 7.216 billion cu m (2009)

Exports $101.1 billion (2011)

$73.7 billion (2010)

Exports – commodities Petroleum and petroleum product

95%, cocoa, rubber

Imports $67.36 billion (2011)

$53.46 billion (2010)

Imports – commodities Machinery, chemicals, transport

equipment, manufactured goods,

food and live animals

ANALYSIS OF SOCIAL ENVIRONMENT OF NIGERIA SOCIAL ENVIRONMENT:- No section of the country is safe to the growing Problems.JOS; Nigeria (Compass) religious

conflict have become serious and worrying in Nigeria. They have undermined national unit

and adversely affected Nigerian churches. When conflicts occur, property is destroyed, live

are lost and church activities are hindered. Second, Muslim seeks the opportunity to use

ethnic problems to force Islam on non-Muslim tribes. The result can be a harvest of blood,

tears and sorrows.

NORTHEN NIGERIA:- Religious Conflicts between Muslims and Christians began to increase in northern Nigeria in

1980. And sharia, or Islamic law, in several states, the crashes have grown. In Kaduna state,

Conflict between Muslim Hausa and Fulani and the Bajju, at yap;

Kagaro, Jaba, Kaninko, Ikulu, and Ninzam. And the Conflicts have Destruction

over 800 Churches and the killing of more than 1,000 Christians. In Bauchi state,

conflict occurred between the Hausa and Fulani, and the Savawa ethnic Group.

SOUTHERN NIGERIA:-

Conflicts have occurred in the southern part of the country also have ethnic and

Religious Roots. In Northern Nigeria Conflict are between Muslims and Christians,

and in Southern Nigeria Conflict occur between animists (traditional religionists) and

Christians. In Northern Nigeria, Political interest have Brought about the Occurrence

of ethnic Conflicts. Examples; Epebu against Emadike in Bayelsa state; Aguleri

against the Umuleri in Anmbra state; and the Eleme against the Okrika, in Rivers

state.

DOMINANT ETHNIC GROUPS IN NIGERIA:-

By percentage of total population

Yoruba—21%

Igbo – 18%

Hausa – 21%

Fulani – 11%

Source: The World Almanac, 1998

SOCIAL SITUATION:- The 2008 Human Development Report ranks Nigeria 154th out of 179 countries,

with a Human Development Index (HDI) of 0.499, which places Nigeria in the low

human development category. Nigeria must overcome an enormous challenge in

order to achieve the MDGs. According to estimates for 2008, just over 64 % of the

population lives on less than US$1.25 per day. Around 30 % of children below the

age of 5 are thought to be malnourished, with percentages reaching critical levels in

several states. Net enrolment in primary education is estimated at about 68 % and

secondary enrolment is also low at about 27.

Education and health: - Nigeria is making efforts to meet the target for primary school enrolment and

elimination of gender disparity at all levels of education. Commitments have also

been made to continue increasing the adult literacy rate (in 2006: 71 %, in

comparison with 48.7 % in 1990).

Nigerian high schools and universities are plagued by strikes, and standards

are not very high. The syllabi tend to concentrate on general subjects rather than

being oriented towards the delivery of professional and technical skills. Policy initiatives since 1988 have been targeted at ensuring the integration of

information and communication technology (ICT) in the Nigerian school system.

The country‗s health system ranks 187th out of the 191 Member States of the World

Health Organization (WHO). It is estimated that the medical resources available cover only

about 20 % of the needs. HIV prevalence in Nigeria is relatively high, with an

estimated 3.5 million people (10 % of the world‗s total) being HIV positive.

According to health surveys the HIV/AIDS prevalence rate is dropping, falling from

5.4 % in 1999 to 4.4 % in 2005. Polio Nigeria is one of four countries (the others

are Afghanistan, Pakistan and India) where polio remains endemic and is a threat to

the global eradication initiative.

Employment and gender equality: -

Over half of all Nigerians are employed in some form of agriculture, mostly in low-

income, subsistence-level activities, and this sector accounts for some 70 % of the

official workforce. Employment in urban areas is focused in the large informal

sector. Official figures for unemployment have ranged between 5.3 % and 12 % in

recent years. Slightly less than half of all women are estimated to engage in

economic activities, while three quarters of all men do.

CORPORATE SOCIAL RESPONSIBILITY (CSR) AND DEVELOPMENT

Some NGOs, like the Worldwide Fund for Nature consider corporations as

potentially the ―greatest allies in sustainable development‖. (Marsden, 2000) By

launching innovative initiatives, such as setting up schools ad vocational training

centres in underdeveloped areas, firms can contribute significantly to improving the

lives of people living in these areas. They can also improve living conditions by

curtailing certain practices which may harm the environment or the people directly.

Through such actions, optimists believe CSR has great potential to bring about

substantial social improvements. (Swift and Zadek, 2002).In fact, such an act can

actually result in further worsening the condition of people. For example, by prohibiting child labour in

developing countries, firms can actually undermine the welfare of these children

and their families by depriving them of their primary source of income. (Frynas,

2005)

Keeping the above issues in mind, In 2006 suggest that the future critical research

agenda on CSR and development should focus on the following four areas:

The relationship between business and poverty reduction.

The impact of CSR initiatives.

Governance dimensions of CSR. and

Power and participation in CSR.

In her research conducted in Ghana, Amanda Berlan also emphasizes the

importance of understanding the socio-cultural setting in developing countries for

CSR activities to make a substantial an positive contribution to development.

Finally, Uwem (2004) highlights the importance of monitoring the state-business

relationship in leading the development process. Discussing the developmental

activities of Shell in Nigeria, he asserts there is a danger that in the long term, Shell

could be leading the efforts of socio-economic development in the region with little

or no contribution from the Nigerian government.

ANALYSIS OF POLITICAL TECHNOLOGICAL ENVIRONMENT OF NIGERIA

The 13th

September of every Year is commemorated in all African Countries as

African Day for Technology and intellectual property. This is in compliance with the

resolution made by the then organization of African Unity (OAU) now African

Union (AU) council ministers and Assembly of Heads of State and Governments

which in July, 1999, at Addis Ababa-Ethiopia, enjoined all African nations to use the

day to arouse the latent inventive, creative and innovative spirit of Africans in order

to facilitate the acceleration of technological development in the continent. The efforts of the federal Ministry of Science and Technology through the

National officer for Technology Acquisition and Promotion (NOTAP) are being

brought to public consciousness.

From available records of last five years, a total of USD 118.5 million, equivalent

to N18.9 billion was remitted to foreign licensors on software license agreements

registered by NOTAP. Through there are Nigerians at home and in the Diaspora

who have demonstrated ICT capabilities especially in software development,

particularly the financial sector were foreign. At present, NOTAP has established 30

intellectual property and Technology Transfer Offices (IPTTOs) in research

institutes and institutions of higher learning across the country. The IPTTOs were

established in the knowledge centers to encourage market oriented and demand

driven research, to strengthen the linkage between industry, universities and

research institutes.

NOTAP also introduced the Technology Strongly initiatives which are an STI

awareness building and an educational tool for the primary and secondary school

levels. This technology teaching tool is aimed at sensitizing the Nigerian child on

STI. NOTAP in collaboration with the Nigerian National Merit Award (NNMA) and

with support and cooperation of the Federal and state ministries of education,

science and technology institutionalized the intellectual property Capacity Building

programmers in Secondary schools which is a aimed at developing the innovation

and intellectual capacity of the youths. Through plans initiated by NOTAP with the

partnership of Abuja Geographic information system (AGIS) and other stakeholders,

the Abuja international Airport Road would be transformed into the largest science

and Technology Park in Africa to be known as Africa‗s premier innovation Corridor

(APIC).

SCIENCE AND TECHNOLOGY:- Four satellites have been launched by the Nigerian government into outer space.

The primary objectives of the Nigeriasat-1 were: to give early warning signals of

environmental disaster; to help detect and control desertification in the northern part

of Nigeria; to assist in demographic planning; to establish the relationship between

malaria vectors and the environment that breeds malaria and to give early warning

signals on future outbreaks of meningitis using remote sensing technology; to

provide the technology needed to bring education to all parts of the country through

distant learning; and to aid in conflict resolution and border disputes by mapping out

state and International borders.

NigeriaSat-2, Nigeria's second satellite, was built as a high-resolution earth

satellite by Surrey Space Technology Limited, a United Kingdom-based satellite

technology company. It has 2.5-metre resolution panchromatic (very high

resolution), 5-metre multispectral (high resolution, NIR red, green and red bands),

and 32-metre multispectral (medium resolution, NIR red, green and red bands)

antennas, with a ground receiving station in Abuja. The NigeriaSat-2 spacecraft

alone was built at a cost of over £35 million. This satellite was launched into orbit

from a military base in China.

NigComSat-1, a Nigerian satellite built in 2004, was Nigeria's third satellite and

Africa's first communication satellite. It was launched on 13 May 2007, aboard a

Chinese Long March 3B carrier rocket, from the Xichang Satellite Launch Centre in

China. The spacecraft was operated by NigComSat and the Nigerian Space

Agency, NASRDA. On 11 November 2008, NigComSat-1 failed in orbit after running

out of power due to an anomaly in its solar array. It was based on the Chinese

DFH-4 satellite bus, and carries a variety of transponders: 4 C-band; 14 Ku-band; 8

Ka-band; and 2 L-band. It was designed to provide coverage to many parts of

Africa, and the Ka-band transponders would also cover Italy.

On 24 March 2009, the Nigerian Federal Ministry of Science and Technology,

NigComSat Ltd. and CGWIC signed a further contract for the in-orbit delivery of the

NigComSat-1R satellite. NigComSat-1R was also a DFH-4 satellite, and is expected

to be delivered in the fourth quarter of 2011 as a replacement for the failed

NigComSat-1.On 19 December 2011,a new Nigerian communications satellite was

lunched into orbit by China in Xichang. The satellite according to Nigerian President

Good luck Jonathan which was paid for by the insurance policy on NigComSat-1

which de-orbited in 2009, would have a positive impact on national development in

various sectors such as communications, internet services, health, agriculture,

environmental protection and national security.

TECHNOLOGY TRENDS PREDICTIONS IN NIGERIA:- 2011 was a great year in the advancement of technology in Nigeria. These

advancements include the number of blackberry users hitting 2.4 million, launch of

mobile money payment platforms, and increase in social media activity, internet

becoming more accessible and so on. Based on these advancements, I believe the

following predictions will come to pass in the year 2012.

Mobile money (here to stay):- With the seriousness of the Central Bank of Nigeria in the actualization of its

cashless policy, a number of companies including Page have been given the

permission to act as intermediaries between financial institutions and their

customers. These companies provide cash-in-transit services amongst other

services via electronic channels including the internet and Short Messaging Service

(SMS). There are already lots of innovations in this space including the introduction

of SMS as an electronic medium. A lot of questions skeptical minds will ask will

include ―Can this work in Nigeria?‖, I‗ll say yes to that if given enough time. With

the iniquitousness of mobile phones and innovations in e-payment, this should be a

success.

Slight shift from laptops to tablet PCs:- With the increase in variety and the cheaper prices of tablet PCs, a lot of

Nigerians will be thinking of substituting their laptops for tablet PCs. This is a good

trade-off considering the easier mobility of tablet PCs over laptops and also

because most people don‗t really need the heavier processing power advantage

that laptops have over tablet PCs. Tablet PCs will fulfils most of a typical Nigerian‗s

computing needs which include social networking, photos, audio and videos

sharing, word processing, ames, movies and so on. Smartphone‗s (including

Blackberry, Android phones) purchases still be on the rise though.

More successful indigenous tech startups:- With the help of newly established technology incubators like Co-Creation Hub,

there will be more tech startups equipped to do the right thing in Nigeria.

Technology entrepreneurs (technopreneurs) could use this medium to polish and

develop their ideas while still in the startup stage. This is interesting because there

are so many problems in Nigeria to be solved and now technopreneurs would be

helped in the achieving their dreams. Hopefully these start-ups will become

economically viable, successful and get the attention of venture capitalists which

will grow these startups into successful businesses.

More indigenous amateur videos (might disrupt Hollywood):- Due to the iniquitousness of video recording devices and the recent launch of

YouTube in Nigeria, it is easier for amateur videos (including home-made music

videos, movies and so on) to be created and shared virally on YouTube and also

with the aid of other social media sites including Face book and Twitter. Although

before the recent launch of YouTube in Nigeria, there had been video shared by

Nigerians on YouTube, the launch of YouTube in Nigeria will increase the

awareness of YouTube in Nigeria. Depending on the quality and quantity of these

videos, they might cost Hollywood producers the attention of their viewers who

might prefer those videos freely distributed online.

ANALYSIS OF MAJOR TRADING PARTNERS OF NIGERIA

Nigeria is ranking tenth in the world in oil and gas reserve, Nigeria is Africa's

largest oil producer and the sixth biggest exporter in the world.

Nigeria‗s main imports include machinery, chemical, transport equipment,

manufactured goods, food and animals. There are currently 24 free Trade Zones in Nigeria, but only 15 are currently

operational.

Imports of Nigeria

Products of the Chemical and

Base Metals and Allied Articles of Base Industry, 6.1

Metals, 7.2

prepared foodstuffs, Bevera

ges, Spirits, Vinega Vehicles, Aircraft r and Tobacco, 7.8 and Associated

parts, 35 Boilers, Machinery,

Appliances and

Associated parts, 18.5 IMPORTS TRADING PARTNERS OF NIGERIA Q1 2012

IMPORTS TRADING PARTNER

Ranking Code Country

(Major Trading partner)

1st CN CHINA

2nd US UNITED STATES

3rd GB UNITED KINGDOM

4th BR BRAZIL

5th IN INDIA

6th JP JAPAN

7th DE GERMANY

8th BE BELGIUM

9th NL NETHERLANDS

10th

AE UNITED ARAB EMIRATES

IMPORTS BY REGION Q1 2012

AMERICAS, 23.9 ASIA, 37.4

EUROPE, 32.5 EXPORTS OF NIGERIA

6.9 1.1

Mineral Products

Plastic,Rubber and Associted

Article

Vegetable Products

Raw hides and Skins, leather and

Fur skins 84.3

EXPORTS TRADING PARTNERS OF NIGERIA Q1 2012

EXPORTS TRADING PATNER

Ranking Code Country

( Trade partner)

1 IN INDIA

2 US UNITED STATES

3 NL NETHERLANDS

4 ES SPAIN

5 BR BRAZIL

6 IT ITALY

7 ZA SOUTH AFRICA

8 FR FRANCE

9 ID INDONESIA

10 GB UNITED KINGDOM

EXPORTS BY REGION

Exports By Region ASIA 26% EUROPE 42% AMERICAS 32%

Financial Markets in Nigeria

Capital Market in Nigeria Capital Market consists of primary market and secondary market. In primary market newly

issued bonds and stocks are exchanged and in secondary market buying and selling of

already existing bonds and stocks take place. So, the Capital Market can be divided into Bond

Market and Stock Market. Bond Market provides financing by bond

issuance and bond trading. Stock Market provides financing by shares or stock issuance

and by share trading. As a whole, Capital Market facilitates rising of capital.

Nigerian capital market started rolling from 1960 when Nigerian Stock Exchange ( Lagos

stock) exchange was opened. At present the market is gaining depths and becoming steady.

This stock exchange is the pivot of the Nigerian capital market.

This exchange is providing different types of funds to bring the accumulated public wealth

into the stock market. At the same time, the large-scale industries of Nigeria are listed on this

exchange. There is also another stock exchange in Nigeria that is working with the medium

and small-scale industries of the country and providing good support to strengthen the

Nigerian capital market.

The development of the Nigerian capital market has some other reasons too. A number of

Nigerian banks are investing in the Nigerian stock market so that they can roll the money and

can earn some good profit from the market.

The recently introduced minimum capital requirements for the bank have encouraged the

banks to choose the stock markets. The Nigerian capital market is still gaining depth and so

that it was a bit risky for the banks to take the decision but they took the risk and the results

are very positive.

It not only encouraged the individual investors but at the same time provided some good

support to the growth of the Nigerian capital market. It is true that the Nigerian capital market

is performing well and the country is experiencing some historical public offers by the banks

like the Zenith Bank. But at the

same time, it is also true that the market has to go a long way to because still now the NSE's

market capitalization is, much lower than the GDP.

According to the ongoing trends, the market capitalization should be nearer to the GDP or in

certain cases it is more than the GDP as in the case of Johannesburg that recorded 239% of

GDP. The turnover ratio of Nigeria stock exchange was 12.4% in 2005. The Nigerian bond

market is also passing through a developing phase.

The main participants of the Nigerian capital market are the Securities and Exchange

Commission (regulatory), Nigerian Stock Exchange, stock brokers, trustees, issuing houses,

registrars. The investments are done by the insurance companies, pension funds, institutional

investors and the individual investors.

The Stock Market in Nigeria

The Nigerian Stock Exchange The Nigerian Stock exchange was founded in 1960. With its headquarters in Lagos, NSE

branches are in the following cities: Port Harcourt, Ibadan, Kaduna, Kano, Onitsha, Yola and

Abuja.

The activities of the market are regulated by the Securities and Exchange Commission. A typical working day on the floor of the Nigerian Stock exchange Market starts between

9.30 am and ends 12.30pm every week day. Some of the goods which are traded are shares,

corporate bonds and government bonds. They are traded by professional called stock brokers.

How the Stock Exchange Market Works The Stock Exchange operates a system known as the Automated Trading. New stocks are

offered on the floor of the Stock Exchange market by issuing houses or stockbrokers who

determine the prices. Secondary market prices are later made by only stockbrokers.

The smooth administration of the Stocks Exchange Market is aided also by practicing

Corporate Law Houses, and by Auditing and Accounting Houses.

Market prices and the All-Share Index are published daily in on the Stock Market‗s intranet,

The Stock

Exchange Daily Official List; on the pages of Newspapers and the Nigerian Stock Exchange

website. The Central Securities Clearing System Limited (CSCS)

The CSCS is a subsidiary of the NSE which was incorporated in 1992; it‗s in charge of

clearing, settlement and delivery of transactions on the NSE. This is done by electronic

means. The CSCS Limited also offers custodian services.

THE NIGERIAN MONEY MARKET

The money market is a market for short – term funds: and as the name suggests, it is a

market in which money is bought and sold, the market is used by business enterprises to raise

funds forthe purchase of inventories, by banks to finance temporary reserve loss, by

companies to finance consumer credit and by government to bridge the gap between its

receipts and expenditure.

Unlike the market for textiles, for example, there is no place that one can call a money

market. Although activities in the money market cam be concentrated in a particular street. For

example, all street in New York, Lombard street in London and Broad street in Lagos.

Transactions in the market are impersonal taking place mostly by telephone (Ajayi and Ojo,

1981). Thus, it is a market for the collection of financial institutions set up for the granting of

short-term loans and dealing in short-term securities, gold, and foreign exchange (Anyanwu,

1993).

RESONS FOR THE ESTABLISHMENT OF THE NIGERIAN MONEY

MARKET

(a) To provide the machinery need for government short-term financing requirements. (b) It is a part of a modern financial and monetary system which enables the nation to

establish the monetary autonomy which is part and parcel of the workings of an independent,

modern state.

(c) To domesticate the credit base by providing local investment outlets for the retention

of funds in Nigeria and for the investment of funds repatriated from abroad as a result of

government persuasions to that effect.

(d) It provides a good barometer to CBN, which can use it to judge the shortage of

surplus of funds in the economy.

(e) The existence of the money market enables the central bank to undertake vigorous

monetary policy.

THE DEVELOPMENT OF THE NIGERIAN MONEY MARKET

No money market existed in Nigeria before the establishment of the Central Bank of Nigeria.

This is however not to say that a market for short-term funds did not exist before then. Before

the advent of commercials banking, there existed some elements of short-term lending and

borrowing based of commercial paper. The market was anntegral part of the London money

market. It worked by moving funds from London to Nigeria during the season in order to

finance the export of produce. At the end of the season, the funds were moved back to

London, when there was all-season money-market activity. The establishment of the Nigerian

money market involved, on the part of the Central Bank of Nigeria, repatriating these ―roving‖

funds to Nigeria for the country‗s economic development.

The development of the Nigerian money market is not unconnected with the systematic

introduction of the various instruments used in the market. Hence, discussion shall be on

these instruments and time of introduction.

1. Treasury Bills (TBS) These are money-market (short-term) securities issued by the federal government of

Nigeria. They are sold at a discount (rather than paying coupon interest), mature within 90

days of the date of issue. They provide the government with a highly flexible and relatively

cheap means of borrowing cash.

Thus, TBS and IOUs are used by the federal government to borrow for short periods of

about three months pending the collection of its revenue. Their issue for the first time in

Nigeria (in April 1960) was provided for under the Treasury Ordinance of 1959. It was issued

in Nigeria in multiples of #2000 (later reduced to #100 in order to expand the coverage of

holders for 91 days and at fixed discount. TBS outstanding average #34.421.8 million in 1989

with # 10,879.5 million issued between1992, and 1995, it averaged #2585.05 million.

2. Treasury Certificate (TCS) These are similar to TBS but are issued at par or face value and pay fixed interest rates.

These fixed in interest rates are called coupon rates. Thus, each issue promises to pay a

coupon rate of interest and the investor collects this interest by tearing coupons off the edge of

the certificate and cashing the coupon at a bank; post office, or other specified federal office.

Each coupon is imprinted a year from the date of issue. In the Nigeria context, their rates

became market-determined like TB rates following interest rates deregulation.

Thus, treasury certificates are medium-term government securities which mature after a

period of one to two tears and are intended to bridge the gap between the treasury bill and

long term government securities. They were first issued in 1968 at a discount of 45/8 percent

for one-year certificates and 41/2 percent for two year certificates.

At the end of 1990, treasury certificates outstanding had risen to #34214.6 million. This

further rose to N36554.32 in 1993, #37342.7 million in 1994 but declined to #23596.5 million

in 1995. Thus, between

1990 and 1995 it averaged #39230.2 million. The main holders of treasury certificates are

the commercial banks with the CBN ranking second.

3. Call Money Fund Scheme- Money at call or Short Notice this refers to money lent by the banks on the understanding that it is repayable at the bank‗s

demand or at short notice (e.g. 24 hours or over-night). Overnight loans are simply bank

reserves that are loaned from banks with excess reserves to banks with insufficient reserves.

One bank borrows money and pays the overnight interest rate to another bank in order and

obtains the lending bank‗s excess reserves to hold as one-day deposits. The borrowing bank

needs these one day deposits in order to acquire the legal reserves the CBN examiners

require banks to maintain.

They act as a cushion which absorbs the immediate shock of liquidity pressures in the

market. The scheme was introduced in 1962 in Nigeria. Under the scheme, fund was created

at the CBN and the participating banks had to agree to maintain a minimum balance at the

CBN. Any surplus above the minimum balance was then lint to the fund. The CBN

administered the fund on behalf of the banks and paid interest at a fixed rate somewhere

below the Treasury bill rate. The CBN then invested the funds in the treasury bills.

The scheme was abolished in 1974 due to buoyant oil revenue of the federal government

consequent upon the oil boom. While the scheme lasted, it had a beneficial impact on the

efficiency with which the banks managed their cash balances while helping to reduce the

degree of dependence of the banks on overseas money market facilities.

4. Commercial Papers or Commercial Bills These are short-term promissory notes issued by the CBN and their maturities vary from 50

to 270 days, with varying denominations (sometimes #50,000 or more). They are debt that

arises in the course of commerce.

Commercial papers may also be sold by major companies (blue-chips-large, old, safe, well-

known, national companies) to obtain a loan. Here, such notes are not backed by any

collateral; rather, they rely on the high credit rating of the issuing companies. Normally, issuers

of commercial papers maintain open lines of credit (i.e. unused borrowing power at banks)

sufficient to pay back all of their commercial papers outstanding. Issuers operate in this form

since this type of credit can be obtained more quickly and easily than can bank loans.This

instrument was introduced in 1962 to finance the export-marketing operations of the then

Northern Marketing Board. Under the arrangement, the marketing boards meet their cash

requirements by drawing ninety-day bills of exchange on the marketing boards. The bills are

then discounted with the commercial banks and acceptance houses participating in the

scheme. The role of the CBN is that to provide rediscounting facilities for the bills.

In 1968, CBN took over the responsibility for the marketing Board crop finance and hence,

the demise of the bill market. What remains today of the commercial paper market, following

the disappearance of produce bills are import and domestic trade bills.

By 1968, commercial paper outstanding was #5.1 million falling from #36.4 million in 1967.

However, in 1989, commercial paper outstanding averaged #868.8 million. Between 1990 and

1995, it averaged #2219.05 million recorded in 1990.

5. Certificates of Deposits (CDS) Negotiable (NCO) or Non-negotiable (NNCO) deposits are inter-bank debt instruments

designed mainly to channel commercial banks surplus funds into the merchant banks. NCO‗s are rediscountable with the CBN and those with more than 18 months tenure are eligible as liquid assets in computing a

bank‗s liquidity ratio. These attributes make the instruments attractive to banks.

Taxes in Nigeria Under current Nigerian law, taxation is enforced by the 3 tiers of Government, i.e. Federal,

State, and Local Government with each having its sphere clearly spelt out in the Taxes and

Levies (approved list for Collection) Decree, 1998. Of importance at this juncture however are

tax regulations pertaining to investors both foreign and Local.

The importance of tax regulations cannot be over-emphasized, as most transactions with

any Ministry, department, or government agency cannot be concluded without evidence of tax

clearance. i.e. a Tax Clearance Certificate certifying that all taxes due for the three

immediately preceding years of assessment have been settled in full. The following are some

of the relevant tax regulations in the country.

1. VALUE ADDED TAX (VAT): This was introduced by the VAT decree No. 2 of 1993, to

replace the old sales tax. It is a consumption tax levied at each stage of the consumption

chain, and is borne by the final consumer. It requires a taxable person upon registering with

the Federal Board of Inland Revenue to charge and collect VAT at a flat rate of 5% (recently

increased to 10%) of all invoiced amounts of taxable goods and services.

VAT paid by a business on purchases is known as input tax, which is recovered from VAT charged on company‗s sales, known as output tax. If output exceeds input in any

particular month the excess is remitted to the Federal Board Of Inland Revenue (FBIR) but

where input exceeds output the taxpayer is entitled to a refund of the excess from FBIR

though in practice this is not always possible.

A Taxpayer however has the option of recovering excess input from excess output of a

subsequent period. It should be stated at this point that recoverable input is limited to VAT on

goods imported directly for resale and goods that form the stock-in-trade used for the direct

production of any new product on which the output VAT is charged.

2. CAPITAL GAINS TAX: This accrues on an actual year basis and it pertains to all

gains accruing to a taxpayer from the sale or lease or other transfer of proprietary rights in a

chargeable interest which are subject to a capital gains tax of 10%, such chargeable assets

may be corporeal or incorporeal and it does not matter that such asset is not situated in

Nigeria. Where however the taxpayer is a non-resident company or individual the tax will only

be levied on the amount received or brought into Nigeria. Computation of capital gains tax is done by deducting from the sum received or receivable

from the cost of acquisition to the person realizing the chargeable gain plus expenditure

incurred on the improvement or expenses incidental to the realization of the asset.

3. EDUCATION TAX: An education tax of 2% of assessable profits is imposed on all

companies incorporated in Nigeria. This tax is viewed as a social obligation placed on all

companies in ensuring that they contribute their own quota in developing educational facilities

in the country.

4. PERSONAL INCOME TAX: The legal basis for this tax is found in the provisions of

the Personal Income Tax Decree [now Act]. 104 of 1993.

Every taxpayer in Nigeria is liable to pay tax on the aggregate amount of his income whether

derived from within or outside Nigeria, the salaries, wages, fees, allowances, and other gains

or benefits, given or granted to an employee are chargeable to tax. The Employers of labor

are deemed to be agents of the tax authority for the purposes of remitting taxes deducted from

salaries due to employees.

However residency of the Taxpayer determines the extent of a taxpayer‗s liability in Nigeria.

A person‗s place of residence for this purpose is defined as a place available for his domestic

use in Nigeria on a relevant day, excluding hotels and rest houses. A person is deemed

resident in Nigeria if he resides in Nigeria for 183 days in any 12-month period, expatriates

holding residence permits are liable to tax in Nigeria even if they reside in the country for less

than 183days in any 12-month period. Once

residence can be established, the relevant tax authority of the territory is the tax Authority in

which the taxpayer has his place of residence or principal place of business.

The following are however exempted from tax: - • Medical or Dental expenses incurred by the employee; • Retirement gratuities and compensation loss of office; • The cost of passage to or from Nigeria incurred by the employee; • Interest on loans for developing an owner-occupied residential house; • Leave allowance, which is computed as 10% of annual basic salary subject to a

maximum of N7, 500 per annum.

5. COMPANIES INCOME TAX: Tax is payable for each year of assessment of the profits of

any company at a rate of 30%. These include profits accruing in, derived from brought into or

received from a trade, business or investment. Also companies paying dividends to its

shareholders are first obliged to

pay tax on its profits at the companies tax rate. Generally in Nigeria company dividends or

other company distribution whether or not of a capital nature made by a Nigerian company is

liable to tax at source of 10%, however dividends paid in the form of bonus share or scrip

shares to individual share holders are not subject to tax, where also a company is a

shareholder in another company then such dividends are excluded from the profits of the

company for the purposes of computation of the tax.

6. NIGERIAN SOCIAL INVESTMENT TRUST FUND (NSITF): This is governed by the

NSITF Decree, and requires everybody employed in a Nigerian incorporated company to

contribute a certain percentage of their salary to the fund. This contribution is based on the

assumption that the maximum basic salary in Nigeria is N48, 000 per annum; Expatriates are

excluded from this requirement where they can show proof of a similar contribution in their

home country. The rate of contributions is defined as follows, where the contributor is an

employee, 2.5% of his salary subject to a maximum of N 1,200 per annum; Where the

contributor is an employer, 5% of basic salary subject.

7. WITHHOLDING TAX: Nigerian law subjects certain activities and services to Withholding

Tax. This basically means that where during transactions in any of the specified activities or

services, a payment is due from one person to another, the person making the payment is

expected to deduct tax at the applicable rate and remit it to the relevant tax authority. This

should be done not later than 30 days after the deduction. This provision can be found in

sections 68 to 72 of the Personal Income Tax Decree No. 104 of 1993; Sections 60 to 64 of

the Company Income Tax Act (as amended), and Section 51(a) of the Petroleum Profits Tax

Act (as amended). Some of these activities and Services and their current applicable rates

include:-

Payment %Corporate %Individual/Partnership

Rent 10 10

Construction 5 5

Dividend 10 10

Royalties 10 5

Commission 10 5

Professional 10 5

Fees

Technical 10 5

Consultancy 10 5

Fees

8. Tax Treaties: Nigeria has a number tax treaties referred to as ―double taxation

agreements with a number of countries, these are designed to ensure that the tax payable in

Nigeria on the profits of a Nigerian company being remitted into the country are reduced by

the amount of ―foreign Tax paid abroad and vice versa where an overseas company receives

profits from Nigeria that have already been taxed in

Nigeria. Some of these countries include the UK, France. The Netherlands, Belgium,

Canada and Pakistan.

Overview of major industries of Nigeria

Primary industry: Agriculture

Agriculture is a priority of the Nigerian government. Agriculture here Nigeria financial records

for around two-fifths of the country‗s GDP. Nigeria's main crops in the 1990's integrated palm,

peanut oil, rubber, and cotton. All these products are exported simply and it‗s sold locally.

Additional agricultural products include sorghum, millet, maize, yams, and cassava, all before

used as continuation foods by farmers but are now broadly sold for cash.

The popular of Nigeria's food production comes from small scale farmers baying basic

agricultural tools. The government has newly in the 1980's and 1990's plant substantial

amounts of money into improving undeveloped during the investment interested in rural

infrastructure and irrigation projects and in introducing current agricultural chemicals.

Agriculture contributed 41.84% to Nigeria‗s GDP in 2009, and the segment employs around

70% of the workforce. Yams, cassava, peanuts, millet, sorghum, rice, maize, okra, cocoa,

palm oil, rubber, cattle, fish and timber are the main good of agriculture produce of Nigeria.

Nigeria is a net importer of agricultural goods in year 2009, imports in the sector added up to

more than USD 3 billion, while agricultural exports accounted for about USD1.4 billion. Wheat,

rice and sugar import of the Nigeria. Most agricultural imports come from the US and the EU.

Nigeria country‗s most important agricultural exports are cocoa beans, rubber, sesame seeds

and cocoa butter. UK, the US, Canada, France and Germany export of Agricultural goods.

A large quantity of Nigeria‗s agriculture is carried out according to traditional methods is use,

with computerization relatively different. Government hard works to give confidence modern

methods are used and gain more success. Since farmers frequently find it difficult to get used

to new technology and have limited capital for updating equipment.

The National Centre for Agriculture Mechanization a government parastatal was set up in

1990 to develop and sponsor mechanized undeveloped in the country. Other factors that have

back the agricultural segment and investment for Nigeria agriculture.

Nigerian agriculture and co-operative bank limited

The Nigerian Agriculture and Co-operative Bank (NACB) were established in 1973. NACB

are developing for the credit wants of farmers, the government improved the lending policies

of the CBN's Agricultural Credit Guarantee Scheme (ACGS). Both Scheme of little impact of

agriculture.

There was also the 1996–1998 National Rolling Plan with the motivated projection so as to

through year 2000, Nigeria would have grown-up the agriculture sector to make sure the

country could provide for her fast growing population and even develop capacity to process

agricultural raw materials for local industries and export.

National fertilizer company of Nigeria The National Fertilizer Company of Nigeria also called NAFCON. But now it‗s No tore Chemical Industries was a state owned company which was later sold to a private firm.

National Fertilizer Company of Nigeria was included as a joint venture between the Federal

Government of Nigeria -70% and Kellogg Brown and Root (KBR) 30%.

And also No tore signed by the one project of Technical Advisory Service Agreement

(TASA) with Tata Chemicals Limited of India in 2011.

Analysis of the National Accounts of Nigeria showed that value-added in the agricultural sector

comprising crops production, livestock, forestry and fishing continued to dominate output in the

economy during 2009 and 2010.

Years N Trillion

2008 7.98

2009 9.18

2010 10.31

2011 11.04

Interpretation:

At the end of the 2011 we can see that real growth reach to just 11.04%

But in 2009 % 2010 it was declined by 5.82% to 5.88%

In 2008 it was 6.27%.

The structure of agricultural production during the period showed dominance of crops

production which accounted for over 89% of total agricultural value added during the period

under review. This is followed distantly by livestock with a share of a little over 6.0% of

agricultural production.

Contribution to GDP, the agricultural sector‗s share of GDP registered as:

Years Agricultural GDP

2011 35.4%

2010 40.87%

2009 42.13%

2008 41.70%

Crop production sub sector constituted the most important component of the agricultural sector

of Nigerian economy in terms of contribution to output growth and as a source of employment

and livelihood to most rural dwellers. The sub sector‗s output growth in 2010 stood at 5.77% as

against 5.83% in 2009 and 6.22% in 2008. In terms of contribution to growth, crop production

accounted for 26.89% of total GDP growth in 2010 compared to 31.45% in 2009 and 38.96% in 2008. The sub sector‗s share of real GDP was 37.16% and 36.40% in 2009 and 2010 respectively.

The output in nominal terms of livestock, forestry and fishing sub-sectors totaled N1, 114.65

billion in 2010, from N985.38 billion in 2009 and N866.60 billion in 2008. As share of GDP, it

contributed 4.47% in 2010, 4.54% in 2009 and 4.57% in 2008. Livestock production grew by

6.45% in 2010 down from 6.48% in 2009 and 6.80 in 2008. Similarly, fishing output quickened

from 5.96% in 2008 to 6.17% and 6.57% in 2009 and 2010 respectively. In the same vein,

forestry production, decelerated to 5.77% in 2010 from 5.85% in 2009 and 6.10% in 2008.

Secondary Industry: Manufacturing

Manufacturing activities comprised of cement, oil refining and other manufacturing sub

sectors. Other developed sub sector is the dominant sector in terms of size of manufacturing

activities. The value-added of manufacturing activities at current basic prices rose to 643.07

billion in 2010 from 612.31 billion in 2009 and 520.88 billion in 2008. In real terms, developed

value add increase rate slow to 7.57% in 2010 from 7.85% in 2009 and 8.89% in 2008. In

terms of contribution to growth, the manufacturing sector accounted for 3.96% of the total

GDP growth rate of 7.98% in 2010 and 4.67% of the 6.96% real GDP growth achieved in

2009. Relative to size of the economy, the developed segment contributed 4.16% of the real

GDP in 2010 in contrast to 4.17% in 2009 and 4.14% in 2008.

Growth for cement and oil refining sub sectors stood at 10.56% and 7.28% in with the

purpose of order in 2010 down from 10.83% and 6.95% growth rates in 2009. The

recommencement of production at the Kaduna Refinery and Petrochemical Company (KRPC)

after three years of shutdown, improved performance in the oil refining sub sector in 2008, but

increase slow in 2009 as there were little hard work to expand and boost production. Refining

capacity remains inadequate to meet local demand; hence reliance on imported refined

petroleum goods persisted in 2010.

Working to rebuild Nigeria’s manufacturing industry :

Nigeria‗s manufacturing industry has suffered from neglect, since the country‗s economy has

depended on the petroleum sector since the 1970s. As the government try to expand the

economy, it is working to strengthen the manufacturing sector so as to increase its

contribution to Nigeria‗s affluence. Lagos and its background are home to about 60% of

Nigeria‗s industrial base. Other key industrial centers are Kano, Ibadan and Kaduna. Nigeria‗s

most important manufacturing industries include, cement, food processing, cigarettes,

beverages textiles and detergents.

Restarting the Manufacturing Sector :

Manufacturing contribute of 4.2% GDP in 2009, up from 3.6% in 2008. The sector‗s

contribution to GDP has tainted little over the course of the decade. Even as industries like

cement and beverages attract investment from home and overseas, other industries are

closing up shop; between 2000 and 2010, more than 850 manufacturing companies either

shut down or for the short term halted manufacture. Capacity utilization in manufacturing is

around 53%. Imports of manufactured goods dwarf sales of homegrown products

manufactured goods have constituted the biggest type of imports since the 1980s. But the

government is working to regenerate the in poorly segment May 2010; the Nigerian

government announced 1.3 billion funds to help banks expand credit to the manufacturing

sector, following the decline in available finance after the start of the global economic crisis.

The biggest problem facing manufacturers over the past decade has been insufficient

infrastructure in general and lack of power supply in particular. The country set a target of

generating 6‗000 Mega Watts of electricity by the end of 2009, but expected national demand

is 25‗000 Mega Watt electricity. Manufacturers have mainly installed their possess generators

to compensate for mottled supply from the state – the manufacturing industry as a whole

generates around 72% of its own energy needs. But operating these generators greatly

increases the cost of manufacturing goods, and the cost increase is passed on to the

consumer, making it difficult for Nigerian goods to compete with cheaper imports. The

government is embarking on a major drive to improve power generation with the articulate aim

of improving conditions for industry in March 2010 it unveil tactics to invest USD-3.3 billion in

power projects throughout the country.

To help local industry complete more effectively with foreign imports, the government has

decided to introduce a new tariff regime in 2010.like manufacturing connection of Nigeria was

drawn up in business.

Investing In Manufacturing :

Nigeria is the most full of people country in Africa and as the country workings towards its

goal of becoming one of the world‗s top 20 economies by 2020. Its market for manufactured

goods is expanding. With considerable mineral resources, including Iron ore, coal, lead, zinc

tin, and of course petroleum and gas as well as large arable land resources appropriate for

crops and survive stock create many good for manufacturing.

Many industries make the grade for ‗pioneer‗ status means they can avail of tax free of up

to 7 years eligible industries in the manufacturing sectors include cement ,pharmaceuticals,

rubbers and automotives. The government offers capital allowance for the import of

manufacturing equipment.

Manufacturing Up and Downs

The increase of the Nigerian cement industry is one bright spot in the manufacturing sectors.

Total production of cement in Nigeria is set to rise to 13 million tons in 2010 up from 7-8

million tons in 2009 since domestic demand is expected at 13.4 million the industry is on the

edge of meeting its objective of supply domestic demand and making the country a net

exporter of cement by 2013.

The textile industry is a once one of the country‗s most successful industries, has

misshapen in recent years, faced with the challenges of inadequate power generation and

smuggling. In 1985 food processing is an important part of Nigeria‗s manufacturing industry.

The sub-sector has full-grown at an standard of 10% a year over the past numbers of years

mostly due to important constraint put in place to secure the market for Nigerian food

products. As the government works to stabilize power supply and make stronger

infrastructure, the sector‗s fortunes should improve.

Manufacturing activities comprised of cement, oil refining and other manufacturing

subsectors. Other Manufacturing subsector is the dominant sector in terms of size of

manufacturing activities. The value-added of manufacturing activities at current basic

prices:-

Years Current basic Price on

Manufacture(Billion)

2011 N 857.83

2010 N 643.07

2009 N 612.31

2008 N 520.88

2008 Interpretation:

In 2011 manufacturing value- added growth rate reach to N857.83 Compared to 2011 Slowed

to 7.57% in 2010. 7.85% in 2009 and 8.89% in 2008.

In terms of contribution to growth, the manufacturing sector accounted for 3.96% of the total

GDP growth rate of 7.98% in 2010 and 4.67% of the 6.96% real GDP growth achieved in 2009.

Relative to size of the economy, the manufacturing sector contributed 4.16% of the real GDP in

2010 in contrast to 4.17% in 2009 and 4.14% in 2008.

Output growth for cement and oil refining subsectors stood at 10.56% and 7.28% respectively

in 2010 down from 10.83% and 6.95% growth rates in 2009. The

resumption of production at the Kaduna Refinery and Petrochemical Company (KRPC) after

three years of shutdown, enhanced activities in the oil refining subsector in 2008, but growth

slowed in 2009 as there were little efforts to expand and boost production. Meanwhile, refining

capacity remains inadequate to meet local demand, hence reliance on imported refined

petroleum products persisted in 2010.

Manufacturing Performance:

YEAR CAPUT MANUFACTURING

1990 40.3 162.9

1991 42 178

1992 38.1 169.5

1993 37.2 145.5

1994 30.4 144.2

1995 29.29 139.2

1996 32.46 138.7

1997 30.4 144.2

1998 32.4 133.1

1999 34.6 137.7

2000 36.1 138.2

2001 42.6 146.3

2002 36.1 148.0

2003 42.7 148.0

2004 54.9 145.7

2005 55.7 145.8

2006 54.8 145.7

2007 53.38 89.7

2008 53.84 91.1

2009 58.92 92.4

2010 52.12 93.7

Service sector A Service is the non-material equivalent of a good. Service provision is defined as an

economic activity that does not result in ownership, and this is what differentiates it from

providing physical goods. It is claimed to be a process that creates benefits by facilitating

either a change in customers, a change in their physical possessions, or a change in their

intangible assets. Service output is a component of the GDP of a nation. The service sector

includes (but is not limited to) farm and factory related activities.

The services sector comprises domestic trade, tourism/hotel and restaurant,

This sector remains a major growth driver in the economy, accounting for 65.89% and

54.89% of the total GDP growth in 2008 and 2009 respectively.

The strong growth rate of the services transportation, post and telecommunications,

social services, utilities, finance and insurance, real estate,

etc.

12.39 per cent in 2010 from 12.04 per cent in 2009. However, the contribution of

services to the real GDP growth declined by 2.45 percentage points from the

2009 performance to 50.87 per cent in 2010.

A disaggregated analysis of growth trend in services sector for 2010 indicates that

sub-sectors such as telecommunications, hotel and restaurants, rail

transportation, and transport services recorded higher growth in comparison with their 2009

performance.

In contrast, growth rates of wholesale and retail trade, real estate, road transport, financial

institutions, insurance, air transport, water transport, public

administration, business services, private non-profit organizations, education, health, broadcasting and

other services declined in 2010.

In contrast, growth rates of wholesale and retail trade, real estate, road transport, financial

institutions, insurance, air transport, water transport, public

administration, business services, private non-profit organizations, education, health, broadcasting and

other services declined in 2010.

Value-Added in the Services Sector, 2009-2010

Real GDP % Contributio

ACTIVITY (Naira Nominal GDP % annual Distributio n to

SECTOR Billions) (Naira Billion) change n Growth(%)

2009 2010 2009 2010 2009 2010 2009 2010 2009 2010

Services 232.12 260. 7,127.0 8,027.2 12.04 12.39 32.2 33.6 53.32 50.8

9 2 3 9 4 7

Wholesale and 130.44 145 4,082.3 4,667.6 11.48 11.19 18.1 18.7 28.72 25.8

Retail Trade 5 6 4 1

Hotel and 3.47 3.89 98.96 113.68 11.89 12.01 0.48 0.5 0.79 0.74

Restaurants

Road Transport 17.53 18.7 475.91 495.11 6.91 6.81 2.44 2.41 2.42 2.11

3

Rail Transport & 0 0 0.01 0.01 5.75 5.81 0 0 0 0

Pipelines

Water Transport 0.41 0.43 1.25 1.36 5.66 5.48 0.06 0.06 0.05 0.04

Air Transport 0.43 0.46 5.24 5.81 7.92 7.45 0.06 0.06 0.07 0.06

Transport 1.08 1.14 24.31 25.98 5.47 5.48 0.15 0.15 0.12 0.1

Services

Telecommunicati 25.81 34.8 254.2 260.77 34.73 34.93 3.59 4.49 14.22 15.9

ons 3 4

Post 0.49 0.54 1.81 1.85 10.24 10.24 0.07 0.07 0.1 0.09

Financial 25.54 26.5 430.99 492.26 3.79 3.73 3.55 3.42 1.99 1.69

Institutions

Insurance 1.08 1.18 13.24 15.23 9.6 9.21 0.15 0.15 0.2 0.18

Real Estate 12.17 13.4 1,142.3 1,262.7 10.94 10.66 1.69 1.74 2.57 2.29

7 7 9

Business 0.85 0.9 70.64 80.14 6.19 6.08 0.12 0.12 0.11 0.09

Services (Not

Health or

education)

Public 4.88 5.09 197.26 224.2 4.41 4.23 0.68 0.66 0.44 0.37

Administration

Education 1.44 1.58 47.1 56.01 10.01 9.79 0.2 0.2 0.28 0.25

Health 0.33 0.36 11.09 12.46 10.01 9.99 0.05 0.05 0.06 0.06

Private Non 0.03 0.03 0.21 0.24 11.19 11.11 0 0 0.01 0.01

Profit

Organisations

Other Services 5.56 6.11 267.19 308.64 9.89 9.88 0.77 0.79 1.07 0.97

Broadcasting 0.58 0.63 2.89 3.02 8.48 8.36 0.08 0.08 0.1 0.09

WTO AND OTHER TRADE UNIONS, ITS IMPACT ON COMMERCE AND

INDUSTRIES OF NIGERIA Nigeria is a member of the following international organizations: UN and many of its special

and related agencies:-

World Trade Organization (WTO) Organization of Petroleum Exporting Countries (OPEC) Economic Community of West African States (ECOWAS) African Union (AU) Maritime Organization of West and Central Africa (MOWCA)

There are currently 5 trade unions who try to develop Nigerian economy strong compared to

other African Countries.

WTO OPEC AU ECOWAS MOWAC History:-

International Trade Organization (ITO) – 1944 Bretton Woods Conference, World

bank & International Monitory Fund (IMF) Which is not passed but in 1947 General Agreement Trade & Tariff (GATT) pass with US, UK & other Countries.

Where after some time in 1st

January, 1995- WTO came with new name World

Trade Organization. It also calls Word Talk Opportunities (WTO) for countries.

1983 Members are involved in WTO, where 33 Countries are observer, which handle

entire World Trade Organization.

Head Office- Geneva. Role:- 1) Help to develop Economy; 2) Specialized Help for Export; 3) Encouraging development & Economic reform; 4) Settlement of Disputes; Giving information to public. WTO & NIGERIA:

Nigeria is a lower-middle income country & 2nd

largest economy in Sub-Saharan Africa. World‗s 8th largest producer of Crude oil.- 2.4 Million bpd. Due to high oil price GDP had declined with 23% to 16% in 2003 to 2009 which affect

wholesale, retail trade, communications and agriculture. Foreign trade doubled-Exports increased to US$50 billion & imports US$34 billion. Tariff -Most Favored Nation (MFN)/Normal Trade Relations tariff declined from 29% -

2003 to 18%-2011. Charges additional duties on imports-1 product to different products. Customs have been defined over the last 7 years old. New Legislation to replace the Customs & Excise Management Act- Use E-

documents, digital signatures & Payments as well as the application of proper RM, clearance

audits, & special simplified procedures for qualified traders. In 2007, WTO sagest to Nigeria for new Public Procurement Act- Created for the

National Council on Public Procurement & the Bureau of Public Procurement.-Expected to

reduce corruption and improve the transparency. Nigerian Electricity Regulatory Commission (NERC)- Which generate inadequate

power generation, transmission, and distribution of electricity. WTO & Nigeria made one project in 2005

The Electric Power Sector Reform (EPSR) Act- To break NERC & National Electric Power

Authority (NEPA). 3 Thermal Generating Plants;

11 Distribution Units;

6 Hydroelectricity Plants- Pass throw Private Mgt company.

Due to global financial crisis in 2008- Credit conditions becoming tight (WTO Help). WTO & Nigeria try to develop new plans for investor to invest in Nigeria to become to

achieving their VISION 2020- Private sector.

OPEC & NIGERIA: Organization for Petroleum Exporting Countries (OPEC).

Nigeria has a much higher population than Saudi Arabia. But, still Saudi Arabia

generates a lot of Petro-dollars to develop their country (In 1998).

Production per Year (Million Barrels per Day)

Years Million Barrels per Day

December -2007 1.3 Million bpd

July -2009 1.75 Million bpd

May -2012 Up to 2.58 Million bpd

Due to OPEC and it member Nigeria – Generate more Petro-dollars as compared to

Saudi Arabia.

OPEC member supply 40% of oil to entire world.-Nigeria export- 12.8%.

In 2012 Demand of oil has decreased – Due to last 2 years worldwide recession.

Crude Price cut down from US$140 bpd- 2008 to US$40 bpd in- 2009.

In May 2010 crude price reached a 22 months high US$84.15 bpd, but slid to 11-

months low with US$68 bpd.

OPEC & Nigeria try to develop new method and path to collect petroleum sector

back on track with new project & develop long-time disabled production

facilities.

ECOWAS & NIGERIA:

The ECOWAS Vision 2020 for the air transport sector is to develop a sound and

seamless regional air transport system with safe, reliable, efficient and affordable

air services, well connected within West Africa and integrated with the global network.

Successful development of Air Transport in West Africa will enable the member

state for fast track for socio-economic development. Foreign trade relation has

been develop by the Air Transport authority. Donors & partners as well as to reduce the

negative effect of famine, war and epidemics by the rapid conveyance of foodstuffs and

medicines.

The collapse of the traditional flag air carriers such as Air Africa, Ghana Airways

and Nigeria Airways has had negative consequences in West Africa such as the

due to reliable and affordable air links between member States only.

Undeveloped Infrastructures and equipment for airports and air navigation

services.

High level rate of air accidents to improve air safety and security.

Limitation in cooperation and mixing of West African Airlines.

AU & NIGERIA: African Union (AU) not to interfere Nigerian Bar Association (NBA) on the

continental body to prevail on the Federal Government to prosecute perpetrators

of the recent crisis in Jos, Plateau State, made an interesting reading.

African Union comes with 2 new Article (Objective):-

Article 4(h): The Constitutive Act, African Union provides for the right of the

Union, in certain cases, to intervene in the affairs of a member state on the

recommendation of the Peace and Security Council.

Article 4(j): Provides for the right of Member States to request for such an intervention. The

decision by the Assembly of Heads of State and Government of

the OAU to incorporate the right of intervention in that Act stemmed from concerns about OAU‗s

failure to intervene in order to stop the gross and massive human rights violations witnessed in

Africa.

MOWCA & NIGERIA: In May 1975 as the Ministerial Conference of West and Central African States on Maritime

Transport (MINCONMAR).The name was changed to Maritime Organization for the West and

Central Africa (MOWCA) in 4h August 1999.

All maritime matters that are handle by MOWCA in Nigeria.MOWCA in 1998 to up to now,

generated 247million tones of cargo which represented 4.8% of world cargo, 95% of which was

seaborne.

Role of MOWCA with Nigeria: 1. Encouraging participation of the private sector in West/Central Africa in ship operation

particularly in coastal shipping 2. Development of coastal shipping networks and establishment of feeder systems to

connect hub and spoke ports for the sub-region. 3. Port development and facilitate with particular reference to achieving a faster ship

moment turnaround times and creating special berths and conditions for landlocked

countries. 4. MOWCA provide facility for Marian tanning for Fishing and petroleum industry.

The MOWCA Secretary following Three specialized Units for MOWCA which represent the ports,

shippers and operators.

Port Management Association of West and Central Africa (PMAWCA);

Union of African Shippers Councils (UASC);

ECOLOGICAL ENVIRONMENT OF NIGERIA

2.1 What is Ecology? Ecology is the scientific study of interactions of organisms with one another and with the

physical and chemical environment. Although it includes the study of environmental problems

such as pollution, the science of ecology mainly involves research on the natural world from

many viewpoints, using many techniques. Modern ecology relies heavily on experiments, both

in laboratory and in field settings. These techniques have proved useful in testing ecological

theories, and in arriving at practical decisions concerning the management of natural

resources.

An understanding of ecology is essential for the survival of the human species. Our

populations are increasing rapidly, all around the world, and we are in grave danger of

outstripping the earth‘s ability to supply the resources that we need for our long-term survival.

Furthermore, social, economic and political factors often influence the short-term distribution of

resources needed by a specific human population. An understanding of ecological principles

can help us understand the global and regional consequences of competition among humans

for the scarce natural resources that support us.

Ecology is a science that contributes considerably to our understanding of evolution, including

our own evolution as a species. All evolutionary change takes place in response to ecological

interactions that operate on the population, community, ecosystem, biome and biosphere

levels. Studies conducted within the scientific discipline of ecology may therefore focus on one

or more different levels: on populations of a single species, on an interacting community

involving populations of many species, on the movement of matter and energy through a

community within and ecosystem, on large scale processes within a biome, or on global

patterns within the biosphere.

In the standard 8 syllabus, we consider the basic principles that allow us to understand the

structure and function of each level of organization in nature, examining the levels from the

biosphere down to the population. The central theme in our studies will be to develop an

appreciation that an understanding of the structure and function of the various levels and the

relationships between them is vitally important for the well-being of humanity and of life in

general.

http://www.botany.uwc.ac.za/sci_ed/grade10/ecology/introduction.htm

2

2.2 Overview Of Ecological Environment Nigeria‘s natural environmental resources and the quality of its air, water, and soils are

severely threatened. Increasing poverty, high population growth and migration, especially into

urban areas, and political/institutional constraints are the underlying causes for environmental

degradation in the country.

Nigeria is Africa‘s most populous nation; one out of every five people living in sub-Saharan

Africa lives here. Its population growth rate is above three percent and rural to urban migration

is making the country‘s cities some of the largest in the world. Although Nigeria receives

considerable revenue from its large multinational oil industry sector, this money rarely trickles

down to the populace who are generally poor and growing poorer.

This combination of expanding population and increasing poverty puts increasingly severe

demands upon the natural environment, the institutional structures and there sources available

to manage them. The technical capacity to deal with the enormity of the problem is generally

weak and the lack of enforcement of (and compliance with) existing regulations make for huge

institutional obstacles when trying to effectively tackle environmental issues.

These causes lead to the major threats of unsustainable use of renewable natural resources,

unplanned urban development and oil industry operations that confound sound community

practices to manage natural resources for their mutual benefit.

Nigeria presently contains considerable biodiversity as well as some very important tracts of

fairly undisturbed tropical forests. Its diversity of natural ecosystems ranges from semi-arid

savanna to montane forests, rich seasonal floodplain environments, rain forests, freshwater

swamp forests and diverse coastal vegetation. Nigeria, in the Niger Delta, contains the largest

remaining tract of mangroves in Africa—the third largest in the world. But all of this is

threatened.

Most of the land in Nigeria has been converted to agricultural or pastoral uses and agricultural

encroachment threatens the natural areas that remain. Desertification, the loss of soil fertility,

insufficient quantities and quality of water and enormous erosion problems have followed in

the wake of overuse and mismanagement of the country‘s resources. Environmental problems

that stem from large unplanned urban centers within adequate solid and municipal waste

disposal practices and the impacts of the oil, mining and manufacturing industries are taking their t oil on water and air quality in many

areas. Add to this the escalating practices of overfishing, uncontrolled logging, and many other

unsustainable uses of the natural resources that remain, and threats to the survival of

significant components of Nigeria‘s biodiversity is very real. There is, however, still some

hope.

Since the return to democracy in 1999, there has been a renewed interest in environmental

management and protection. The newly created Federal Ministry of the Environment (FMoE) is

pushing an agenda that makes priority issues of gas flaring, marine and coastal resources

degradation, desertification, and industrial and urban pollution. The recently formed Niger

Delta Development Commission has a transparent mandate and dynamic leadership to help

that unique and resource-rich region seek and develop community-based solutions to the

social and environmental problems that have been growing for decades. In many states across

the country, there are encouraging signs that public leaders, NGOs and community-based

organizations (CBOs) are focusing actively on threats to the environment and donors are

moving to help implement environmental activities that result in improved livelihoods for the

people of Nigeria.

Nigeria currently supports vigorous programs in health, democracy and governance,

agriculture, education, and energy and infrastructure. While the Mission does not support an

environment program, per se, it is worthwhile to note most Nigeria programming areas could

be leveraged to impact positively one environmental management. Conversely, it is also true

that improved environmental management would impact positively upon most of Nigeria‘s current programming areas.

Three major threats to effectively managing Nigeria’s environment:

The unsustainable use of renewable natural resources,

Unplanned urban development, and Petroleum industry operations.

3 THE STRUCTURE OF THE NIGERIAN FINANCIAL SYSTEM

3.1 WHAT IS FINANCIAL SYSTEM?

A financial system is a conglomerate of various markets, instruments, operators, and

institutions that interact within an economy to provide financial services such as resource

mobilization and allocation, financial intermediation and facilitation of foreign exchange

transactions to exchange foreign trade.

Financial system in a market economy is comprised of:

Money and non-monetary claims (served debt and equity). Places, institutions or communication systems that provide a market where financial claims

can be bought and sold.

Specialists such as brokers and underwriters who aid in the direct transfer of funds from

surplus to deficit units. A wide variety of intermediaries that provide attractive indirect routes for

the transfer of funds surplus to deficit units. Households, business firms and government unit

that generate financial surpluses and deficits.

3.2 THE DEVELOPMENT AND STRUCTURE OF THE NIGERIAN FINANCIAL SYSTEM The Nigerian financial system comprises the regulatory/ supervisory authority, banks and non-

bank financial institutions. The regulatory/supervisory authorities are the Central Bank of

Nigeria (CBN) at the apex, the Nigerian Deposit Insurance Corporation (NDIC), Security and

Exchange Commission (SEC), the Federal Ministry of Finance (FMF), the Nigerian

Supervisory Board (NISB), and the Federal Mortgage Bank of Nigeria (FMBN).

The CBN is a major regulator and supervisor in the money market, with the NDIC playing a

complementary role. The CBN exclusively regulates the activities of finance companies and

promotes the establishment of development banks. The National Board for Community banks,

while the final granting of license is the CBN‘s responsibility.

The SEC is the Apex regulator/ supervisor in the capital market, with NSE as self-regulatory

institution. The FMF and the CBN share control over Bureaux de change while the NISB is the

regulatory authority in the insurance sector. The FMBN regulates mortgage financial business

in Nigeria (CBN, 1990).

Developmentally, the Nigeria financial system has witnessed a rapid growth in the

last two decades. This could be seen from the widespread establishment of many

financial institutions. The growth can be claimed to due to the oil boom and the

awareness of the importance of money by Nigerians.

One of the characteristics of the Nigerian financial system is the dominant role the

Federal and State Government play in the financial intermediation directly or

indirectly. There are a number of government parastatals which the government

often lend money to. The state and federal governments also borrow money from the

financial system. The governments are also involved in the financial intermediation

indirectly through ownership of banks or financial institutions.

Though Nigeria has one of the most modern financial institutions today, there are

some worrying features about the system. Nigeria still has an undiversified and

unspecialized banking system. The merchant banks are supposed to provide

wholesale banking while commercial banks are supposed to provide retail banking.

The only exceptions are the development banks and insurance companies. Others

perform the same functions. The difference only lies in the quality of service. The co-

operative Banks are supposed to operate essentially for the Co-operative Societies

but they compete with commercial Banks for all normal banking services. There is no

noticeable line of difference between the commercial and merchant banks. They

both lend to individuals, corporate bodies and the government. Again, the structure

of the financial institutions is such that concentration is in the urban areas despite

the rural banking scheme.

4 Financial Markets in Nigeria

4.1 What Is Financial Market? Financial Market is the market where financial securities like stocks and bonds and

commodities like valuable metals are exchanged at efficient market prices. Here, by

efficient market prices we mean the unbiased price that reflects belief at collective

speculation of all investors about the future prospect. The trading of stocks and

bonds in the Financial Market can take place directly between buyers and sellers or

by the medium of Stock Exchange. Financial Markets can be domestic or

international.

4.2 Different Types of Financial Markets in Nigeria

Capital Market in Nigeria Capital Market consists of primary market and secondary market. In primary market

newly issued bonds and stocks are exchanged and in secondary market buying and

selling of already existing bonds and stocks take place. So, the Capital Market can

be divided into Bond Market and Stock Market. Bond Market provides financing by

bond issuance and bond trading. Stock Market provides financing by shares or stock

issuance and by share trading. As a whole, Capital Market facilitates rising of capital.

Nigerian capital market started rolling from 1960 when Nigerian Stock Exchange (

Lagos stock) exchange was opened. At present the market is gaining depths and

becoming steady. This stock exchange is the pivot of the Nigerian capital market. This exchange is providing different types of funds to bring the accumulated public

wealth into the stock market. At the same time, the large-scale industries of Nigeria

are listed on this exchange. There is also another stock exchange in Nigeria that is

working with the medium and small-scale industries of the country and providing

good support to strengthen the Nigerian capital market. The development of the Nigerian capital market has some other reasons too. A

number of Nigerian banks are investing in the Nigerian stock market so that they can

roll the money and can earn some good profit from the market. The recently introduced minimum capital requirements for the bank have

encouraged the banks to choose the stock markets. The Nigerian capital market is

still gaining depth and so that it was a bit risky for the banks to take the decision but

they took the risk and the results are very positive. It not only encouraged the individual investors but at the same time provided some

good support to the growth of the Nigerian capital market. It is true that the Nigerian

capital market is performing well and the country is experiencing some historical

public offers by the banks like the Zenith Bank. But at thesame time, it is also true

that the market has to go a long way to because still now the NSE's market

capitalization is, much lower than the GDP. According to the ongoing trends, the market capitalization should be nearer to the

GDP or in certain cases it is more than the GDP as in the case of Johannesburg that

recorded 239% of GDP. The turnover ratio of Nigeria stock exchange was 12.4% in

2005. The Nigerian bond market is also passing through a developing phase. The main participants of the Nigerian capital market are the Securities and Exchange

Commission (regulatory), Nigerian Stock Exchange, stock brokers, trustees, issuing

houses, registrars. The investments are done by the insurance companies, pension

funds, institutional investors and the individual investors.

The Stock Market in Nigeria

The Nigerian Stock Exchange The Nigerian Stock exchange was founded in 1960. With its headquarters in Lagos,

NSE branches are in the following cities: Port Harcourt, Ibadan, Kaduna, Kano,

Onitsha, Yola and Abuja. The activities of the market are regulated by the Securities and Exchange Commission. A typical working day on the floor of the Nigerian Stock exchange Market starts

between 9.30 am and ends 12.30pm every week day. Some of the goods which are

traded are shares, corporate bonds and government bonds. They are traded by

professional called stock brokers. How the Stock Exchange Market Works The Stock Exchange operates a system known as the Automated Trading. New

stocks are offered on the floor of the Stock Exchange market by issuing houses or

stockbrokers who determine the prices. Secondary market prices are later made by

only stockbrokers.

The smooth administration of the Stocks Exchange Market is aided also by

practicing Corporate Law Houses, and by Auditing and Accounting Houses. Market prices and the All-Share Index are published daily in on the Stock Market‘s intranet, The Stock Exchange Daily Official List; on the pages of Newspapers and the Nigerian Stock

Exchange website. The Central Securities Clearing System Limited (CSCS)

The CSCS is a subsidiary of the NSE which was incorporated in 1992; it‘s in charge

of clearing, settlement and delivery of transactions on the NSE. This is done by

electronic means. The CSCS Limited also offers custodian services.

THE NIGERIAN MONEY MARKET

The money market is a market for short – term funds: and as the name suggests, it

is a market in which money is bought and sold, the market is used by business

enterprises to raise funds forthe purchase of inventories, by banks to finance

temporary reserve loss, by companies to finance consumer credit and by

government to bridge the gap between its receipts and expenditure.

Unlike the market for textiles, for example, there is no place that one can call a

money market. Although activities in the money market cam be concentrated in a

particular street. For example, all street in New York, Lombard street in London and

Broad street in Lagos. Transactions in the market are impersonal taking place mostly

by telephone (Ajayi and Ojo, 1981). Thus, it is a market for the collection of financial

institutions set up for the granting of short-term loans and dealing in short-term

securities, gold, and foreign exchange (Anyanwu, 1993).

RESONS FOR THE ESTABLISHMENT OF THE NIGERIAN MONEY MARKET

(a) To provide the machinery need for government short-term financing requirements.

(b) It is a part of a modern financial and monetary system which enables the nation

to establish the monetary autonomy which is part and parcel of the workings of an

independent, modern state. (c) To domesticate the credit base by providing local investment outlets for the

retention of funds in Nigeria and for the investment of funds repatriated from abroad

as a result of government persuasions to that effect. (d) It provides a good barometer to CBN, which can use it to judge the shortage of

surplus of funds in the economy. (e) The existence of the money market enables the central bank to undertake

vigorous monetary policy.

THE DEVELOPMENT OF THE NIGERIAN MONEY MARKET

No money market existed in Nigeria before the establishment of the Central Bank of

Nigeria. This is however not to say that a market for short-term funds did not exist

before then. Before the advent of commercials banking, there existed some

elements of short-term lending and borrowing based of commercial paper. The

market was an integral part of the London money market. It worked by moving funds

from London to Nigeria during the season in order to finance the export of produce.

At the end of the season, the funds were moved back to London, when there was all-

season money-market activity.The establishment of the Nigerian money market

involved, on the part of the Central Bank of Nigeria, repatriating these ―roving‖

funds to Nigeria for the country‘s economic development.

The development of the Nigerian money market is not unconnected with the

systematic introduction of the various instruments used in the market. Hence,

discussion shall be on these instruments and time of introduction.

1. Treasury Bills (TBS) These are money-market (short-term) securities issued by the federal government of

Nigeria. They are sold at a discount (rather than paying coupon interest), mature

within 90 days of the date of issue. They provide the government with a highly

flexible and relatively cheap means of borrowing cash.

Thus, TBS and IOUs are used by the federal government to borrow for short periods

of about three months pending the collection of its revenue. Their issue for the first

time in Nigeria (in April 1960) was provided for under the Treasury Ordinance of

1959. It was issued in Nigeria in multiples of #2000 (later reduced to #100 in order to

expand the coverage of holders for 91 days and at fixed discount. TBS outstanding

average #34.421.8 million in 1989 with # 10,879.5 million issued between1992, and

1995, it averaged #2585.05 million.

2. Treasury Certificate (TCS) These are similar to TBS but are issued at par or face value and pay fixed interest

rates. These fixed in interest rates are called coupon rates. Thus, each issue

promises to pay a coupon rate of interest and the investor collects this interest by

tearing coupons off the edge of the certificate and cashing the coupon at a bank;

post office, or other specified federal office. Each coupon is imprinted a year from the

date of issue. In the Nigeria context, their rates became market-determined like TB

rates following interest rates deregulation.

Thus, treasury certificates are medium-term government securities which mature

after a period of one to two tears and are intended to bridge the gap between the

treasury bill and long term government securities. They were first issued in 1968 at a

discount of 45/8 percent for one-year certificates and 41/2 percent for two year

certificates.

At the end of 1990, treasury certificates outstanding had risen to #34214.6 million.

This further rose to N36554.32 in 1993, #37342.7 million in 1994 but declined to

#23596.5 million in 1995. Thus, between 1990 and 1995 it averaged #39230.2

million. The main holders of treasury certificates are the commercial banks with the

CBN ranking second.

3. Call Money Fund Scheme- Money at call or Short Notice this refers to money lent by the banks on the understanding that it is repayable at the

bank‘s demand or at short notice (e.g. 24 hours or over-night). Overnight loans are

simply bank reserves that are loaned from banks with excess reserves to banks with

insufficient reserves. One bank borrows money and pays the overnight interest rate

to another bank in order and obtains the lending bank‘s excess reserves to hold as

one-day deposits. The borrowing bank needs these one day deposits in order to

acquire the legal reserves the CBN examiners require banks to maintain.

They act as a cushion which absorbs the immediate shock of liquidity pressures in

the market. The scheme was introduced in 1962 in Nigeria. Under the scheme, fund

was created at the CBN and the participating banks had to agree to maintain a

minimum balance at the CBN. Any surplus above the minimum balance was then lint

to the fund. The CBN administered the fund on behalf of the banks and paid interest

at a fixed rate somewhere below the Treasury bill rate. The CBN then invested the

funds in the treasury bills.

The scheme was abolished in 1974 due to buoyant oil revenue of the federal

government consequent upon the oil boom. While the scheme lasted, it had a

beneficial impact on the efficiency with which the banks managed their cash

balances while helping to reduce the degree of dependence of the banks on

overseas money market facilities.

4. Commercial Papers or Commercial Bills These are short-term promissory notes issued by the CBN and their maturities vary

from 50 to 270 days, with varying denominations (sometimes #50,000 or more).

They are debt that arises in the course of commerce.

Commercial papers may also be sold by major companies (blue-chips-large, old,

safe, well-known, national companies) to obtain a loan. Here, such notes are not

backed by any collateral; rather, they rely on the high credit rating of the issuing

companies. Normally, issuers of commercial papers maintain open lines of credit (i.e.

unused borrowing power at banks) sufficient to pay back all of their commercial

papers outstanding. Issuers operate in this form since this type of credit can be

obtained more quickly and easily than can bank loans. This instrument was introduced in 1962 to finance the export-marketing operations of

the then Northern Marketing Board. Under the arrangement, the marketing boards

meet their cash requirements by drawing ninety-day bills of exchange on the

marketing boards. The bills are then discounted with the commercial banks and

acceptance houses participating in the scheme. The role of the CBN is that to

provide rediscounting facilities for the bills.

In 1968, CBN took over the responsibility for the marketing Board crop finance and

hence, the demise of the bill market. What remains today of the commercial paper

market, following the disappearance of produce bills are import and domestic trade

bills.

By 1968, commercial paper outstanding was #5.1 million falling from #36.4 million in

1967. However, in 1989, commercial paper outstanding averaged #868.8 million.

Between 1990 and 1995, it averaged #2219.05 million recorded in 1990.

5. Certificates of Deposits (CDS) Negotiable (NCO) or Non-negotiable (NNCO) deposits are inter-bank debt

instruments designed mainly to channel commercial banks surplus funds into the

merchant banks. NCO‘s are rediscount able with the CBN and those with more than 18 months tenure are eligible as liquid assets in

computing a bank‘s liquidity ratio. These attributes make the instruments attractive to

banks.

Legal Environment In Nigeria

There are four distinct systems of law in Nigeria: English law which is derived from its colonial past with Britain; Common law, a development of its post colonial independence;

Customary law which is derived from indigenous traditional norms and practice,

including the dispute resolution meetings of pre-colonial Yorubal and secret societies

and the Èkpè and Okónkò of Igboland and Ibibioland; Sharia law, used only in the predominantly Muslim north of the country. It is an Islamic

legal system which had been used long before the colonial administration in Nigeria but

recently politicised and spearheaded in Zamfara in late 1999 and eleven other states

followed suit. These states are Kano, Katsina, Niger, Bauchi, Borno, Kaduna, Gombe,

Sokoto, Jigawa, Yobe, and Kebbi. The country has a judicial branch, the highest court of which is the Supreme Court of Nigeria.

Nigerian Law Regarding Business Companies and Allied Matters Act Chapter 59 Laws of the Federal Republic of Nigeria 1990

The first Companies Ordinance was introduced in Southern Nigeria - Lagos in 1912.

This was then ammended in 1917 to cover the whole country (Companies

Amendment and Extension Act of 1917). Both acts were then repealed and replaced

in 1922 by the Companies Act of 1922.

The 1968 Companies Decree replaced the 1922 Act. Currently, the Companies and

Allied Matters Decree of 1990 regulates companies in Nigeria.

THE CORPORATE AFFAIRS COMMISSION. The Company and Allied Matters Decree of 1990 is regulated by the Corporate

Affairs Commission (the commission); the commission is itself a body corporate with

perpetual succession and common seal.. Its main function 7 (1) is to administer

advice including the regulation and supervision of the formation, incorporation,

registration, management and winding up of companies registry and offices in all the

state of the federation; arrange or conduct an investigation into the affairs of any

company where the interest of the share holders and the public so demand, etc.

Characteristics of a Company.

The death of or transfer of a share holder does not affect the corporate existence. It

enjoys perpetual succession. It is managed by its duly elected Board of Directors

or/and officers. Individual share holders cannot

bind the company by their act. Enjoys limited liability - the debts of the company are its debts. Members are not

liable personally for its debts. A company cannot be constituted by mere agreement of the parties, it can only be

created by or under legislative enactment (decree). It can be dissolved only by or with the consent of the state. It can only exercise powers expressly conferred and its to be reasonable implied

from those conferred and its powers cannot be enlarged without the consent of the

state. A limited liability has the capacity to sue or to be sued in its own name.

FORMATION OF COMPANY.

Any two or more persons may form and incorporate a company. No company

association or partnership consisting of more than 20 persons can be formed for the

purpose of carrying on any business for profit or gain unless it is registered as a

company (co-operatives and professional bodies, legal practitioners, Accountants

etc. are exempt from this rule).

Capacity of individuals to form a company: (Section 20, 1)

An individual shall not join in the formation of a company if he/she: is less than 18 years of age (unless two other persons not disqualified by this

section have subscribed to the memorandum)

is of unsound mind.

is an undischarged bankrupt.

is disqualified under section 254 of the decree from being a director of the company.

(Section 254): if a person is convicted by a high court of any offence in connection

with the promotion, formation or management of a company, or has been guilty while

an officer of the of the company of any fraud in relation to the company or of any

breach of his duty to the company) A corporate body in liquidation cannot join in the formation of a company.

An alien or a foreign company may join in forming a company subject to the capacity

of aliens to undertake or participate in trade or business.

CLASSIFICATION OF COMPANIES (Public or Prviate)

Company Limited by Shares: the liability of its members is limited by the memorandum to the amount, if any,

unpaid on the shares respectively held by them.

Company Limited by Guarantee: the liability of its members is limited by such amounts as the members may thereby

undertake to contribute to the assets of the company in the event of its being wound

up.It may not be incorporated with the object of of carrying on business for the

purpose of making profits for distribution to its members.

When a company is formed for the purpose of promoting arts, science, religion,

sports, culture, education, research, charity etc and the income and property of the

company are to be applied solely towards the promotion of its objects and no portion

is to be paid directly or indirectly to its members except as permitted by the decree,

the company shall not be registered as a comapny limited by shares but as a

company limited by guarantee.

Unlimited Company: no limit on the liability of its members. All unlimited companies shall be registered

with a share capital from the date of the Decree of 1990. If an existing company is

not registered with a share capital then the memorandum must be altered so that is

becomes an ulimited company having a share capital not below the minimum share

capital permitted under section 99 of the decree.

(Section 99, 1) If a memorandum states that the company is to be registered with

shares and it is delivered after the commencement of the Decree, the the amount

stated in the memorandum to be registered shall not be less than the authorised

minimum share capital and not less than 25 per cent of that capital shall be taken by

subscribers of the memorandum. TYPES OF COMPANIES (Section 22, 1) Private company: A company that has been stated in its article of memorandum to be private. The

transfer of its shares is restricted. The total number of members shall not exceed 50,

excluding bona fide employees of the

company. It shall not allow the public to buy shares or debentures or deposit money

for fixed periods or payable at call whether or not interest bearing.

If a company defaults on the provisions of section 22 of the decree, the company

shall cease to be entitled to the privileges and exemptions conferred on private

companies by or under the decree. The Decree shall then apply to the company as if

it is not a private company.

Public Company: Any company that is not a private company shall be a public company and its

memorandum shall state so. Every public company shall have capital except those

limited by guarantee-those formed for promoting commerce, arts, science, religion,

culture, education, research, charity etc. The total liability of a company limited by

guarantee shall not be less than N10,000.

THE MEMORANDUM OF ASSOCIATION. A memorandum of association is a formal request from the company signed by at

least two subscribers who are the company‘s first share holders, this document must

state:

Name of the Company: The name of a private company limited by share shall end with the word Limited. The name of a public company limited by shares shall end with the words Public

Limited Company or PLC. The name of a company limited by guarantee shall end with the words Limited by Guarantee.

The name of an unlimited company shall end with the words Unlimited. A company may use the abbreviations Ltd. PLC., (Ltd./Gtc) and ULtd. for the words

Limited, Public Limited Company, and Unlimited.

Taxes in Nigeria

Under current Nigerian law, taxation is enforced by the 3 tiers of Government, i.e.

Federal, State, and Local Government with each having its sphere clearly spelt out in

the Taxes and Levies (approved list for Collection) Decree, 1998. Of importance at

this juncture however are tax regulations pertaining to investors both foreign and

Local.

The importance of tax regulations cannot be over-emphasized, as most transactions

with any Ministry, department, or government agency cannot be concluded without

evidence of tax clearance. i.e. a Tax Clearance Certificate certifying that all taxes

due for the three immediately preceding years of assessment have been settled in

full. The following are some of the relevant tax regulations in the country.

1. VALUE ADDED TAX (VAT): This was introduced by the VAT decree No. 2 of

1993, to replace the old sales tax. It is a consumption tax levied at each stage of the

consumption chain, and is borne by the final consumer. It requires a taxable person

upon registering with the Federal Board of Inland Revenue to charge and collect

VAT at a flat rate of 5% (recently increased to 10%) of all invoiced amounts of

taxable goods and services.

VAT paid by a business on purchases is known as input tax, which is recovered from

VAT charged on company‘s sales, known as output tax. If output exceeds input in

any particular month the excess is remitted to the Federal Board Of Inland Revenue

(FBIR) but where input exceeds output the taxpayer is entitled to a refund of the

excess from FBIR though in practice this is not always possible.

A Taxpayer however has the option of recovering excess input from excess output of

a subsequent period. It should be stated at this point that recoverable input is limited

to VAT on goods imported directly for resale and goods that form the stock-in-trade

used for the direct production of any new product on which the output VAT is

charged.

2. CAPITAL GAINS TAX: This accrues on an actual year basis and it pertains to all

gains accruing to a taxpayer from the sale or lease or other transfer of proprietary

rights in a chargeable interest which are subject to a capital gains tax of 10%, such

chargeable assets may be corporeal or incorporeal and it does not matter that such

asset is not situated in Nigeria. Where however the taxpayer is a non-resident

company or individual the tax will only be levied on the amount received or brought

into Nigeria.

Computation of capital gains tax is done by deducting from the sum received or

receivable from the cost of acquisition to the person realizing the chargeable gain

plus expenditure incurred on the improvement or expenses incidental to the

realization of the asset.

3. EDUCATION TAX: An education tax of 2% of assessable profits is imposed on all

companies incorporated in Nigeria. This tax is viewed as a social obligation placed

on all companies in ensuring that they contribute their own quota in developing

educational facilities in the country.

4. PERSONAL INCOME TAX: The legal basis for this tax is found in the provisions

of the Personal Income Tax Decree [now Act]. 104 of 1993.

Every taxpayer in Nigeria is liable to pay tax on the aggregate amount of his income

whether derived from within or outside Nigeria, the salaries, wages, fees,

allowances, and other gains or benefits, given or granted to an employee are

chargeable to tax. The Employers of labor are deemed to be agents of the tax

authority for the purposes of remitting taxes deducted from salaries due to

employees.

However residency of the Taxpayer determines the extent of a taxpayer‘s liability in

Nigeria. A person‘s place of residence for this purpose is defined as a place

available for his domestic use in Nigeria on a relevant day, excluding hotels and rest

houses. A person is deemed resident in Nigeria if he resides in Nigeria for 183 days

in any 12-month period, expatriates holding residence permits are liable to tax in

Nigeria even if they reside in the country for less than 183days in any 12-month

period. Once residence can be established, the relevant tax authority of the territory

is the tax Authority in which the taxpayer has his place of residence or principal place

of business.

The following are however exempted from tax: - • Medical or Dental expenses incurred by the employee; • Retirement gratuities and compensation loss of office; • The cost of passage to or from Nigeria incurred by the employee; • Interest on loans for developing an owner-occupied residential house;

• Leave allowance, which is computed as 10% of annual basic salary subject to a maximum of N7, 500

per annum. 5. COMPANIES INCOME TAX: Tax is payable for each year of assessment of the

profits of any company at a rate of 30%. These include profits accruing in, derived

form brought into or received from a trade, business or investment. Also companies

paying dividends to its shareholders are first obliged to pay tax on it‘s profits at the companies tax rate. Generally in Nigeria company dividends or other company distribution whether or not of a capital nature made by a Nigerian company

is liable to tax at source of 10%, however dividends paid in the form of bonus share

or scrip shares to individual share holders are not subject to tax, where also a

company is a shareholder in another company then such dividends are excluded

from the profits of the company for the purposes of computation of the tax.

JJ. NIGERIAN SOCIAL INVESTMENT TRUST FUND (NSITF): This is governed

by the NSITF Decree, and requires everybody employed in a Nigerian incorporated

company to contribute a certain percentage of their salary to the fund. This

contribution is based on the assumption that the maximum basic salary in Nigeria is

N48, 000 per annum; Expatriates are excluded from this requirement where they can

show proof of a similar contribution in their home country. The rate of contributions is

defined as follows, where the contributor is an employee, 2.5% of his salary subject

to a maximum of N 1,200 per annum; Where the contributor is an employer, 5% of

basic salary subject.

KK. WITHHOLDING TAX: Nigerian law subjects certain activities and services to

Withholding Tax. This basically means that where during transactions in any of the

specified activities or services, a payment is due from one person to another, the

person making the payment is expected to deduct tax at the applicable rate and

remit it to the relevant tax authority. This should be done not later than 30 days after

the deduction. This provision can be found in sections 68 to 72 of the Personal

Income Tax Decree No. 104 of 1993; Sections 60 to 64 of the Company Income Tax

Act (as amended), and Section 51(a) of the Petroleum Profits Tax Act (as amended).

Some of these activities and Services and their current applicable rates include:-

Payment %Corporate %Individual/Partnership Rent 10 10 Construction 5 5 Dividend 10 10 Royalties 10 5 Commission 10 5 Professional Fees 10 5 Technical 10 5 Consultancy Fees 10 5

8. Tax Treaties: Nigeria has a number tax treaties referred to as ―double taxation‖ agreements with a number of countries, these are designed to ensure that the tax payable in Nigeria on the profits of a Nigerian company being remitted into the country are reduced by the amount of ―foreign Tax‖ paid abroad and vice versa where an overseas company receives profits from Nigeria that have already been taxed in Nigeria. Some of these countries include the UK, France. The Netherlands, Belgium, Canada and Pakistan. http://www.ngex.com/business/public/newsinfo.php?nid=2

PART-2

1. Transportation industry of Nigeria

2. Analyzing opportunities through

feasibility study on Royal Enterprise

in Nigeria

3. Pharmaceutical Sector of Nigeria

1. INTRODUCTION

1.1Nigeria transportation scenario:

The evolution of modern transport system in Nigeria can be categorized into two

distinct phases. These are:

a) The colonial period which marked the origin of modern transport system?

The networks of rail, water and road developed then were geared essentially to meet

the exportation of cash crops, such as groundnuts, cocoa, cotton and palm products

and to the importation of cheap, mass produced consumption goods. These early

transport systems were planned in the most economical way possible, as typified in

sub-standard road and rail alignments and a sub base, which later proved

inadequate to accommodate heavy vehicles.

b)The post-colonial period/attainment of independence. With a re-orientation

of goals, transport became one of the instruments of unification of the country and an

important tool for social and economic development. The development of petroleum

resources from the 1950‘s had significant impact on the nation‘s social and economic

growth, putting increasing demands on the transport system. Goods and passenger

movements in Nigeria are performed mainly by road, with the railway and inland

waterways playing significant, but less important roles. International freight

movement is principally by sea while air transportation is the main passenger carrier.

Government‘s investment in the country‘s transport system is substantial. The

replacement value of road network at 2001 prices is estimated at between N3, 500 –

N4, 300 billion. The fixed assets of Nigerian Ports Authority amounted to N36 billion

in 1999, but this represents an addition of unadjusted historical data. The

replacement value could therefore be much higher. Investments in the Nigeria

Railway Corporation are smaller, approximately N9.5 – N10 billion.

1.2 WATER TRANSPORTATION

PORTS

BACKGROUND

Ports represent a complex structure in a country‘s transportation system in three

main ways. First, it provides a number of interrelated activities, which include:

Ship-harbor interface (pilot age, dredging, provision of berths, maintenance of

navigational channels etc);

Ship-port interface (loading and unloading of cargoes); and

Port-land interface (delivering cargo to and from the hinterland).

These different functions require different organizations and their relationship must

be taken into account in Port planning and policy.

Second, the Ports play a strategic role in the economy of a country. In Nigeria,

practically all imports and exports move through the Seaports. Thus, the efficiency or

inefficiency of the Ports affects profoundly the costs of imports and the

competitiveness of exports.

Third, Ports, directly and indirectly, are large employers of labor especially, if indirect

employment such as insurance, customs, haulage, clearance, storage, free zone

activities, sorting out the incoming and outgoing cargo, industrial and other value

added activities are considered.

In view of the above, Nigeria has a great potential for a buoyant maritime industry.

To enjoy this inherent benefit, it is vital that Nigerian Ports system operates

efficiently.

THE EXISTING SITUATION

A) Port Development

At independence, Nigeria had two major ports at Lagos and Port Harcourt. The two

Ports together with a few minor ones at Warri and Calabar adequately serviced the

maritime needs of the country. By the second half of the 1970s, Nigeria‘s port

facilities were severely overtaxed due to the oil boom and the associated improved

standard of living which led to a sharp increase in import traffic. This increase

imposed major strains on the system, leading to delays in ship handling and resulting

in high demurrage.

In response to this, a massive investment programmed was undertaken and Port

capacity was increased by about 300 percent between 1975 and 1980. Today

Nigerian Ports Authority (NPA) has 13 major Ports, 11 oil terminals and 128 private

jetties within the port system. There are 102 hard quay berths 62 buoys and over

650 different cargo handling plants and equipment. All together, the country has a

total cargo handling capacity of over 35 million tones. The installation of this

capacity is a major national achievement and the present capacity of the Nigeria

Ports can be considered adequate. However, some additional investment may help

to improve productivity. In terms of traffic, the Ports are essentially importing

dependent. In recent times, the changes in import of ranged from between 31.6

percent and to 6.7% for general cargo; 53.5% and 44.5% for bulk cargo, and 23.6%

and –22.6% in containerized traffic. Overall, cargo throughput increased from 20

million in 1998 to 30 million in 2000. As the nation‘s economy improves, the cargo

throughput of the Ports will increase, while high fluctuations in cargo throughput may

diminish.

B) PORT MANAGEMENT:

The Nigerian Ports Authority (NPA) owns all the Ports. By Decree No 38 of 1999

which sets up her functions and power, NPA controls all public and private tasks in

the sector. It maintains and operates every available asset (fixed and movable) while

stevedoring, warehousing, chambering and industrial activities are executed by

private operators under the supervision of NPA. By Section 124 of the Decree, the

government exercises full control over Nigerian Ports Authority (NPA), operations:

Government appoints the Chairman and the Board members, the Managing Director

and Executive Directors and sets their salaries and remunerations. The Authority

must seek approval from government to spend and borrow money, and make

investments. The present Port organization makes NPA a Public Money. The

centralized system leaves little room for competition and the Ports are characterized

by high tariffs, excessive manpower and gross inefficiency. The Ports suffer from the

problems of imprudent management of resources in the face of increasing

competition from Ports of neighbouring countries. The performance of the Ports is

generally sub-optimal and there is a mounting pressure from the private Port sector

to improve efficiency.

C) PORT REFORMS:

To improve service delivery, enhance management capability, modernized port

development and; reduce government involvement and spending, the Government

embarked on a Port Reform Programmed by transferring responsibility for cargo

handling operations at the port terminals from the Nigerian Ports Authority (NPA) to a

number of private sector operators with the former as Landlord. However, the

weaknesses in the interface between the port terminals and the inland transport

system, particularly in Lagos, are still evident.

D) PORT MANAGEMENT OPTIONS

Within the context of Port reform a number of Port management options have been

considered. These are: Public Service Port; Tool Port; Landlord port; Privatized Port

and Master Concession. Two main Management Models have been adopted

namely: Service Port and the Landlord Port.

The Ports which are operated as Landlord ports include:

Federal Lighter Terminal, one

Federal Ocean Terminal, One

Kirikiri Lighter Terminal Phase 1

Kirikiri Lighter Terminal Phase2 and

Ikorodu Lighter Terminal.

Ports that are operated as service Ports are:-

Lagos Port (Apapa Port Complex)

Tin Can Island Port

Container Terminal, Apapa

Roro Terminal

Calabar Port Complex

Port Harcourt Port Complex

The Warri Port combines in equal terms the two Port management models.

However, the Landlord model stands out and offers greater promise in terms of

efficiency Productivity, going by the performance of Onne Port. Government will

therefore adopted the landlord port model – a port concession approach which

entails the separation of responsibilities of the major actors in the port activities and

functions. Under this arrangement:

Existing Port terminals have been leased out to Private Companies who are

responsible for operations, investment and maintenance of superstructures.

The Public sector will be concerned with Port planning and development,

regulation, nautical management, safety, security and the environment.

Government remains Landlord and owns the land and Port infrastructure.

The NPA, as an agency of the Public sector, which hitherto has been the

operator will execute the public sector functions.

Pending the establishment of a suitable regulatory agency, a Nigerian Port

Commission will be created to undertake Economic Regulation for the sub

sector.

The port reform policy introduces the market principles through full private

sector participation. Government intends to pursue a reform along this line

believing that a liberalized Port sector will:

free the government of enterprise burden and enable her pursue more

rigorously the task of governance;

Place Nigeria in line with international norms in Port efficiency and

productivity; and

Allow the private sector to play its role in the development of the nations

transport sector.

POLICY GOALS:

Emerging international market economy and the effects of globalization in the

maritime sector require fundamental changes in the way ports are managed. The

introduction of Port reform in Nigeria is based on the recognition that the Ports are

major points in the distribution channel and, in line with global trends, the Nation‘s

Ports, have to be efficiently managed. This policy document adopts therefore, private

sector participation, liberalization and competition, in development, management and

operations of Nigerian Ports for the following reasons;

competition from Ports in neighboring countries, namely, Kotonou Port in

Benin Republic and Lome Port in Togo, which are serious competitors for

shipping companies and shippers as preferred designations;

Pressure from the shipping and business communities for improved

procedures, shorter turn-around time, transparent operations and reduction

in costs and losses;

Bureaucratic process caused by the excessive intervention of the public

sector which are factors in ports inefficiency; and

Government alone is therefore committed to major Port reform that will

ensure greater efficiency and productivity through Concessioning of Port

operations to Private Sector Companies, on long-term lease, whilst

safeguarding the public interest.

POLICY OBJECTIVES

The policy implications of the aforementioned goals and outlook are that there is an

urgent need:-

a) To achieve the highest possible level of efficiency at the major seaports of

Nigeria, in the shortest time possible.

b) To monitor carefully, international maritime developments in order to make the

necessary adjustments to maintain and improve the competitiveness of Nigerian

Ports, in the quest to a hub in the West and Central Africa Sub-region.

To achieve these, government will pursue the following specific objectives:

Enhance competition and raise performance standard of the Ports;

Ensure greater investment in up to date cargo handling equipment and

information technology;

Simplify tariffs and operational processes to enhance transparency;

Free Port system from political, bureaucratic interference and make them

responsive to customers‘ needs;

Reduce financial burden on government through increased private sector

participation; and

Reform the institutional and structural set up in the Ports to support desired

efficiency level.

POLICY STRATEGIES

To pursue and achieve the aforementioned objectives, Government will adopt a Port

management model that will attract full private sector involvement and promote

market principles, are prosecute a port reform programmed that ensures improved

efficiency, productivity, and private sector participation, through the following

strategies:-

a) Private Sector Participation

Encourage indigenous entrepreneurs in the port concession in order to

build national capacity in the maritime transport sub sector;

b) Port Reform Model

Regionalize the existing ports into functional but independent port

complexes and

Concession each port complex to a suitable private sector company.

c) Legal and Regulatory Framework

Repeal the NPA Act of 1999 and enact a new Port Act based on the

Landlord Management Model.

Prepare a land use master plan for the Ports including the definition of

appropriate traffic corridor within the Port. Such a land use master plan will

serve as a guide for the establishment of concessions for subsequent

construction in the Port areas.

d) Institutional Reform

Restructure the NPA and properly designate its functions as a landlord;

Establish Economic and Safety Regulator for the sector;

Create a Port Advisory Council for all the Ports. Such a Council will be a

purely consultative body, composed of the Port interests, users‘

representatives and state or local government representatives. Its main

function is to identify problems of common interest and to search for

common solutions.

e) Implementation

Appoint an Implementation Committee, which will prepare an

implementation time table, organize and supervise the implementation.

The Bureau of Public Enterprises charged with the responsibility of

privatizing some government establishment is in the best position to

coordinate this implementation.

The Implementation Committee will prepare concession agreement for

each type of concession. The agreement will specify the length of the

concession, which will assure the concessionaire adequate time for

planning and effecting the investments needed for the efficient and

effective provision of services and/or conducting activities specified in the

concession contract, as well as clearly stating his right and obligations.

f) Labor

Put in place appropriate programmers for dealing with redundancies and

employees compensations.

Organize Consultative/Educational programmers for the staff.

g) Policy Monitoring and Review

Put in place a policy monitoring and review team which main task will be

that of monitoring the effectiveness of this reform policy. It will identify the

problems and proffer solutions, the execution of which it will again follow

up. The monitoring and review committee should consist of Port

management experts and the academia.

1.2.1INLAND WATERWAYS

BACKGROUND

An efficient coastal and inland waterway system will relieve pressure on the

country‘s rail and road transport infrastructure as bulk goods can be transported over

long distances at very low rates. The energy demand of the Waterways is low and

the negative effect on the environment is minimal. The use of the waterways for

transportation should therefore be encouraged as a matter of principle.

EXISTING SITUATION

The Nigerian inland waterways are a major natural resource, traversing 20 out of the

36 states. The areas adjacent to the major rivers represent the nation‘s important

agricultural wetlands. Agricultural products from the middle belt and particularly from

Makurdi and Lafia areas can be transported to Onitsha and Port Harcourt through

the waterways. The Ajaokuta Steel Complex which is fed with coal and scrap metal

imported through Warri, and Onitsha, a major industrial/trade center on the Niger,

will both benefit from a waterways, for movement of bulk cargo.

POLICY OBJECTIVES

Government recognizes the great potentials and benefits of the inland waterways

and is resolve to address the outlined constraints to enable the country fully exploit

and enjoy this mode of transport. It is therefore the objective of government to

develop the inland and coastal waterways with private sector participation.

POLICY STRATEGIES

In order to achieve this objective government will:

Eliminate the physical constraints to navigation in the country‘s waterways;

Promote pricing policies that will shift traffic to the inland waterways;

Restructure the National Inland Waterways Authority (NIWA) (which is

charged with the responsibility of managing the waterways) to give ample

opportunity for private sector participation in the management and

operation of the waterways;

Encourage indigenous involvement in the development of the inland

waterway as a mode of transportation; and

Establish an Inland Waterways Safety Inspectorate to curtail the high

incidents of major and minor accidents. The potential dangers posed by

poorly maintained vessels and incompetent operators will also be checked

in addition to stricter endorsement of existing navigational and safety rules.

Proper licensing and inspection procedure will be adopted and appropriate

sanctions imposed on those who infringe safety rules and procedure.

Commercial river crafts will be properly inspected and licensed to promote

safety in inland water navigation.

1.2.2 SHIPPING

BACKGROUND

The Nigerian economy is heavily dependent on international trade. The total cargo

throughput of Nigeria Ports was 14.2 million tones in 2000. The projected throughput

is 17 million for 2005; 20 million for 2010 and 24 million for 2015. Such heavy

dependence on international trade implies a virile maritime industry in the country.

Many benefits await a country with such a maritime industry. Among these are:-

Promotion of export trade, and accelerated national economic growth;

Acquisition of shipping technology, thereby enhancing the nation‘s ability to

engage in ship building and repairs;

Backward linkages and creation and diversification of employment

opportunities;

Boost in government revenue and improvement in the country‘s balance of

payment.

Unfortunately, these benefits have not been fully realized in Nigeria. Between 1971

and 1981, Nigeria accounted for 68% of the total trade of West and Central African

sub- region but earned only 14.4% of the accruing revenue. In 1990, Nigeria was

responsible for freighting only 3% of the country‘s total cargo, even though it had the

mandate to carry as much as 60%. The relative share of indigenous carriers in the

country‘s maritime trade has declined from its very low level of 7% in 1987 to an

even lower level of 4% in 1990. To date, the shipment of cargoes depends almost

entirely on foreign shipping lines. Government has made several efforts to arrest this

situation notably

Establishment of the Nigerian Shippers Council to improve the bargaining

position of Nigerian shippers;

Establishment of the National Maritime Authority to regulate freight sharing

between shipping Conferences, thereby promoting national merchant marine;

Venturing into shipping through the direct presence of the defunct National

Shipping Line and later the Unity Line;

Establishment the Maritime Academy of Nigeria, Oron, to promote technical

manpower development in the sub-sector; and

Enactment, in recent time, the Cabot age Act to encourage indigenous

carriers.

In spite of the aforementioned promotional and regulatory measures, only modest

progress has been made and Nigeria continues to lose significant revenue to foreign

shipping companies. With the present trend, Nigeria may not be involved in the

carriage of her own cargo in the nearest future except adequate measures are taken.

POLICY OBJECTIVES

Government‘s policy objective is to consolidate on the achievement of the existing

promotional and regulatory measures and encourage indigenous participation in the

carriage of the country‘s wet and dry cargoes.

POLICY STRATEGIES

In order to correct the anomaly existing and ensure that Nigerians are fully in control

of the contrary‘s wet and dry cargo business, government will:

facilitate full indigenous participation in the carriage of cargoes including the

lifting of crude petroleum;

promote human capacity development for the manning of maritime vessels

by Nigerians;

Put in place monetary and fiscal policies that adequately favour the shipping

companies. In this regard, government will:

Create an enabling environment for indigenous private shipping companies to

acquire vessels;

Make a special provision for the shipping industry in the context of domestic

credits and foreign exchange;

Allow substantial tax relief and tax concessions for indigenous shipping

companies;

Explore the possibility of international funding assistance and cooperation for

the indigenous shipping companies; and

Encourage and promote a culture of financial discipline for the shipping

companies to enable them build up fleet capacity.

1.3 LAND TRANSPORTATION

INTRODUCTION

Land Transport involves movement of people and goods on land, from one location

to another. It is the dominant form of transportation in the World and includes rail,

road and pipeline. In this National Transport Policy, Land Transportation includes;

road, rail, Pipeline, Rural accessibility, Urban Transportation and Pipeline.

1.4 ROAD TRANSPORTATION

BACKGROUND

Nigeria has become increasingly dependent on the road system to meet virtually all

its inland transport needs as the rail, pipeline and inland waterway systems have

deteriorated. At the same time, the road network itself has suffered from continuing

lack of maintenance and investment by the three levels of government, Federal,

State and Local.

Federal State Roads Local Govt. Roads

Total Percentage

Paved Main Roads 26,500

10,400

36,900

19%

Unsaved Main Roads 5,600

20,100

25,700

13%

Urban Roads 21,900

21,900

11%

Main Rural Roads 72,800

72,800

38%

Village Access Roads 35,900

35,900

19%

Total 32,100

30,500

130,600

193,200

100%

Percent 17%

16%

67%

100%

Source: Central Bank of Nigeria

From table one; it is obvious that the local government roads ownership accounts for

about 67%. This therefore shows that local government controls about 130,600 km

roads, state government 30,500 km and federal government, 32,100 km.

As regards investment in road development, the various governments in Nigeria

have given priority attention to road development over years. From table two below,

during the first National Development Plana total of N150.6 million was allocated to

road development. The votes for the road sub-sector ranged from 7% in the then

western region to 25% in the Northern Region and a national average of 11% for all

projected investments. In keeping with the objective of rational allocation of scarce

resources, the federal allocation of N70.8 million was meant to provide for a

minimum, essential road development programmer which has been developed on

the basis of a system of priority rating.

Three major issues affect the road network:

o misuse particularly as a result of axle overloading causing damage to roads;

o neglect of periodic and routine maintenance and an absence of emergency

maintenance; and

o Inadequate design and construction.

The above diagnosis reveals that:

o There is an urgent need to ensure an adequate and efficient maintenance of

the existing road network. Failure to do so imposes high costs on road users

and raises the cost of rehabilitation works.

o Past failures to ensure adequate and effective maintenance, due largely to the

inadequacy of resources, are the major cause of the current massive need for

road rehabilitation.

o In addition to rehabilitation needs, there is the need to check the misuse of

road infrastructure due to excessive axle load.

o The costs of rehabilitation and improvement programmers are very high and

government is finding it increasingly difficult to meet them.

o Lack of transit parks for trucks along the Federal roads;

o To find the funding to meet the high cost of rehabilitation and improvement

programmers;

-Additional sources of revenue need to be considered to fund the roads,

including user charges in the form of road tolls; and

- Better control and more efficient use of available funds are also needed;

EXISTING SITUATION

In 1985, about 23 percent of national roads were in a bad state. This rose to 30

percent in 1991 and 50 percent in 2001. The current dependence of Nigeria on its

road system increases the urgency of addressing this issue. Unless roads and

bridges are kept in good conditions they cannot support the desired socio-economic

development of the country.

The Government will therefore introduce user charges on Federal Roads, as the

primary means of augmenting as the primary means of augmenting the budgetary

allocation for road maintenance and rehabilitation. The Ministry of Works is

responsible for the construction of new roads and the major upgrade of existing

roads whilst Federal Roads Maintenance Agency (FERMA) created in 2002 has the

mandate for the routine maintenance of Federal Roads. The Government will

continue to contribute to the funding of road construction and maintenance, and

attract additional funding by promoting private sector investment in the upgrade and

maintenance of roads and management of tolls through PPPs. In this way,

performance risk will be passed to the private sector and there will be a strong

discipline for efficient delivery of services.

A road study undertaken in 1998 indicates that N300 billion will be required over the

next 10 years to bring national road network into a fairly good condition. After the

recovery, an average of N24 billion will be required each year for subsequent

maintenance and N32 billion per year for road rehabilitation. Further neglect of these

roads implies a loss of network value of N80 billion per year and additional operating

cost of N53 billion per year. Except roads and bridges are kept in good conditions

they cannot support the desired socio- economic development of the country.

POLICY GOALS

Govt. hopes to achieve adequate and efficient maintenance of existing road

network

Promotion of Private Sector investment in the upgrade and maintenance of

roads through PPP.

POLICY OBJECTIVES

Government policy objectives in the road sub-sector are as follows:

New sources of revenue to close the resource gap;

Measure efficient road maintenance and rehabilitation and

Protect the roads from premature deterioration.

a) Sources of funding – These include

Budget allocation from general government revenues

User charges or taxation, and

Private sector funding through investment

i) Government Allocation.

Due to competing needs, government allocation to the road network sub-sector

over the years which has been dwindling is now grossly inadequate. Because of the

social service functions of roads, government will continue to contribute to the

funding.

ii) Road User Charges

Road user charges including fuel tax, vehicle registration tax, vehicle import taxes,

driver licenses, road tolls and taxes on tyres, lubricants and consumable spare parts

are gaining world-wide acceptance as a source of revenue for augmenting

government allocation for road maintenance and construction. This is based on the

argument that those who incur costs should be responsible for paying for them.

User taxes when properly designed could lead to a more rational use of road

capacity and even become a technique of capacity rationing through price

mechanism. Government wills henceforth emphasis user charges as a means of

augmenting the budgetary allocation for road maintenance and rehabilitation.

iii) Private Sector Investment

Innovative approaches to the management and financing of the road network are

emerging through private sector participants. Governments across the world are now

working with the private sector not only to provide service, but to build new roads

and maintain existing ones.

A major way of involving the private sector in road construction and maintenance is

through road toll concession. Under this arrangement the private entrepreneur is

giving the right to construct, overhaul, maintain and operate a road over an agreed

length of time. The entrepreneur recovers his money from toll charges. Toll

concession may either be through government Toll Road Authority or by private

investors. Government is resolved to involve the private sector in the maintenance of

the road network and will:

Develop detailed criteria for roads to qualify as toll roads

Prepare a list of such roads and the potential ones that will go on toll

concession

Prepare construction and maintenance standard for roads to be placed on toll.

Invite the private sector to participate in the maintenance of these roads on

toll concession and the construction of new ones on a Build-Operate-Transfer

basis.

Given the scale of the task to restore the road network to good order, a study is

being commissioned to prepare an investment plan for road maintenance for the

next decade. The plan will establish priorities and a programmer of

maintenance.The government will take measuresto improve the management of the

road network assets by ensuring that responsibilities are allocated to new roads

authority with the capacity to carry out the role of the construction of new roads and

the upgrade and the routine maintenance of existing roads.

iv) The Toll Road Issue

Government considers the introduction of the toll roads in Nigeria a necessity, given

the heavy resources needed for maintaining the roads. To this end, government will:

Grant toll roads concessions to qualified private sector investors, who would

either take over, for a certain period of time, the existing expressways, high

volume highways, or, who under the Build-Operate-Transfer system would

either construct a new road, or upgrade an existing one.

Establish government owned autonomous Toll Roads Authority in the case of

roads for which there are no private sector concessionaires.

For the concessionaires, government will:

provide a list of the immediate, long term and periodic improvements required

for each of these roads

Provide a projection of probable costs and revenues for each road, under

different scenarios.

Prepare necessary contract with the concessionaires, including proposed

draft tariffs and methods of tariff revision.

In the case of public owned concessionaire, a public limited company would be

established to take over and administer the roads that are suitable for toll road

concession but are not taken over by the private sector. The Authority would have a

similar status to a private concessionaire, but with the following differences:

It would be bound by a government approved plan for upgrading the road (or,

roads) to be taken over. This implies preparation of a suitable realistic

program of improvements, with well specified targets and target dates.

As in the case of private concessionaire, the Authority would derive its

revenues from commercial concessions, but, in order to avoid improper

behavior, the Authority would have to adhere strictly to the rules regarding the

granting of such concessions.

After covering the cost of current maintenance, it will establish "periodic

maintenance" or "road reconstruction" funds. Revenues over and above what

is required for this would be transferred to the Road Fund. This would imply

the establishment of an appropriate accounting and audit system.

Under the two arrangements, the concessionaire will contract out road

complementary facilities such as service stations, fuel providers, restaurant and rest

houses.

v) User charges and Road Fund Issue.

Because of the critical shortage of funds, falling far short of the minimum amount

necessary for maintaining and improving the country‘s road network, government

will put in place a system of user charges based on the following taxes:

An annual vehicle registration fee, uniform for all the states and strictly

enforced. Such a fee would be established according to the vehicle

type, and weight, etc

Fuel tax, vehicle import tax, etc.

The user charges revenues will be augmented by:

Revenues from toll roads' concessions, or, if toll roads remain in the

government administration, net revenues of the Toll Roads Authority,

less maintenance and reconstruction ("periodic maintenance")

reserve;

Grants from the government to reflect the non-user, or indirect benefits

of the roads; and

Special government grants to meet emergency situations (especially

natural disasters).

Government will establish a Road Fund into which the income from the above stated

sources will be lodged. The Fund will be administered by the National Road

Commission (see section 4.2.5 b iii) which will:

Prepare a set of road revenue allocation criteria for Government

approval;

Administer, monitor and supervise the allocation of funds for well

specified road maintenance programmes.

Develop and finance (fully, or in part) programmers aimed at the

strengthening of road maintenance capacities;

Administer any special funds which the Federal Government may

allocate to the states and local governments for road development,

road improvement and road maintenance.

Perform other, related duties, which the Federal Government may

entrust to it.

a) On Road Maintenance and Construction

(i) Reassignment of Responsibilities

The national road network is shared by the three tiers of government in the

proportion of 17% for Federal Government, 16% for State government, and 67% for

Local government. An essential principle of sound governance is that responsibilities

should be focused at the level that has the knowledge and understanding of the

problem and the capability to address them. Although intimate knowledge of the

country‘s transport problems is principally concentrated at the local and state

government levels, the Federal government has superior professional, technical and

financial capacity, which may justify extending its jurisdiction over some state, or

even local roads. In the nearest future, government will consider a fair distribution of

the roads to reflect the capability of the different tiers of government.

Previous criteria for the takeover of roads by federal government include:

Road connecting major industrial towns

Roads connecting state capitals

Roads connecting major seaports with the hinterland

Roads linking other road network of neighboring countries.

The Federal government will consider, for the purpose of taking over additional

roads, other criteria as:

Roads in physically constrained areas (hilly or revering areas) where the cost

of construction creates a problem to both state and local government;

the development needs of disadvantaged areas;

connection to major towns;

connection between local government headquarters;

Any other criteria that may be found appropriate.

The Federal government will similarly cause the State government to increase its

stock of roads. A benchmark of an Average Daily Traffic of 100 vehicles or any other

appropriate criterion may be instituted for the transfer of roads from local to state

government.

A network and need approach adopted in this way may result in the sharing of the

network to be in the order of 50-30-20 for Federal State and Local governments

respectively.

ii) Road maintenance/New Road construction

The purpose of maintenance is to preserve the value of an existing asset. In this

regard, maintenance in the road sector is a necessity. A Road Maintenance Agency

was established in 2002 by the Federal Ministry of Works and Housing. It has

recently commenced road maintenance by direct labor and it is making an

appreciable progress. Clearly roads already built are considered priority projects

essential for the functioning of the country‘s economy. At the same time it is clear

that in order to meet present and future needs, government must anticipate and plan

for expansion of the current system. This implies that road maintenance and

reconstruction should be given a high priority.

Earlier, the sources of funds for road maintenance and construction were outlined.

For a judicious utilization of this fund, government will put in place a coordinating

body to be called National Road Commission. The responsibilities and duties of the

Commission would be to:

o Monitor the development and the condition of the Nigerian roads system.

o Establish general road development and road maintenance strategies, based

on the perceived needs of road users and the existing road conditions.

o bring together all the main stakeholders to assure a common approach and

co-ordination between different programs affecting the needs for road

development and improvement

o approve and develop uniform standards and regulations for road maintenance

o advise the Government on issues arising out of toll roads concession and toll

roads' pricing,

o advise the government on all matters concerning road development,

improvement and maintenance, and

o administer, monitor and supervise the allocation of funds for road

maintenance

ROAD TRANSPORTATION

Road transport accounts for about 90% of the internal movement of goods and

people in Nigeria. Except the railway is revived and the inland waterways are

developed, this proportion is likely to rise even higher in the nearest future. The

predominance of the road over the other modes is not only because of its inherent

advantages but because government has paid greater attention to this mode. At

present the road transport in Nigeria is characterized by:

O Large number of small-scale operators of goods and passenger vehicles,

many with a limited professional and business capacity, resulting in inefficient

services.

O Uncoordinated activities and services leading to inefficient services.

O Noncompliance with traffic regulations and poor enforcement.

POLICY OBJECTIVES

Nigerian road network was produced at a great effort and represents a huge national

asset. The usefulness of this huge investment depends on how efficiently the roads

are used. It is government objective to:

o Enhance road productivity through efficient utilization

o Enhance private sector operation

POLICY STRATEGIES

Road transportation is one mode of transport in Nigeria where the private sector

participation is almost total. Government intends to promote stronger private sector

involvement to enhance the productivity of the operators and will evolve a

government-private sector partnership in the search for solution to the road transport

problems. To do this, government will through the National Road Commission:

Group small vehicle owners into cooperatives which can operate bigger

capacity vehicles, have access to loans and credit facilities and effect

organized operation.

Promote training of operators and the dissemination of road transport

information

Promote compliance to road traffic regulation with specific reference to vehicle

weight limitations. Promote government road pricing

1.5 RURAL TRANSPORTATION

BACKGOUND

The nature of rural Roads within the context of regional development is to:

Provide the means for the evacuation of raw materials to industries and

food products to urban markets.

Facilitate service delivery in the areas of education, health, social

development, agriculture, etc.

Allow rural-rural and rural-urban interaction for the exchange of goods

and services.

Inadequate and inefficient rural roads therefore intersect with these functions and act

as constraints to the achievement of socio- economic development. For these

reasons, the Federal Government emphasizes the development of rural roads and

applies the measures to facilitate rural accessibility. To a large extent, rural transport

problems are inadequately addressed. There are also considerable difficulties in the

development and maintenance of rural roads. For example, rural road development

and maintenance could not take place without the collateral programmers of other

bodies, as the defunct Directorate of Food, Road and Rural Infrastructure (DFRRI)

the Petroleum Trust Fund (PTF), and Local Communities, the National Planning

Commission; the Federal Ministry of Finance; Federal Ministry of Agriculture and

Rural Development, State Ministries of Works and Rural Development and the Local

Governments.

POLICY OBJECTIVES

Government is resolved to address these anomalies to open up the rural areas and

make them contribute optimally to the social and economic development of the

country.

The objective of government in rural transport policy is to:

Open up the rural areas for local and regional markets

Improve the institutional framework for rural road construction,

maintenance and operation, for a more focused development

Ensure sustainable funding for rural road construction and

maintenance.

POLICY STRATEGIES

Given the number of institutions involved in management of rural roads, with a wide

diversity of responsibilities, interests, capacity for planning and programmed

execution, coordination of rural roads development is a formidable task. To address

these issues, Government will, as much as possible, focus on indigenous

knowledge, initiative and effort in developing the rural roads network. However, the

majority of Local Governments need capacity building to improve their technical

know-how and improved resources in order to discharge this responsibility.

Therefore, Government will pursue the following strategies:

Create and strengthen the Transport Unit in the Local governments to

handle rural roads management matters including construction and

maintenance.

Give top priority to effective routine, periodic and emergency

maintenance of rural roads in all local governments and communities

through the use of Rural Road Maintenance Team that will be created

by the local government.

Promote labor intensive technologies in the construction and

maintenance of rural roads through focused training and to build

human capacity in planning, design, construction, maintenance and

supervision of road projects.

Make deliberate effort to encourage communities to continue with self-

help schemes by assisting them technically, and in the provision of

materials not locally available in the rural areas.

Funds constitute a major constraint to rural road development and maintenance. A

more focused and reliable source of road network funding has been outlined earlier.

Rural roads will benefit from the Road Fund allocations. To actualize this, the State

government will set up Rural Roads Development Boards at the state level, with the

members appointed by the states' governments, representing not only transport, but

also other interests (especially, agriculture).

The responsibilities of such boards would be to:

Allocate funds to local authorities for rural road construction and

maintenance. Such funds would be supplemental to the resources

generated by local governments.

Set well defined criteria and strict conditions for the utilization of these

funds,

Organize, fund and possibly directly conduct appropriate training

courses and workshops for members of local authorities and/or

designated persons responsible for road maintenance employed by

local authorities

Provide technical assistance to local authorities.

1.6 URBAN TRANSPORTATION

BACKGROUND

Nigeria is urbanizing at a very rapid rate. The total urban population in Nigeria in

1963 was about 11 million. This rate rose to 32.2 million in 1991 and by 2000 the

urban population was estimated at 45 million. On the average Nigerian cities have

been growing at the rate of 8% per year, far in excess of the country‘s population

growth of 3.2%. Today the country has 11 cities with population above one million

and there are 23 cities with population of over 200,000.

EXISTING SITUATION

The urban transport problem today manifests in the form of:

Poorly maintained urban road network and road complementary

facilities

Inefficient public transport system

Poor institutional framework leading to poor coordination of urban

transit services.

Poor landuse-transport planning

Poor and ineffective transport management.

POLICY GOALS

The major objective of government in the urban transport policy is to develop an

efficient, self-sustaining and reliable public transport system that meets the needs of

the growing population of the cities of Nigeria, and to improve the infrastructure and

institutional framework for public transport service delivery.

POLICY STRATEGIES

(a) Urban Public Transport Government will introduce a well organized high

capacity bus mass transit system which the existing infrastructure can

accommodate.

In order to achieve this objective, government will:

create dedicated routes for bus mass transit in the urban areas;

Promote cooperatives or associations of numerous small transport

operators in order to:

assure organized and coordinated services;

improve operators‘ managerial, technical and economic

capacity; and

facilitate the access of mass transit operators to the capital

market for resources to acquire vehicles;

Promote full private sector participation and competition in urban

transit service delivery.

On the long run government will introduce the Rapid Rail System into the major cities

of the country.

(b) Road Infrastructure

Urban roads are the primary right-of-way which accommodate and ensure the safety

of all modes – bus transit, automobile, walking and cycling. Priority must be given to

the maintenance and improvement of these roads and the construction of pedestrian

walkways.

Government will:

Enhance the capacity of the existing infrastructure through proper

maintenance of roadways and efficient traffic management.

Ensure efficient traffic management through proper intersection control,

better passenger.

Pick-up and disembarking spaces, priority lanes, congestion control

etc.

Strict enforcement of traffic regulations.

Government will also:

Expand substantially, urban road infrastructure, with proper concern for

the needs of public transport infrastructure (railway, dedicated bus

routes etc.)

Promote road widening and extension in new areas as part of landuse

planning and development.

Provide facilities for alternative modes – walking and bicycling.

Develop a multimodal 10 year transport network plan for major cities.

The plan will include strategies for the development of pedestrian,

cycling, public transit facilities and services along the roadway network.

Improve the efficacy of urban planning, which should take cognizance

of transport implications of different land use patterns and prevent

congestion inducing developments.

Improve roadway aesthetics and encourage traffic calming.

(c) Institutional Issues

Urban transport activities in Nigeria are characterized by the proliferation of

management bodies, creating overlaps and conflicts in the provision and

management of urban transport infrastructure and services and in the enforcement

of traffic laws and regulations. There is therefore the need for an institutional reform

which will advance the efficiency of urban transport system operations and

management. To this end, the government will:

Establish an Municipal Transportation Agency (UTA) in each major city, as

an autonomous body which will be responsible for:

Maintenance of urban road network.

Planning, designing, and maintenance of urban transport

infrastructure facilities.

Regulation, registration, licensing, permit of private operators.

Determining and implementing appropriate traffic management and

control measures.

Liaison with the different government as the need arises.

Pricing issues to ensure social equity.

Formulating parking needs in line with local needs.

Ensuring intermodal coordination.

Undertaking research and development, identifying problems and

proffering solutions.

Create an Urban Transport Fund. Money collected from license fees,

parking fees and other appropriate user charges within the city should go

into this Fund for the maintenance of urban infrastructure. The fund will be

administered by the Urban Transportation Agency.

For cities with special Federal interests, the Federal Government will aid

the State and Municipal governments in the construction of new urban

roads. For the other categories of cities, the provision of urban transport

infrastructure will be the responsibility of the State and Municipal

governments in which the city is located.

Table.1 Summary of vehicles and passengers travelling on Third Mainland

Bridge based on traffic data for (2006, 2010) respectively.

2006 Vehicles/h Persons/Vehicle Persons/h Percent of

vehicles

Percent of

persons

Mini buses 415 14 5807 16.09 57.72

Coaster 6 36 209 0.22 2.08

Molue 16 56 885 0.61 8.79

Car 2037 1.5 3056 79.00 30.37

Truck 105 1 105 4.08 1.05

Total 2579 10062 100.00 100

2010

Minibus 1056 14 14786 18.31 35.93

Coaster/mol

ue

294 47 13799 5.09 33.53

Car 3738 1.5 5608 64.82 13.63

Heavy 247 1 247 4.28 0.60

BRT/lagbus 130 46 5988 2.26 14.55

Motorcycle 290 1.25 363 5.03 0.88

Metro ferry 4 45 180 0.07 0.44

Speed boat 8 23 184 0.14 0.45

Total 5768 41155 100.00 100

Table.2 Summary of vehicles and passengers travelling on Ikorodu Road

based on traffic data for (2006, 2010) respectively.

2006 Vehicles/h Persons/Vehicle Persons/h Percent of

vehicles

Percent of

persons

Mini buses 762 14 10662 21.29 59.16

Coaster 7 36 259 0.20 1.44

Molue 55 56 3080 1.54 17.09

Car 2539 1.5 3809 70.99 21.13

Truck 214 1 214 5.98 1.19

Total 3577 18024 100.00 100.00

2010

Minibus 1507 14 21093 14.43 43.66

Coaster/molue 101 47 4741 0.97 9.81

Car 5902 1.5 8853 56.53 18.32

Heavy 206 1 206 1.97 0.43

BRT/lag bus 216 46 9939 2.07 20.57

Motorcycle 2497 1.25 3122 23.92 6.46

Metro ferry 4 45 180 0.04 0.37

Speed boat 8 23 184 0.08 0.38

Total 10441 48318 100.00 100.00

However, the survey carried out by LAMATA in June 2006 and 2010 on travel

demand on the Third Mainland Bridge as well as Ikorodu road was used for the

analysis of capacity of transit mode. From the two roads, buses of different classes

with different number of passengers were considered and depicted in Tables 1 to 6.

In 2006, the total person flow is 10,062 in the peak hour. Cars, which represent 79%

of the total vehicles, carry only 30.37% of the passengers; minibuses, which

represent 16.09% of the total vehicles, carry 57.72% of the passengers; while,

‗coaster and molue‘, which represent just 0.22 and 0.61% of the vehicles, carry 2.08

and 8.79%, respectively. Carry 35.93% of the passengers, and coaster/molue, which

represents 5.09% of the total vehicles carry 33.53% of the passengers. Also BRT/lag

bus, which represent 2.26% of the total vehicles carry 14.55% of the passengers,

while motorcycle, metro ferry and canoe, which represent just 5.03, 0.07 and 0.14%

of the vehicles, carries 0.88, 0.44 and 0.45% of the passengers, respectively.

Similarly, in 2010 the total person flow is 41,155; car which represents 64.82% of the

total vehicles, carry only 13.63% of the passengers; minibuses, which represent

18.31% of the total vehicles, carry 35.93% of the passengers, and coaster/molue,

which represents 5.09% of the total vehicles, carry 33.53% of the passengers. Also

BRT/lag bus, which represent 2.26% of the total vehicles carry 14.55% of the

passengers, while motorcycle, metro ferry and canoe, which represent just 5.03,

0.07 and 0.14% of the vehicles, carries 0.88, 0.44 and 0.45% of the passengers,

respectively.

In 2006, the total person flow is 18,024 in the peak hour. Cars, which represent

70.99% of the total vehicles, carry only 21.13% of the passengers; Minibuses, which

represent 21.299% of the total vehicles, carry 59.16% of the passengers; while,

coaster and molue, which represent just 0.20 and 1.54% of the vehicles, carry 1.44

and 17.09%, respectively. Similarly, in 2010 the total person flow is 48,318; car

which represents 56.53% of the total vehicles, carry only 18.32% of the passengers;

minibuses, which represent 14.43% of the total vehicles, carry 43.66% of the

passengers, and coaster/molue which represents 0.97% of the total vehicles carries

9.81% of the passengers. Also BRT/lag bus, which represent 2.07% of the total

vehicles carry 20.57% of the passengers, while motorcycle, metro ferry and canoe,

which represent just 23.92, 0.04 and 0.08% of the vehicles, carries 6.46, 0.37 and

0.38% of the passengers, respectively.

Similarly, in comparison with the travel demand on the road, Table 2 shows existing

ferry services on Lagos lagoon which includes passenger carrying capacity, travel

time and number of trip per day. From the results, in the absence of congestion, the

travel time and travel distances on water are shorter than the road mode of travel;

which accounted for the delay usually experienced on the road transport system in

Lagos. In view of this, it could be inferred that the water transport system is more

environmental friendly and cost effective than the existing road routes. Similarly, in

comparison with the travel demand on the road, water Travel mode would provide

significant savings in travel time as shown in Table 4 due to increased speed and

reduced delays because of no congestion problems; it would reduce the vehicle

operating cost due to reduction in congestion on the existing roads and reduced the

physical and mental stress in car driving.

It is obvious that traffic density and frequency are unevenly distributed in Lagos

State. However, certain time periods are intuitively considered to command heavier

traffic than others. Such temporal variations are caused mainly by the distribution of

opening and closing work hours and other economic activities. As at present, this

heavy traffic is more pronounced on the three bridges (Third Mainland, Eko and

Carter) as well as Ikorodu road because they serve as major throughways and

routes to high spot of intense commercial activities on Lagos

Table.3 Observed travel time from the existing metro ferry services.

Existing ferry name

Travel time

(Minutes)

Passenger

carrying capacity

cost (naira) per

passenger

Total trip per

day

Route name

Metro ferry

40 45 300 8 trip per day Ikorodu to EbuteEro

Speed boat

20 23 350 8 trip per day Ikorodu to CMS

Speed boat 30 23 500 8 trip per day Ikorodu to Victoria Island

Figure.1 Observed travel time from the existing metro ferry services.

Table.4 12 hours count on selected roads in metropolitan Lagos.

S/N Road No. of vehicles in both direction

(12 h traffic counts)

No. of vehicles in both

direction P/h

1 Third Mainland Bridge 220190 18349

2 Carter Bridge 50962 4247

3 Eko Bridge 150130 12511

4 Western Avenue 110190 9183

5 Murtala Mohammed Way 21302 1775

6 Herbert Macauley Way 88345 7362

7 Ojuelegba- Mushin 56345 4695

8 Ikorodu Road 300238 25020

9 Agege Motor Road 60123 5010

Sources: LAMATA, (2008) and Author‘s field survey (2008).

Figure.212 hours count on selected roads in metropolitan Lagos.

Table.5 A prototype commuter ferry total travel time on the routes (Authors

research, 2010).

Link ID.

Pickup Delivery Speed of travel (m/s)

Water distance (km)

Vessel draught

On water travel time (min)

Loading and unloading time (min)

Total travel time

e1

Victoria Island

Agboyi 14.42 20.307 1.2 23 15 38

e2

Victoria Island

Ikorodu 14.42 23.195 1.2 27 15 42

e3

Victoria Island

EbuteEro 14.42 6.179 1.2 7 15 22

e4

Agboyi Ikorodu 14.42 13.654 1.2 16 15 31

e5

Agboyi EbuteEro 14.42 14.306 1.2 17 15 32

e6

Ikorodu EbuteEro 14.42 19.237 1.2 22 15 37

(FIGURE.3 WATER ROUTE NETWORK DESIGN )

Central, Lagos Island, Victoria Island and Ikoyi. Traffic survey along the major routes

revealed that, Third mainland, Ikorodu road, Eko bridge, Western avenue and Agege

motor road are often used by these vehicles in that order as shown in Table 4. These

routes are directly linked to all the identified industrial areas and CBD zones.

Passenger service is an important factor to be considered during the transportation

planning. The factors usually considered in the passenger service quality for a

transportation system includes time taken for the service, comfort, entertainment and

safety. Here, only the ―service time‖ that is, the time taken by the transporters to

serve their passenger is considered as passenger service quality to compare the

transportation modes. The other factors for the service quality were excluded as it

was a short distance travel. In this work, the trip time was taken as the service time.

The ratio of this service time of water transport to the road transport was taken as

the passenger service index given in Table 6. While 50 km/h speed was adopted for

the two mode of travel for the routes under consideration in this study.

Table.6 Passenger service index, Is = (Triptime) water

(Triptime) road

Water travel time (min) Road travel time (min) Passenger service index (Is)

20.3070 37.3260 0.5440

23.1950 63.5440 0.3650

6.1790 11.9042 0.5191

13.6540 29.4808 0.4631

14.3060 26.0211 0.5498

19.2370 55.4725 0.3468

Figure.4 Passenger service index

1.7 RAIL TRANSPORT

CURRENT SITUATION

The Nigerian railways network includes approximately 3,500km of narrow gauge

lines. The network has been extended by a narrow gauge line between Onne and

the Enugu-Port Harcourt line and a yet to be completed 320km standard gauge line

from Ajaokuta to Warri.

The Nigerian Railway system has the potential to provide an efficient and cost

effective means of transport, particularly on long distance routes serving high density

traffic flows. Railways can provide the most cost-effective, affordable, energy saving

and environmentally friendly form of transport, when traffic densities are high. When

properly integrated with other modes of transport, economic levels of traffic can be

consolidated to enable the railway to provide efficient services for high density flows

of homogenous traffic carried over relatively long distances on a regular basis. The

railways are also well suited for the movement by large numbers of inter-city

passengers and high volumes of containerized cargo or bulk freight such as oil, coal,

steel or agricultural produce.

Unfortunately, due to past neglect, the Nigerian railway system has not been able to

meet this need. It has deteriorated in all areas, and caught up in a vicious circle of

declining traffic, endemic deficits, decreasing capacity to serve its customers

resulting in further loss of revenue. In short the railways have ceased to be

economically viable. If the present imbalance of the transport sector is to be

corrected and the goals arising from increasing industrialization be actualized, the

Nigerian railway must be resuscitated.

The government has carried out a detailed analysis of the best means of transferring

responsibility for the management and operations of the existing railway system to

the private sector. Vertically integrated concessions have been identified as the first

phase of PPP in the railways sector. The substantial commitment of investment that

the government has made to rehabilitate the railway will give confidence to the

private sector in the Government‘s resolve to re-establish the railway as an important

component in Nigeria‘s transport system.

The draft 25 Year Strategic Vision for the Nigerian Railway System will be reviewed

and updated to develop a comprehensive plan for the rehabilitation and expansion of

the railway. This investment programmed needs to be subjected to economic

analysis to ensure that each of its components is justified before commitments are

made and duplication of railway infrastructure avoided. Government is currently

rehabilitating the existing rail network and is committed to the development of rail

links to the ports and the Inland Container Depots (ICD) when completed. The

network is to be expanded and modernized in segments as resources permit, and

partnership with the Private Sector. Government is committed to occasioning the

existing rail line to enhance efficiency and improved service delivery.

FUTURE EXPANSION

The foregoing considerations relate to the occasioning of the existing railway

facilities and services. The Nigerian Railway systems run North East-South East and

North West – South West. The system is essentially outward looking, having been

built to meet the colonial needs for the export of resources out of the country. The

need for East-West connections is now manifest considering the volume of freight

and passenger traffic interchange between these regions. The ―25 Year Strategic

Vision for Nigerian Railway System‖ has indicated details of the East-West and other

linkages to be added. These new lines can be funded on a Build, Operate and

Transfer concession.

Nigeria is also prepared to take its place as a regional transportation hub and

develop a railway with trans-national connections between Nigeria and neighboring

countries. The National Transport Policy recognizes this need, and in the spirit of

NEPAD Nigeria will extend its railway network to:

Republic of Benin through Ilaro

Republic of Niger through Kaura-Namoda

Chad Republic through Maiduguri

Cameroon through Yola

POLICY GOAL

The primary Goal for the rail sector is to transform the system from its present

condition to an efficient, flexible and competitive mode. Government is determined to

reverse the decline of the Nigerian railways system, to enable it play its full part in

the country‘s transport system.

POLICY OBJECTIVES

In order to achieve its goal, government will:

Rehabilitation/existing the railway infrastructure;

concession the existing rail lines;

Moderate and expand the network to link all Sea Ports, International Airports, Major

Industrial and Economic Centers etc.

The objectives of the rail concessioning are as follows:

Transforming the Nigerian Railway system from a non-performing and debt-

ridden transport mode to a dynamic and more functional transportation

system.

Reducing the burden of the railway sector on the Federal budget through

private sector investment.

Encouraging the use of the rail to reduce road traffic congestion problems

and other negative externalities.

Strengthening the railway capacity and developing national capacity through

local sourcing of maintenance and construction materials

preparing a medium term plan for expansion of the rail system for inclusion in

MITI, with short term priority given to:

- Extension of the network to ports;

- Link Abuja to the rail network and to the ports;

developing a complementary inter-modal policy to support the operations of

the railway, including the development of inter-modal terminals at key

locations;

facilitating plans for further investment to increase the capacity of the railway

and to expand the network to meet growing demand; and establishing a

National Railway Authority with responsibilities for the maintenance,

rehabilitation and expansion of the railways,

Table.7 Development of Nigeria Railway Network :-

construction location Length (km) Geographic axis

2001-2002 Lagos-Ibadan 193

2002-2003 Ibadan-Jebba 295 South-west

2003-2004 Kano-Baro 562

2004-2005 Jebba-Minna 255 North

2005-2006 Port Harcourt-Enugu

243

2006-2007 Kafanchan-Jos 179 East and Center

2007-2008 None 0

2008-2009 Kafanchan-Bauchi 238

2009-2010 Bauchi-Maiduguri 302 North-East

Sources:http://www.industryweek.com/site-files/industryweek.com/files/uploads/2013/02/

Figure.5 Development of Nigeria Railway Network

Table.8 Rails continue to gain in volumes and rates in 2010:

MODE RATE INCREASE VOLUME INCREASE

Rail 2.6% 3.2%

Intermodal 1.8% 2.7%

Truckload 2.0% 2.7%

Regional less than truckload 1.8% 1.4%

National less than truckload 1.8% 0.9%

Figure.6 Rail continue to gain in volumes and rates in 2010

NEED FOR PRIVATE PARTICIPATION IN NIGERIA RAILWAY BUSINESS:

Because railway is very capital incentive, the Nigerian government should encourage

competition by allowing private sector participation in ownership, funding and

operation. This will help intensify the effort to modernize railway railway infrastructure

and service as we start the next millennium.

It is much easier for private business then government to raise fund via the stock

market, especially in developing economies. Permitting Private Corporation and

individual to fund railway operation will user in modern technologies in specialized

area like information technology, rolling stock and locomotive manufacturing, rail

network design, etc.

Moreover, it will encourage healthy competition between various companies, there

by offering the populace the best service along with option.

1.8 PIPELINE TRANSPORT

BACKGROUND

Pipeline is the newest mode of land transport. It is now widely used for the

transportation of bulk liquid and gaseous consignments over long distances. The

overriding advantages of this mode over others include:

Flow continuity.

Ability to traverse any terrain (hilly or marshy).

Ability to withstand any weather.

Low operating cost.

Easy and routine operation.

Limited periodic maintenance and inspection.

Very low transit losses.

Pipeline transport as a mode of overland transport dates back to 1955 following the

discovery and exploitation of petroleum in Nigeria. The initial lines were limited to the

oil producing regions of the Southern Nigeria and were owned by the oil exploring

companies. The increasing demand for fuel in the Northern Nigeria and the need to

ensure safe transportation of this hazardous good over long distances led to the

construction of pipelines. Today, the country has a total of over 4,000 km of pipelines

owned by both the public and the private sectors. The pipeline has become a very

important mode of transporting petroleum products from refineries to NNPC pump

stations and depots across Nigeria.

EXISTING SITUATION

Pipeline transport system in Nigeria is faced with the problems of:

frequent vandalization of pipelines;

illegal tapping of pipeline products;

encroachment of pipeline right – of – way;

poor safety measures manifested in frequent devastating fire

outbreaks;

poor handling of pipeline accidents and poor policing of pipeline route;

Old and corroded pipelines requiring replacement.

POLICY GOALS

Government policy objective is to provide an adequate and safe pipeline transport

as a complementary mode to the road and rail transport system.

POLICY STRATEGY

In pursuit of this objective, government will:

Extend the lines to other areas of need within the country;

Provide adequate regulatory measures for ensuring the security of

infrastructure and the safety of persons and the environment in which

the pipelines pass;

Integrate pipeline into the total transport system;

Provide terminal and interchange facilities at depot.

1.9 AIR TRANSPORT

BACKGROUND

Air transport is an important component of Nigeria‘s transport system. From a

functional perspective, it provides complementary services to other modes; for

passengers and freight; on both domestic and international routes. The air transport

sub-sector comprises of airports and air transport services. The significance of this

mode derives from its ability to satisfy human needs by making goods and people

available not only where they are needed but also when they are needed. Of all the

different modes of transport, air transport performs the ―place and time utility‖

functions best.

AIRPORTS

Airports and air navigational facilities constitute major infrastructure for the country‘s

air transport sub-sector. From its three landing sites of Lagos, Kano, and Maiduguri

in the 1920s, Nigeria today has a total of 19 airports and 62 airstrips distributed all

over the country. Based on their design, characteristics and level of service, the

airports may be categorized into three groups namely:

International airports

Domestic airports

Local private airstrips

The international and domestic airports were built by governments and they belong

to government. The operation and management are done by government through

the Federal Airports Authority of Nigeria (FAAN) while the National Airspace

Management Agency (NAMA), is responsible for regulation, traffic control and

navigational aids for aircrafts. The airports navigational aids and air traffic control

facilities are inadequate and in some cases, obsolete.

Because of the high fixed cost in the running of the airports and the relatively low

income, only three of the airports operate at a commercial self sufficiency, while the

others operate at a substantial loss.

Government‘s Civil Aviation Policy of 2001 has put in place appropriate machinery

for development, improved, profitable management of the airports as well as

improved traffic control and navigational facilities in compliance with International

Civil Aviation Organization (ICAO) regulations, and international best practices.

AIR TRANSPORT SERVICES

Following the deregulation of the sector air transport services are currently provided

by privately owned and operated airlines which operate mainly on domestic routes.

Some of the airlines also provide services to the West African sub region and on

international routes. The Government is committed to Safety Related Standards and

Recommendations (SRSR) and associated procedures contained in the annexes to

the Convention on International Civil Aviation and related documents. Nigeria, as a

signatory to these conventions, is guided by international norms and conventions in

the civil aviation industry. The safety regulation system provides for the regulation

of standards for individuals, organizations and aircraft by means of rules, licenses

and certificates embracing airworthiness the operation of aircraft and aerodrome

standards.

The Nigerian Airspace Management Agencies (NAMA) is the country‘s sole Air

Navigation Service Provider (ANSP), created by 1999 to manage the Nigerian

Airspace to a level consistent with the requirement of the ICAO Standard and

Recommended Practices (SARPs). NAMA ensures the safety of all airplanes and

forestalls the intrusion by unauthorized planes (civil or military) into the country.

POLICY GOAL

To create an enabling environment for the private provision of air transport services

and to ensure air transport safety in line with global best practices and ICAO

(industry) standards.

POLICY OBJECTIVES

To continue to improve safety in the provision of air transport services.

To make Nigeria a hub for such services in the West African sub-

region.

To improve the utilization of the take-off and landing slots for safety.

To ensure further investment in infrastructure and equipment for safety

and security the Nigerian airspace.

POLICY STRATEGIES

The government will:

o Improve safety in the provision of aviation services by strengthening the

capacity of NAMA and other safety authorities and investing in modern

airspace management technologies;

o encourage competition in the provision of domestic aviation services;

o Protect the national interest and promote indigenous operations; and

o Promote education and training of staff in the aviation industry and enhance

staff welfare.

2. POLICY REGULATORY FRAMEWORK FOR TRANSPORTATION

IN NIGERIA

2.1. INTRODUCTION

In a deregulated transport system, the private sector has the freedom to provide

transport services as may be demanded government sets service quality, standards,

controls tariff, enforces competition, especially in areas where access rights are

required, sets safety standard and ensure that the goals and objectives of the

nation‘s transport policy are realized.

2.2 THE NEED FOR A REGULATORY BODY IN NIGERIA TRANSPORTATION

Government‘s commitment to the use of PPP for the private sector to invest,

operate and manage public transport requires clear definition of roles for the private

sector and the government. While the private sector will invest in, operate and

manage the transport system, the government will play the role of an enabler,

planning and facilitating the private sector driven transport system, making it grow

and sustain its productivity.

However, the government and the private sector cannot be the players, and at the

same time the referee. There is therefore the need for an effective regulatory body,

which will be independent of both government and the private sector, to regulate the

activities in the transport sector.

2.3 STRUCTURE OF THE TRANSPORT REGULATORY COMMISSION

The Transport Regulatory Commission (TRC) will be the Independent Regulatory

Body for the Sector; and will be structured as follows:

Coordinate Economic and Safety Regulation activities in the transport sector;

Have two Departments – Department of Economic Regulation and

Department of Safety Regulation;

The various modes will be units under each of the two Departments.

2.4 FUNCTIONS OF THE REGULATORY BODY OF TRANSPORTATION

a) Transport Regulatory Commission

Coordinate the activities of the Economic and Safety Regulatory Departments and

liaise with government as the need arises. It will have decision making powers on all

aspects of economic, research, safety and technical regulations and will resolve

conflicts arising from economic and safety regulation issues.

b) Economic regulation

In a market driven transport sector, the force of competition will either eliminate

inefficient operators or cause them to reform their practices. It is also possible that in

the process, natural monopolies may emerge, which may undermine the safety and

social service components of the transport system. In this and other related

circumstances, there is the need for some checks and balances. This will be

provided by the Economic Regulator that will:

Protect the right and obligations of competing operators.

Provide improved competitive environment for modes

Protect the consumers by enforcing a minimum level of service

quality

Regulate fares and tariffs, etc.

Enforce competition especially in the area where access rights

are required

Enforce legal rights of consumers.

c) Technical and Safety regulation

Transport safety has for long been an issue of great concern to the Federal

government. Unfortunately, the institutions for enforcing safety are diffused and

ineffective. Under the present arrangement, these safety institutions will come under

the same Safety Regulator for effective co-ordination. The Safety Regulator will:

Promote safe transport operation.

Set mandatory operation standard.

Approve and issue permits and licenses.

Set technical standard and regulate the designs, construction,

maintenance of transport infrastructure and vehicles.

Domesticate international conventions and protocols in respect

of the aviation and the maritime industries.

Produce and disseminate safety information.

Encourage collaboration with and participation of all

stakeholders in improving safety.

Regulate the conveyance of dangerous goods.

3. INTEGRATED AND INTERMODAL COORDINATION IN TRANSPORTATION

OF NIGERIA

3.1 INTEGRATED TRANSPORT

BACKGROUND

The Nigerian land transport system is almost unmoral with over 90% of domestic

freight and passengers transported by road. The over-reliance on road transport

means that bulk cargoes are contributing disproportionately to damaging the road

network and significantly increasing overall road maintenance costs. At present, road

transport is insufficiently regulated and there is insufficient enforcement of existing

commercial vehicle overloading control contributing to the exponential deterioration

of Nigeria‘s roads.

Goods arriving by sea are best transported from the port by rail or inland waterways.

However, Nigerian ports, except Port Harcourt and Apapa are not connected by rail

and the waterways. The road is therefore the only option. The predominant use of

the road is principally because transport development has favored road over all other

modes. This National Transport policy recognizes the need for the seamless

movement of people and goods and for each mode to fulfill its distinct roles.

To optimally utilize the transport system and derive the full benefits of the different

modes, there must be connections between ports, rail, inland waterways, air and

road. This will ensure better utilization of available transport resources held to reduce

transport costs.

POLICY OBJECTIVE

Government‘s policy objectives in this regard are as follows:

take necessary action to ensure fuller integration of the available

transport modes.

Improve the connectivity of transport infrastructure and ensure,

particularly, that the:

All major Ports are well-connected by rail.

River ports, rail stations and airports are connected by good roads.

Proposed Six Dry Ports are connected by road and rail.

Develop standard interchange points for passengers and freight traffic

Promote intermodal transport and facilitate shift from road to other

transport modes in order to achieve greater efficiencies and to lower

overall transport costs.

Revive the role of the rail, inland waterway and pipeline networks, in

order to provide the heavy dependence on the road system by

providing efficient and cost-effective alternatives.

Encourage intermodal coordination and cooperation between the

modes to optimize service delivery, minimize total costs and maximize

the economic return on investment. The government will create a level

playing field by introducing effective regulation and eliminating

constraints or disincentives that result in inefficiencies. The customer

will be given a choice of modes for which the determining factor will

usually be based on cost, timeliness and reliability.

Review and update the Master Plan for Integrated Transport

Infrastructure (MITI) and develop a five year plan with annual targets;

Undertake regular measurement and monitoring of the demand, output,

capacity, efficiency and other performance criteria in the transport

sector than has taken place in the past;

Ensure the right priorities in policy, planning, and efficient utilization of

resources, in order to achieve the desired policy goals.

Set up coordination amongst stakeholders including government at all levels to allow

for:

o develop and operate the required terminals;

o develop the supporting systems; and

o Provide an appropriate legislative framework and incentives for intermodal

transport to develop.

o update MITI that will plan and priorities the development of the required

intermodal infrastructure linking the ports, major airports and ICDs to rail and

road;

o improve the regulation of transport operations, including the enforcement of

existing road transport regulations and review the regulatory framework to

ensure that it provides appropriate incentives for efficient intermodal

operations; and

o develop the institutional framework for policy coordination within government

and between transport operators to facilitate intermodal transport.

3.2 INTERMODAL TRANSPORT

BACKGROUND

In Nigeria, inter-modal operations are constrained by a number of factors namely:

(a) Inadequate physical facilities (rail system, hinterland freight terminals

Information Technology etc.);

(b) Poorly organized freight forwarders; and

(c) Ineffective system of documentation and custom clearance.

POLICY OBJECTIVES

The Policy objective in intermodal operation is to combine, in the most efficient way,

the operating advantages of different modes and to ensure that transport users enjoy

a reliable service of movement from origin to destination.

POLICY STRATEGIES

Given the importance of inter-modal transportation and inter- modal services, the

Federal Government, will

Conduct a study into the problems of intermodal coordination in Nigeria and

proper solutions; and

Implement the Master Plan for Integrated Transport Infrastructure (MITI)

recommendations on integrated transport infrastructure in Nigeria to ensure

adequate connections of the different segments of the transport system.

4. SAFETY IN TRANSPORTATION IN NIGERIA

INTRODUCTION

Transportation safety implies the prevention of accidents and the minimization of

accident losses. As Nigeria becomes more mobile, the possibility of accidents

resulting in the death of people and the destruction of property becomes more of a

reality.

The consequences of accidents to a nation are immense. Accidents cause

significant losses to present and future productive manpower of the country, as well

as, in many cases, profound social problems, deaths or serious injury often results in

loss of bread winners, pushing the affected family into poverty, and jeopardizing

educational upbringing of children. Accidents impose heavy costs on the health

services, and constitute drain on foreign exchange through importation of vehicles

and vehicle spare parts.

Safety promotion requires the development, implementation and the evaluation of

policy programmed that will ensure the safety of goods and people in transit.

4.1 ROAD SAFETY

BACKGROUND

Nigeria has a bad record of road traffic accident. In 1976, there were 53,897 road

traffic accidents resulting in 7,717 deaths. In 1981, the number of accident reduced

to 35,114 accidents, but the fatality increased to 10,236. On the average there were

96 accidents and 28 deaths every day of that year. The situation in subsequent

years is not significantly different, although fatality rate reduced to 9,707 in 1993 and

6,521 in 2000. International comparisons indicate that the chances of a vehicle killing

someone in Nigeria are 47 times higher than in Britain.

Nigeria cannot afford this high accident rates and the associated consequences.

Thus, government will ensure that the road transport system supports high level of

safety and restores the people‘s confidence in the road transport mode.

ROAD SAFETY POLICY GOALS

Government policy efforts will focus on:

A detailed understanding of the factors that account for the high road accident

rate in the country.

Strengthening the institutional capacity for ensuring traffic safety in Nigeria.

These calls for a more coordinated holistic approach to the question of safety within

the road transport sub-sector.

POLICY STRATEGIES

To achieve the recommended safety measures, government policy will focus on:

Modification of the behavior of road users

Raising of public awareness on road safety

Crash prevention measures

Enforcement of safety regulation; and

Post injury management

a) Behaviors Modification

The vehicle operator is the key factor in road traffic accidents and by

implications, the key factor in ensuring safety. The principal instruments in improving

driver behavior modification are education, training and law enforcement.

The first step in the education of road users is the development of a safety culture.

Inculcating a fresh culture into an adult may be difficult. The most effective step on

the long run is that which begins with the education of primary and secondary school

children. Basic training in the understanding of traffic signs, road user attitudes,

causes of accidents and methods of prevention are important in building a safety

consciousness in the youth.

Proper training of drivers is also an important step in reducing accidents. Although

driving is a profession that should be learnt, there are few adequate driving schools

in the country to create the right avenue for learning. In view of the foregoing,

government will:

Introduce safety courses into the curricula of primary and secondary schools.

Create an enabling environment for the private sector to establish driving

schools in each major city of the country with government assuring uniformity

and adequacy of training.

Set and enforce minimum age.

Establish minimum training period and driving experience for drivers of

different vehicles.

b) Raising Road Users’ Awareness

The Federal Road Safety has initiated and sustained some road safety awareness

programmed in the country. Enlightenment is necessary and government will

continue to encourage the road Safety Corp to specifically:

Conduct rallies at bus interchange points with film shows of road traffic

accidents and talks on accident prevention.

Use national and private radio and television stations to educate drivers

and road users on the safe use of the roads.

c) Crash Prevention

The design, construction and maintenance of roads impact on road safety. Certain

road segments tend to have more accidents than others. Such ―black spots‖ will be

identified and investigated with the objective of introducing appropriate corrections.

The design and operating characteristics of vehicles are largely determined by

international standards, but vehicles may be ill- maintained, poorly repaired, and/or

used inappropriately.Over the past five years, there have been large-scale

importations of used vehicles, especially from Western Europe. Appropriate

legislation and regulations will be put in place to regulate the type and quality of

vehicles imported into the country. To this end government will:

Set quality standard for imported vehicles.

Set minimum standard for break system, tyre threading, lights and

vehicle exhaust system.

Identify ―black spots‖ and ―unsafe‖ conditions to guide the use of the

roads

d) Enforcement

Traffic regulations are poorly enforced in Nigeria. To ensure safety, there is need for

better laws, strict and tougher enforcement. In order to deal with this government

will:

Examine, restructure, empower and equip the existing institutional

bodies for traffic safety delivery (i.e. the Road Safety Corps, the Police

and the Vehicle Inspection Officers (VIO) to enforce road safety

regulations.

Prepare and introduce a strict vehicle inspection regulation to enforce

safety regulations.

e) Post Injury Management

There is no absolute solution to road traffic accidents. Thus government policy

strategy will aim at improving post-injury management through:

Creation of first aid centers along major highways for accident victims.

Acquisition and use of patrol ambulances on major highways.

Encouragement of the private sector to establish road safety

associations to help in the accident injury management.

Improvement of communication system along major roads to facilitate

contact with first aid centers in case of accidents.

4.2 RAILWAY SAFETY

BACKGROUND

The Nigerian Railways has been far safer than any of the other modes of land

transport.

POLICY GOAL

In the resuscitated Nigerian railway, government will:

Set up a Railway Regulator in the Transport Safety Regulatory

Department to:

set firm duties and responsibilities regarding safety for the different

categories of stakeholders;

Set minimum standard for rail components (track, rolling stock,

signaling and equipment etc.).

4.3 WATER SAFETY

BACKGROUND

At the international level, there have been very few accidents involving ocean liners

because they are operated strictly in line with international safety regulations.

Although Nigeria Inland waterways are expected to domesticate these regulations

and make them applicable to its national waterways, not much progress has been

made.

EXISTING SITUATION

Water transport related accidents within Nigeria are therefore high. They are caused

by:

Use of un-seaworthy crafts

Lack of standard berthing facilities

Use of hazardous routes

Overloading

Excessive speeding

Incompetent operators

POLICY OBJECTIVES

To ensure safety in water transport, government will:

Enforce water safety regulations through the Transport Safety

Regulator.

Provide formal and informal training opportunities for craft operators.

5. TRANSPORTATION OF DANGEROUS GOODS

INTRODUCTION

With the growth in the nation‘s economy, the volume of dangerous goods

transported has also increased. Correspondingly, the potential hazards to the public

have also increased as exemplified by the numerous petrol tanker accidents and the

associated destructions.

POLICY OBJECTIVE

Current safety regulations in this regard reflect the conditions of the past which are

not fully appropriate under the present situation. There is the urgent need for

regulation, which clearly states the conditions under which petrol, gas, explosives

and other potentially poisonous and polluting substances can be carried.

POLICY STRATEGY

The Federal Environmental Protection Agency (FEPA) is the appropriate government

organ to develop such regulations. The Ministry of Transport will cooperate with

FEPA to evolve new regulations to combat the hazards of the transportation of

dangerous goods in Nigeria.

5.1 ENERGY AND THE ENVIRONMENT

BACKGROUND

Transport constitutes a major source of environmental pollution, particularly the

emission of greenhouse gases through pollutants as a consequence of the heavy

consumption of fuel energy. This is particularly evident in urban areas where road

vehicles and motorcycles are a major source of air pollution. Discharge of water

polluting substances from ships is also a major cause of the destruction of marine

ecosystem. Substances such as oil and fuel additives, batteries, old tyres and tyre

patching equipment are now important sources of water contamination. Protecting

the environment is the responsibility of the Federal Ministry of Environment but the

transport authorities also have an important role to play, by helping to identify the

sources of pollution and by carrying out environmental impact assessments as part

of the project appraisal, and by initiating new renewable energy sources and

regulatory reforms aimed at curbing the sources of pollution.

CURRENT SITUATION

The Nigerian transport system is characterized by:

Growing demand for transport services as a result of increasing socio-

economic activity;

Urban congestion in the major cities which has led to severe

environmental damage;

Low fuel price structures which has encouraged over-dependence on

private cars and environmentally damaging fossil fuels;

Poor quality of the road network which has contributed towards high

fuel consumption.

POLICY GOAL/OBJECTIVES

To develop transport infrastructure which environmentally sustainable

and line with global best practice with internationally accepted

standards. Government through the Federal Ministries of Transport

and Environment, and the Energy Commission of Nigeria, would jointly

measures to reduce the negative effects of transport on the

environment;

Adopt/promote measures to reduce the negative effects transport on

the environment;

Strengthen the Federal Ministries of Transport and Environment, and

Nigeria Energy Commission of Nigeria to safeguard Nigeria

environmental quality against transport related pollutants.

STRATEGIES

To limit the consumption of fossil fuels using appropriate policy

measures.

To promote rail and inland waterway mass transit services will provide

the public with alternative transport choices to reduce the consumption

of fossil fuels.

To introduce differential pricing for diesel, leaded and un-leaded fuel

petroleum modified spirit (PMS) to encourage more efficient and more

environmentally-friendly fuels.

To promote the use of renewable sources as fuel.

To promote environmentally sustainable investment decisions.

5.2 RESEARCH, TRAINING AND CAPACITY BUILDING

BACKGROUND

The basic data needed for effective planning and appraisal of transport projects is

not available. Transport demand data is not collected consistently or accurately

enough and the operation of the transport system is not monitored sufficiently to

identify key problem areas and to establish priorities for action. Greater emphasis is

needed on the collection and analysis of data and information relating to the

demand, supply, performance and future requirements of the transport system to

enable effective policymaking and for the planning of projects and other initiatives to

develop the country‘s transport system. This can only be achieved if the skills are

available to carry out the work and to utilize the results effectively in decision making.

Furthermore, there is a shortage of skills and a lack of institutional and organizational

focus for carrying out the analysis, forecasting demand, project planning and

appraisal to determine the appropriate actions and project priorities. These skills

and capability need to be built within the relevant ministries, operating organizations

and the associated research and training institutions in Nigeria. The situation is

compounded by the civil service structure that transfers civil servants with general

administration skills to the Ministry of Transport and continuously redeploys staff

between Ministries. This result in the absence of professionals permanently assigned

to the Ministry of Transport and the loss of institutional knowledge. Transport

professionals such as economists, engineers and planners should therefore be

assigned permanent roles in the Ministry of Transport and the Parasternal. Unless

this is done it will not be possible to implement the policies set out in this document

successfully. Human resources are critical to the performance of the transport

sector. An adequate and efficient pool of manpower is required to conduct research,

plan, construct, maintain and operate the transport infrastructure and services. The

success of any Transport Policy in itself depends on the quality and quantity of the

human resources available to develop and implement the policy. Professional

training for the acquisition of skills and competence in transport is provided by:

the Nigerian Institute of Transport Technology, Zaria, charged with

training middle level management staff;

the Maritime Academy of Nigeria Oron, charged with the training of

seafarers;

the Nigeria College of Civil Aviation Technology, Zaria which trains

pilots and air crew workers; and

Professional bodies such as the Chartered Institute of Logistics and

Transport (CILT) and the Institute of Transport Administration (IOTA).

The paucity of training equipment and inadequate funding constrain manpower

development by these institutions. For skilled manpower in the transport sector, the

country is still dependent on overseas training and experts. In a deregulated

transport system, skill is as important an issue as funding. Indeed improved

transport efficiencies depend on training and research, which create the climate for

new ideas and management methods. There is an urgent need to improve skills in

planning, analysis and research in the transport sector to improve the quality of

decision taking in the sector.

POLICY GOAL

To develop the pool of human resources required to plan and develop the transport

system, to maintain infrastructure and equipment; operate transport facilities and

services and conduct appropriate basic and applied research in order to improve

productivity and ensure better use of transport facilities.

EXISTING SITUATION

There are serious knowledge and capacity challenges in the Nigerian Transport

Sector. The key institution in the sector, namely Federal Ministry of Transport

suffers from lack of permanent professionals; data and statistics to determine future

demand and capacity requirements of the sector are generally lacking and

unreliable; and the existing training facilities for the sector are inadequate and

unable to retain qualified and experienced professional due to poor

remuneration/conditions of service.

POLICY OBJECTIVES

Government recognizes the importance of research, training and institutional

capacity building and will address the issues by:

carrying out a periodic appraisal of manpower needs in the transport

sector;

promote and coordinate research in transport;

professionalize the Ministry of Transport by creating professional and

permanent positions with experts skilled in transport economics, policy

and planning;

develop human resource policies making it possible to place the

professionals appropriately in the civil service structure;

creating Centers of Transport Studies in three Federal Universities with

a mandate to develop transport specializations in major transport sub-

sectors and undertake an agreed programmed of research and

training in these areas of specialization;

strengthening the Nigerian Institute of Transport Technology, Zaria; the

Maritime Academy of Nigeria, Oron and the Nigerian College of

Aviation Technology, Zaria as the apex institutions for developing

manpower in the management and technical areas of the transport

industry;

liaising with such transport professional organizations in Nigeria as the

Chartered Institute of Logistics and Transport (CILT) and Institute of

Transport Administration (IOTA) to professionalize the transport

industry; and

Strengthening the Planning, Research and Statistics Department of the

Ministry of Transport to collate and disseminate transport statistics and

research reports and to develop the use of appropriate planning and

analysis techniques to improve the basis for government decision

taking for the transport sector.

POLICY IMPLEMENTATION

The achievement of the goals and objectives of this policy depends on its effective

implementation by all relevant stakeholders notably, Federal, State and Local

governments, private sector investors, transport service providers, relevant transport

agencies, etc. The National Assembly plays a key role in legislating for the structural

changes and appropriating funds for projects and programs within the sector.

The FMOT as coordinator and primary adviser on transport as well as the other

federal ministries, departments and agencies (MDAs) responsible for aviation, roads,

rural roads, energy, environment, petroleum and regulation all have critical roles to

play. Implementation of this policy will therefore require coordination not only across

federal (MDAs) but between the different tiers of government as well as between the

public and private sectors. The policy will be implemented in three phases as follows:

An Immediate Action Plan;

A Short Term Action Plan; and

A Medium Term Action Plan.

IMMEDIATE ACTION PLAN

As a basic condition for ensuring the success of this policy, Government will

establish an inter-ministerial Transport Policy Implementation Unit consisting of the

Ministries of National Planning, Transport, Works, Housing and Urban Development,

Aviation and Agriculture and Water Resources to:

prepare a comprehensive plan focusing on the immediate priorities and

allocating responsibility for tasks and projects;

prepare for a longer term programmed of investment projects and

policy implementation as the specific requirements in each sector are

identified;

specify annual targets/milestones to be achieved for the next five years

and reporting arrangements by the task leaders; and

set up a Policy Implementation Unit that will set the guidelines for

monitoring transport policy and report progress on its implementation.

5.3 THE LEGAL AND REGULATORY FRAMEWORK

Government will:

review existing transport laws and regulations in respect of road, rail,

air and water transport to accommodate the new policy directions;

repeal all laws that may impede private sector participation; and

Promote the enactment of new legislation to enhance the policy of

reform and establish the transport authorities and multi-sector

regulator.

INSTITUTIONAL FRAMEWORK

Transport Policy Implementation Unit will:

redefine the functions, objectives and the interrelationship among the

three tiers of government, the Ministry of Transport, other Ministries

and other transport institutions and organizations;

prepare a comprehensive implementation agenda for the PPP

programmed with specific activities attached to it; and

Examine the current institutional structure of its own machinery to

improve greater integration by creating a single Ministry of Transport

which will be responsible mainly for policy issues in all modes of

transport.

SHORT TERM ACTION PLAN

A Short Term Action Plan for the next three years will be drawn up to implement

recommendations from the reviews of policy initiated by the Immediate Action Plan.

Implementation of this plan will be monitored and working groups may be

established to authorize actions. The Policy Implementation Unit will review actions

taken since commencement of the policy to:

establish what progress has been made and whether targets have

been met;

ask why targets have not been met;

identify what implications of a failure to meet targets has on the

subsequent; implementation of the programmed; and

Whether the programmed should be modified in the light of experience

and/or the availability of resources.

The Policy Implementation Unit will set up an Evaluation and Monitoring Unit to:

set detailed criteria and guidelines for transport policy monitoring

evaluate and monitor policy programmed

produce periodic reports on the progress of the policy implementation

MEDIUM TERM ACTION PLAN

The Policy Implementation Unit will review the Short Term Plan and any changes to

the policy to:

evaluate the overall achievements over the period under review against

expectations;

review the ongoing programmed to determine which have to be

extended, modified or abandoned;

determine the impact of the programmed or policy actions completed

and assess their benefits and costs;

identify any undesirable effects, and corrective actions necessary,

identify the lessons learned from past achievements, failures and

partial failures; and

consider what changes may be needed in policy direction and the

implications for the programmers

CONTINUOUS REVIEW OF POLICY

Economic development will lead to changes in transport demand and supply and

unforeseen events can change priorities. The Transport Policy will therefore need to

be continuously reviewed to take into account the new economic conditions and

social pressures. The policy review must be objective and to bring about changes

where necessary learning from past experience in order to improve future

performance. The review will be carried out by knowledgeable transport specialists

and researchers from the Universities and other related institutions.

6. PESTEL ANALYSIS

a) Economic

To accelerate investment in new transport infrastructure and ensure that

existing infrastructure is upgraded to a satisfactory standard that meets the

needs and aspirations of the public;

To ensure that all investment projects provide value for money and that

the costs to government are affordable;

To improve the availability, quality, and efficiency of transport services in

order to increase economic growth, productivity, competitiveness, and

access to markets; to increase the Capacity and diversity of the private

sector by providing opportunities for Nigerian and international investors

and contractors in the provision of transport infrastructure, encouraging

efficiency, innovation, and flexibility;

To ensure that transport infrastructure projects are planned, prioritized,

and managed to maximize economic returns and are delivered in a timely,

efficient, and cost effective manner;

To manage the fiscal risks created under PPP contracts within the

Government‘s overall financial and budgetary framework;

To utilize federal, state, and local government assets efficiently for the

benefit of all users of public services.

b) Social

To ensure balanced regional development;

To increase access to quality public transport services for all members of

society;

To ensure that user charges for new or improved public transport services

are affordable and provide value for money;

To respect the employment rights and opportunities of existing employees

and to ensure that any redundancy or other social safety net issues are

resolved before final project approval;

To enhance the health, safety, and wellbeing of the public;

To encourage the direct or indirect participation of small and medium sized

enterprises in PPP projects.

c) Technical

Nigerian Institute of Transport Technology (NITT), Zaria-Nigeria

NIIT was established by law as a Transport Management Development and

Research Institute for Nigeria and the West African Sub-region. It provides

professional training for middle cadre managers in the areas of transport and

logistics. It also conducts research and offers consultancy services to public and

private transport and logistics organizations.

d) Environmental

To protect and enhance the natural environment;

To minimize greenhouse gas emissions and other pollutants.

e) political, Legal

The fundamental goal of this National Transport Policy is to develop an adequate,

safe, environmentally sound, efficient and affordable integrated transport system

within the framework of a progressive and competitive market economy.

An ―adequate transport system‖ means that available transport infrastructure and

services meet the needs of all Nigerians for access to the market, place of

employment and to basic social services. The transport system will serve as an

instrument for social, political and economic unification; strengthening the operation

of markets, facilitating production and resource development, and promoting

relationships with the outside world.

A ―Safe transport system‖ means that all reasonable standards are set and actions

taken to prevent accidents and minimize the number of potential victims and the

destruction of property. Effective safety measures should protect transport operators

and their employees, users of transport services and the public at large.

An ―environmentally sound transport system‖ means that reasonable, effective

actions will be taken to diminish atmospheric, water and other pollution, through

proper planning of infrastructure and the establishment of appropriate regulatory

standards.

An ―efficient transport system‖ means that the transport services are provided in a

way that ensures resources are used efficiently and the economic potential of

appropriate technology is used to achieve sustainable gains in productivity in order

to reduce costs and improve service quality. An efficient transport system also

implies the progressive reduction of social costs, the control of other external costs

of transport, and the expenditure of public funds in a way that is properly justified and

carefully managed.

An ―affordable transport system‖ means that adequate transport services can be

enjoyed by all classes of Nigerians at reasonable cost, and where market

mechanism fails to provide this, the Government will intervene to support the

provision of essential transport services.

An ―integrated transport system‖ means the effective connectivity between ports, rail,

road, inland waterways and air, thereby making use of the advantages of different

modes to ensure seamless movement of goods and people and better utilization of

resources.

The Government’s policy objectives for the sector are:

To promote economic development, expand trade, and improve Nigeria‘s

competitiveness through an efficient and affordable integrated transport

system;

To encourage and remove all barriers towards the private sector participation

in the development, provision, maintenance, operation, and upgrading of

transport infrastructure and services;

To promote the use of public transport over private cars.

To promote a culture of maintenance and continuous upgrading of transport

infrastructure and services;

To promote competition and efficiency and cost reduction of transport

services in Nigeria.

To improve the safety, security, reliability, quality, and speed of movement of

goods and people, at local, national, and international levels;

To develop transport infrastructure that ensures environmental sustainability

and internationally accepted standards; and

To support States and the Federal Capital Territory in the development and

promotion of urban transport systems and local governments in developing

and promoting rural accessibility.

7. SWOT ANALYSIS

STRENGTH AND WEAKNESSES

LIBERAL GOVERMENTAL POLICY

The introduction to the National Transport Policy document of 1993 states that:

―At present, the Nigerian transport system functions in a crisis situation‖, and one of

the principal causes, it identified was ―a major imbalance between the needs of

Nigerian society and economy for adequate transport facilities and the ability of the

transport sector to meet such demands‖.

This statement remains valid today, in 2010, in respect of most of the transport

system. The imbalance in supply and demand for transport capacity overall, and in

the development of the different modes of transport, has in fact increased over the

period since 1993.

This does not mean that during these years no efforts were made to improve and

maintain the system and make it function. A significant improvement exists, but

overall the demand for transport services in Nigeria seems to exceed the supply. The

Nigerian transport system is still in a very difficult situation that needs urgent

remedies. Changes and improvement are obviously needed. Therefore, the present

National Transport Policy strives to attain maximum realism both in the identification

of the problems and in the assessment of the means to rectify them.

The responsibility for planning, developing and maintaining the nation‘s transport

infrastructure is shared among the three tiers of Government. To this end, intra-state

roads are the responsibility of State Governments, while the Local Governments are

required to cater for intra-urban and rural feeder roads, which account for over 60%

of the existing road network. The Federal Government is responsible for the national

highways which constitute only 17% of the existing road network. In addition, the

Federal Government through its Agencies is also responsible for Inland

Waterways/River Ports, Sea Ports, railways, airports and pipelines.

Furthermore, high-level policies of government in particular, the NV 20:2020

economic transformation blueprint, 7-point Agenda, NEEDS, Public Private

Partnership (PPP) and International Commitments such as the Millennium

Development Goals (MDGs) all require a functional, reliable and effective transport

system to, among other things, connect people, places, services, opportunities, etc.

This National Transport Policy therefore provides the guidelines for planning,

development, co-ordination, management, supervision and regulation of the

transport sector as well as:

explaining Government‘s decisions and actions in the sector by espousing the

goals and principles that guide it;

identifying existing gaps and short-comings and how to address them;

showing how actions in the different modes are linked in pursuit of common

goals;

providing the basis for a system of monitoring and accountability; and

Ensuring consistency in the application of policy principles across all modes

and in pursuit of different objectives.

GROWTH OPPORTUNITY

Globally, demand for basic infrastructure services has outstripped the supply

capacity of existing assets. Many years of underinvestment and poor maintenance

have left Nigeria with a significant infrastructure deficit which is holding back the

countries development and economic growth. Nigeria needs to make massive

investments, beyond the means available to government in order to close its

yawning infrastructure gap. The Federal Government has adopted a Policy

framework for the private sector to play an important role in providing some of this

new investment through Public Private Partnerships (PPPs). The use of private

investment where appropriate to address the infrastructure deficit and improve public

services in a sustainable way is regulated by Federal Government of Nigeria PPP

Policy framework and the Infrastructure Concession and Regulatory Commission

(ICRC) Act (2005). In line with the Government‘s commitment to transparency and

accountability, the legal and institutional framework provided for PPP is to ensure

that the transfer of responsibility to the private sector follows best international

practice and is achieved through open competition.

WEAKNESSES

High rate of sediment build up along the channel.

Physical obstruction (wrecks, rock outcrop etc.).

Poor government investment in infrastructure development

inadequate river Port infrastructure

poor landward connection to River Ports

poor communication and navigational aids

neglect of periodic and routine maintenance and an absence of

emergency maintenance; and

Inadequate design and construction.

THRATS AND OPPORTUNITIES:

The Nigerian transport system faces great challenges and also offers several

opportunities. The predisposing factors include:

a) The size of the country: With area coverage of 923,768.64 km2, spanning

longitude 30E-160E and latitude 40N-140N Nigeria is a comparatively large

country. It is inhabited by over 140 million people. Transportation is a crucial

instrument for linking the country economically, socially and politically.

b) Nigeria’s vast natural resources: Nigeria is endowed with petroleum, gas

and solid mineral resources. The country is also blessed with abundant

agricultural and forest resources, which vary by the three ecological zones of

the country. The country is endowed with a highly productive open sea with

abundant and diverse marine resources within her coastline of 852km

bordering the Atlantic Ocean in the Gulf of Guinea and her maritime area of

46,000 km. This variation is a factor in spatial interdependence. Transport

plays an important role in the exploitation and distribution of these resources

and in the reduction of spatial inequality and in poverty alleviation.

c) The Growth of the Nigerian Economy: Until the current decade, economic

growth posed significant challenges to the Nigerian economy, especially

during the decades of the 1980s and 1990s. However, between 1999–2008,

the performance of the Nigerian economy improved significantly. Real Gross

Domestic Product (GDP) grew at an annual average rate of 5.6% and was the

highest in three decades. The economic growth rate of almost two times the

estimated 3% growth rate of the population ensured a real per capita output

growth of 2.6%. The oil sector tended to constitute a drag on growth. The

composition of national output for the 1999 – 2008 decade shows that there is

still the challenge of achieving broad-based growth. Three large sectors –

crop production, oil and gas, and wholesale and retail trade contributed the

most to GDP. The role of Manufacturing was limited while wholesale and

retail trade, through a high contributor to GDP, had low linkage with domestic

production due to low domestic production output and high importation.

Overall, the Sectors of the economy are still plagued by numerous problems

notably, poor and decaying infrastructure, epileptic power supply, institutions

and regulatory deficit, etc. The defective structure of the nation‘s economy

make her heavily dependent on export earnings from crude oil and on import

of consumer and capital goods, thereby increasing the country‘s cargo

throughput and boosting the overall maritime trade. The huge volume of cargo

generated by Nigeria places her at an economic advantage in South-Saharan

Africa.

d) Strategic Location of Nigeria: by its location, Nigeria has an extensive coast

washed by the Atlantic Ocean and a geographically conducive shore which

provide the opportunity of port services to landlocked countries in West Africa

and particularly Chad and Niger Republic, as well as serve as a hub for

transshipment for the West and Central African sub-region.

e) In Stability in Politics The demand for transport is high and growing. This

national Transport Policy acknowledges the need to support the country‘s

social and economic growth to enable her compete favorably in international

markets. This Policy above all, acknowledges the need to develop a transport

system that ensures national security, opens up inaccessible areas and

serves the overall wellbeing of the people.

FINDINGS

In the colonial period transportations infrastructures was made systematically

but, now it is inadequate to accommodate heavy vehicles.

That‘s why they need more infrastructures development, which can satisfy

their need related to transportations.

Goods and passengers movement in Nigeria are performed manly by road

and also, rail and waterway are using by them.

In Nigeria practically all import and export move through the seaports.

Land Transport involves movement of people and goods on land, from one

location to another. It is the dominant form of transportation in the World and

includes rail, road and pipeline.

Nigeria has become increasingly dependent on the road system to meet

virtually all its inland transport needs as the rail, pipeline and inland waterway

systems have deteriorated.

Road transport accounts for about 90% of the internal movement of goods

and people in Nigeria.

Enhance the capacity of the existing infrastructure through proper

maintenance of roadways and efficient traffic management.

The Nigerian railway system has not been able to meet this need. It has

deteriorated in all areas, and caught up in a vicious circle of declining traffic,

endemic deficits, decreasing capacity to serve its customers resulting in

further loss of revenue.

Pipeline is the newest mode of land transport. It is now widely used for the

transportation of bulk liquid and gaseous consignments over long distances.

Air transport is an important component of Nigeria‘s transport system. From a

functional perspective, it provides complementary services to other modes; for

passengers and freight; on both domestic and international routes.

Develop the institutional framework for policy coordination within government

and between transport operators to facilitate intermodal transport.

Transportation safety implies the prevention of accidents and the minimization

of accident losses.

Strengthening the Planning, Research and Statistics Department of the

Ministry of Transport to collate and disseminate transport statistics and

research reports and to develop the use of appropriate planning and analysis

techniques to improve the basis for government decision taking for the

transport sector.

The achievement of the goals and objectives of this policy depends on its

effective implementation by all relevant stakeholders notably, Federal, State

and Local governments, private sector investors, transport service providers,

relevant transport agencies, etc.

CONCLUSION & SUGGESTION

The Government had previously handled all modes of transportation to the exclusion

of the private sector. With the adoption of a PPP approach, Government is

committed to

Concessioning of the existing rail network when fully rehabilitated and inland

waterways facilities to private operators

Ending public sector monopoly in the transport sector

Like other policy documents, the National Transport Policy (NTP) contains a

set of ideas, aspirations, goals and visions; in this case for a better,

responsive, integrated and affordable transport system capable of meeting the

country‘s mobility needs.

However, overtime, the ideals, attitudes, aspirations, visions, etc. contained

herein may change and/or new problems and opportunities may emerge. The

policy document is therefore intended to be a process rather than a blue print.

As its implementation proceeds fresh issues may arise. While this will be

addressed through appropriate policy directive, a policy review will be

undertaken where the need arises.

This paper has looked at the meanings of ports and systems and considered

problems associated with the Nigerian ports systems after which solution

were proffered to them.

The fact that the problems have solution that can be applied means they are

practically solved. If therefore the solutions are correctly implemented, the

problems will be reduced if not totally solved and the Nigerian ports, it‘s the

Nigerian economy would all be the better for it.

This study has described and quantified a number of channels through which

aviation in Nigeria generates important economic benefits for its customers

and the wider Nigerian economy.

However, the following areas remain a challenge;

Funding to fully carry out capital projects in the afore mentioned areas

Capacity building of staff and workers in the sector

Capacity building on infrastructure maintenance

Capacity building on Research and planning.

Limited supply of indigenous professional technical and managerial capacity

in core areas

Over dependence on foreign expertise and limited indigenous capacity

building

Other challenges include, use of substandard vessels for the water sector,

inexperienced operators.

In view of the magnitude of the initial Transport challenge, the desired results

cannot be achieved over-night; however, commitment to the reforms is an

indication to a better repositioning of the sector.

2. Analyzing opportunities through

feasibility study on Royal

Enterprise in Nigeria

EXECUTIVE SUMMARY

Nigeria is a south African country situated in west Africa & contributes majorly in total

GDP of the Africa continent most popular country of Africa is also known as the giant

of Africa. One of the Commonwealth of Nations.

In this report the efforts are made to analyze the opportunity in Nigeria for paint

company quantified it. The city for the businesses is chosen in Nigeria is Lagos. The

paint enterprise i.e. Royal Enterprise will be situated in Lagos. Lagos is the largest

city & one of the most popular of Africa. Moreover it has experienced a rapid growth.

These are the reasons for choosing the Lagos city.

Apart from this Lagos is a large hub for banks, industrial enterprise & music & film

industry transportation advantage in terms of plane & railway as well cargo facility.

The advantages are influencing to choose Lagos as a city for production & business

establishment.

The manufacturing of a marble paint which has the durability up to 10 years & gives

a lavish look is not an easy process. The manufacturing process will be done by 1

hour with the help of 15 employees & labours. The advantages for choosing the

labour & employees from Nigeria is mainly cost advantage. The manufacturing

process does not need the called expertise. So, the training & other expenses are

also reduced.

Main reasons for choosing this industry are non availability of this kind of paint in

Nigeria. As Nigeria is having a atmosphere with high temperature & low humidity.

So, this paint will be useful for reducing the temperatures of the houses to some

extent. Moreover this paint has durability of up to 10 years which each be affordable

for the Nigerian people.

Another benefit of this venture would be loss pollution in environment & no use of

lead. So, it is not harmful for as health of theirs are concerned.

This venture will produce 3 buckets of 25 leg each in 1 hours. If the calculations are

made the productions are made will be 7488 units which will increase the production

up to 8236 units in next year.

In this venture there are most suppliers who can provide raw materials at very low

cost in India. The supping cost & duties (Export, Import & VAT) are the extra costs

which have to bear for production as these raw materials are readily available in

India. The unique feature of the venture lies in this raw material only. So, the best

advantage has influenced the extra cost of shipping.

The substitutes won‘t be available for the buyers as the unique features of the

product don‘t allow only one to under estimate the product. Moreover if the focus is

on competition the giant competitors like (Companies means) provide simple paints

& finishing only. They do not provide the features of this product.

So, the competitors threat is medium to low. Why it is medium because it depends

on the customers preferences to choose a particular product.

The investment for this venture is limited or we can say very low. The threat of new

entrants would be high. Moreover technological advance are not available so it is

less risky to invest in machinery & equipment. So new entrants fascinated towards

this business.

The market would be segmented on the basis of the income group & according to

geography of Nigeria.

The product will be available in different range of colors. The size of the business

can be 1,70,113.31 USD which is around 92,23,543 Rs.

The project describe the layout of plant & other financial data analysis for the

analysis of viability of the project. The wages will be provided in terms of Nigeria.

Minimum wage for the labours are 116.31 USD. The leave policy is somewhat

different. In Nigeria the Muslim community can be allowed for leave on Friday. The

benefits will be provided according to The Labour Act, 1990 Nigeria.

The venture will need their investment of 1,70,113 USD which will give the 54,191.98

USD net profit after a year. In this venture to fulfill the veiled of the investment loan of

50,000 USD will be taken at interest rate of 10% from the break even analysis the

finding show that the investment will be recovered in 3 months & it shows that after

1512 units selling the projects will be generated.

Finally this research report shows that in Nigeria the low investment can generate

enough profits. Gujarat well as India has lots of opportunities to start the venture.

From Rajasthan the raw materials will be purchased so they will get benefit from the

dust of marble. The machinery for the manufacturing will be provided from Gujarat.

This will increase the chances for Gujarat companies to develop/expand their

business. Moreover the other raw materials will be from Nigeria. Which will

strengthen their economy by generating employment & the citizens will get some

new products for their houses.

So, this venture can benefit to both the nations i. e. India & Nigeria.

INTRODUCTION

1.1 Name and address of business

ROAYAL ENTERPRISE

Plot-3A, cowbell way,

Isolo Industrial Estate,

Oshodi Isolo, Lagos,

Nigeria.

www.royalenterprisenigeria.com

VISION:

To establish a leading indigenous paint Enterprise in Nigeria that will be

environmentally friendly and compete favorably with other leading paint companies

in the world through techno managerial excellence.

MISSION:

Bringing technology to the surface by surpassing the needs of our customers

through the production of quality paint products and provision of services unrivalled-

in-the-paint-industry

OBJECTIVES/CORE-VALUES

•Production-oriented

•Customer-oriented

•Professionalism

•Integrity

•Quality

•Initiative

•Innovation and superior use of technology

Lagos is the largest city and thus the first choice for many expats moving to Nigeria.

With a little over 10 million residents, it is also one of the most populous cities in

Africa. The metropolis on the Gulf of Guinea has experienced a rapid growth, as

moving to Nigeria‘s economic and cultural center remains a big incentive for people

from rural regions and abroad.

In many respects, Lagos is Nigeria‘s most important city. It is a large hub for banks,

industrial enterprises, and the music and film industry. The three ports are the

nation‘s biggest transfer site for all goods, except for oil, which is shipped directly

from the Delta. Lagos also is home to the most modern international airport – you will

at least have to change flights here when moving to Nigeria.

Lagos was Nigeria‘s capital until as recently as 1991. Most embassies, although now

officially located in Abuja, handle visa applications from their Lagos offices. The city‘s

cultural and economic importance is unparalleled, as is the quality of life. Many

expats moving to Nigeria opt for accommodation in the popular neighborhoods of

Victoria Island, Ikoyi, Apapa, and Ikeja.

1.2 Name and address of principal

Maulik D. Patel

2, Suyog Complex,

Near Maruti complex,

Gurukul Road,

Ahmadabad, 380 052

1.3 Nature of business

Manufacturing Business:-

Manufacturing specifications define the processes and methods necessary to

produce a given product; including converting raw materials, components, or parts

into WIPs (work-in-process) or finished goods.

Manufacturing is the production of goods for use or sale using labor and machines,

tools, chemical and biological processing, or formulation. The term may refer to a

range of human activity, from handicraft to high tech, but is most commonly applied

to industrial production, in which raw materials are transformed into finished goods

on a large scale. Such finished goods may be used for manufacturing other, more

complex products, such as aircraft, household appliances or automobiles, or sold to

wholesalers, who in turn sell them to retailers, who then sell them to end users – the

"consumers".

Manufacturing takes turns under all types of economic systems. In a free market

economy, manufacturing is usually directed toward the mass production of products

for sale to consumers at a profit. In a collectivist economy, manufacturing is more

frequently directed by the state to supply a centrally planned economy. In mixed

market economies, manufacturing occurs under some degree of government

regulation.

Modern manufacturing includes all intermediate processes required for the

production and integration of a product's components. Some industries, such as

semiconductor and steel manufacturers use the term fabrication instead.

INDUSTRY

ANALYSIS

2.1 Industry overview

The chemical and paints industry has been in existence for a number of years. The

industry has gone through various levels of development from the manual based

processes to more technologically advanced production methods. However, the level

of development of the sector in Nigeria is still low when compared to other countries

with more advanced technical.

The Nigerian paint sector is a highly competitive one because of organized and

unorganized sector. The entry and exit barriers are high due to high operating cost

and technology advancement in paint industry. Moreover the Nigerian government

has adopted a policy to bane the lead contained paints in Nigeria. So the legal

framework is one of the major factors for the Nigerian paint industry. Many new

entrants get attracted to paint making business due primarily to attractive capital

requirement.

Another major characteristic of the industry is the existence of various tiers which

are determined by criteria such as market share, product quality, average turnover

and reputation. Industry players can be placed into three broad categories: the first,

second and third tiers. The first tier category consists of major players which control

a large share of the market and have been in existence for many years.

Some of the companies within this category include:

DN Meyer Plc

Premier Paints Plc

IPWA Plc

Nigerian German Chemicals

African Paints

Berger Paints

CAP Plc

There‘s a second category which consists largely of medium sized players with less

Control of market share. These companies are characterized by private ownerships

with majority of the of the equity control in the hands of a few individuals. The third

tier category comprises of companies with relatively larger customer patronage than

their mid tier peers (due to higher price advantage) but are restricted based on

quality. Unlike the more successful companies often regarded as ‗premium paint

makers‘, they concentrate more on emulsion (decorative). The Standards

Organization of Nigeria (SON) is the major regulatory body for the chemical and

paints industry.

2.2 Future outlook and trends

The direction the industry will go will be determined by where the economy goes. If

the economy grows, It can be seen that an industry that will get more sophisticated

because there will be larger demand on the product and you have people that are

willing to pay for quality. Once you have demand growing then there is also going to

be corresponding increase in investment in the industry.

It can also see that a situation where quality will be improved in the industry because

of what Royal is doing. Royal is getting more active in ensuring that there is quality

product on the shelf and those that are producing below the standards specified will

find themselves out of the market. To be positive that the economy will grow and

consequently, by 10% increased in Nigerian paint industry.

Every year Nigerian housing & development infrastructure increase by 10%, which

denoted that decorative paint industry, is also going to be increased.

Every 1 process made 3 buckets which denote that in 8 hours a day process it can

be produced 24 & in month 624 buckets. By making a same process it can be

possible to make 7488 buckets in year. It‘s show your actual consumption units in

year, 2013. Due to rapid changes in Nigerian paint industry, manufacture & sale also

increased by 10% in next year, 2014 with 8236 units.

In 2015, by increasing 10% production, selling units can be grow by 10%, which

directly affect the breakeven point(BEP) of the production. Where companies can

start earning some kind of amount where they can do R&D work & innovation

process.

Every company starts getting some kind of amount due to its strength &

opportunities for that particular product. In 2017 production reached to 13,590 units

of buckets which show that there is no competitors in the market which can beat this

company. Where company can make profit by selling its products in Nigerian market.

2.3 Porter five forces model

Introduction

The Nigerian Paint industry, estimated to be USD $221.50 million industries, has

been growing at a rate of above 13% for the past few years. The organized players

of the industry cater to about 62% of the overall demand, whereas the unorganized

players take care of the remaining 30%, in value terms. The unorganized players

mainly dominate the distemper segment.

The industry consists of two segments, namely

Decorative segment -Major segments in decorative include exterior wall paints,

interior wall paints, wood finishes and enamel and ancillary products such as

primers, putties etc. Decorative paints account for over 71.53% of the overall paint

market in Nigeria. Demand for decorative paints arises from household painting,

architectural and other display purposes. Demand in the festive season (September-

December) is significant, as compared to other periods. This segment is price

sensitive and is a higher margin business as compared to industrial segment.

Industrial segment - Three main segments of the industrial sector include

automotive coatings, powder coatings and protective coatings. Kansai Nerolac is the

market leader in this segment. User industries for industrial paints include

automobiles engineering and consumer durables. The industrial paints segment is

far more technology intensive than the decorative segment. consists of powder

coatings.

Nigeria Paint Industry

Supply: Supply exceeds demand in both the decorative as well as industrial paints

segments, Industry is fragmented.

Demand: Demands is for decorative paints depend on the housing sector and good

monsoons. Industrial paint demand is linked with user industries like auto,

engineering and customer durables.

Barriers to entry: Brand, distribution network

Bargaining power of suppliers: Price increases constrained with the presence of

the unorganized sector for the decorative segment. Sophisticated buyers of industrial

paints also limit the bargaining power of suppliers. It is therefore that margins are

better in the decorative segment.

Bargaining power of customers: Low due to unavailability of choices.

Rivalry among Competitors: In both categories, companies in organized sector

focus on brand building. Higher pricing through product differentiation is also

followed as a competitive strategy.

Model Analysis

1. Bargaining power of buyers: Households and Industrial Users are the main

customers of this industry.

For housing requirements, the buyers can be customers (building contractors who

buy in bulk) and end customers (people who paint/re-paint their house). Customers

are more price sensitive because for them number of options are available and

decisions are made based on quality, price and differentiating factors (like weather

protection, environment friendly paints). The unorganized market has also have a

large chunk of market share providing many options to lower income segment.

Whereas, Industrial segment is low margin high revenue business and buyers of

these segments are knowledgeable about their needs. Therefore, price comparison

is done effectively by the customers. However, the leading Industrial paint suppliers

have their expertise in their favor, which limits the bargaining power of buyers.

But in the marble paint there are no choices available for the customers/consumers

so bargaining power of buyer is low.

2. Bargaining power of suppliers: The Nigerian Paint industry is raw material

intensive industry with more than 300 products going into the manufacturing of the

final products. The raw material can be divided into different categories like

pigments, additives, solvents, binders etc. Chips are key raw material used in the

manufacturing of marble paint which is available in very low cost in India. So the

suppliers‘ bargaining power for the chemicals and chips is low for marble paint

production.

Thus, bargaining power of supplier is low.

3. Competitive Rivalry: About 80% of organized market is created to by the below four

players of Nigerian Paint Industry. But the current market growth rate can provide

ample room of opportunity for all the players of the industry to flourish. However,

competition will keep on increasing as market will get saturated, but this will take

some time to happen, till then one can keep satisfy customer need with good margin.

Also, the presence of unorganized market does provide room for competition. Thus,

on the whole competitive rivalry for the Nigerian paint industry is Low to Medium.

Example:

Asian Paints: Overall Market leader due to cost leadership in decorative paint

market.

Kansai Nerolac: Market leader in Automotive Industrial Paint segments, also into

decorative paint.

Berger Paints: Major revenue from decorative segment, also into industrial paints

DN Meyer Plc: Major revenue from decorative segment, also into automotive

segment.

4. Availability of Substitute: The availability of substitute of very minimal. In the rural

areas lime wash is conventionally used substitute for paints. One alternative option

for decorative walls available today is wallpaper. The product which will be provided

can be used as a substitute with better quality and durability with affordable price for

high income group. Thus, the availability of substitutes in the Nigerian Paint Industry

is low to medium.

5. Threat of new entrants: As it has been stated earlier that the paint market in

Nigerian is dominated by few organized players, making it difficult for anyone new

entering the industry to compete. Since new technologies are also available to

shorten production life cycle of paint. In marble paint manufacturing the new entrants

can easily start their venture by low investment and low threat for technology

advancement. Thus, Threat to new entrant is high.

2.4 Analysis of competitors

Aceland Paints.

122, Ikotun Road,

Ejigbo,

Lagos.

Phone: +23417745523.

Adamson Coatings Ltd.

19, Oladipo Kuku Street,

Off Allen Avenue,

Ikeja,

Lagos.

Balux Paints Nigeria Limited.

10, Fagge Road,

Kano,

Kano-State.

Phone: +23464622314.

Banex Ind Limited.

Banex Plaza, Plot 750,

Aminu Kano Cresent,

Zone A7, Wuse, Abuja.

Phone: +2349236420-5.

Berger Paints Nigeria Plc.

102, Oba Akran Avenue,

Ikeja Industrial Estate,

Ikeja,-Lagos.

Phone: +23414976980-5,

+23414976980-5, +23414976989.

Email:

customercare@bergerpaintnig.com

Website: http://www.bpnplc.com

Celiat Paints Limited.

3B, Nurudeen Street,

Off Akinremi Street,

Anifowoshe,

Ikeja,

Lagos.

Phone: +23414702885,

+23414974161.

Century Merchants & Chemical

Nigeria-Ltd.

AU-10,-Gamagira-Road,-By

Nnamdi-Azikiwe-Bye-Pass,

Kaduna.

Phone:-+23497831077,

(0)8033489855.

E-mail: centurypaints@yahoo.com

Graduate-Paints.

49, Yaya Abatan Street,

Ogba, Ikeja,

Lagos.

Phone: +23414702678,

+23418045379.

2.5 Market segmentation

Heritage-Paints-Limited.

6, Abiodun Sadiku Street,Dopemu,

Lagos.

Phone: +234 1 492 2869.

Home-Charm-Paints

Nigeria-Ltd.

Km-5,-Old-Aba-Owerri Road,

Osisioma, Aba, Abia State.

Phone: +234 8 222 3843.

Integrated-Coating-Technology.

23,-Adamo-Street,-Egbe,-Lagos.

Phone: +2348028287950.

Kobak-Paints-Limited.

95,-Lagos-Badagry

Expressway,

Orile-Iganmu,-Lagos.

Phone: +23417741820.

Lydoline-Paints-Limited.

Plot 58, Adeola Avenue,

Ifako-Agege,-Lagos.

Phone: +23414920799.

Saclux-Paints-Plc.

Shop-B4-70,-Abuja

International Building Market,

Dei-Dei,-Abuja.

Phone: +23498500162.

Segmentation refers to a process of bifurcating or dividing a large unit into various

small units which have more or less similar or related characteristics.

Market Segmentation

Market segmentation is a marketing concept which divides the complete market set

up into smaller subsets comprising of consumers with a similar taste, demand and

preference.

A market segment is a small unit within a large market comprising of likeminded

individuals.

One market segment is totally distinct from the other segment.

A market segment comprises of individuals who think on the same lines and have

similar interests.

The individuals from the same segment respond in a similar way to the fluctuations

in the market.

Demographic Segmentation

Gender

The marketers divide the market into smaller segments based on gender. Both men

and women have different interests and preferences, and thus the need for

segmentation.

Organizations need to have different marketing strategies for men which would

obviously not work in case of females.

A woman would not purchase a product meant for males and vice a versa.

The segmentation of the market as per the gender is important in many industries

like cosmetics, footwear, jewellery and apparel industries.

Age Group

Division on the basis of age group of the target audience is also one of the ways of

market segmentation.

The products and marketing strategies for teenagers would obviously be different

than kids.

Age group (0 - 10 years) - Toys, Nappies, Baby Food, Prams

Age Group (10 - 20 years) - Toys, Apparels, Books, School Bags

Age group (20 years and above) - Cosmetics, Anti-Ageing Products, Magazines &

apparels.

Income

Marketers divide the consumers into small segments as per their income. Individuals

are classified into segments according to their monthly earnings.

The three categories are:

High income Group

Mid Income Group

Low Income Group

Stores catering to the higher income group would have different range of products

and strategies as compared to stores which target the lower income group.

Example: Pantaloon, Carrefour, Shopper‘s stop target the high income group as

compared to Vishal Retail, Reliance Retail or Big bazaar who cater to the individuals

belonging to the lower income segment.

Marital Status

Market segmentation can also be as per the marital status of the individuals. Travel

agencies would not have similar holiday packages for bachelors and married

couples.

Occupation

Office goers would have different needs as compared to school /college students. A

beach house shirt or a funky T Shirt would have no takers in a Zodiac Store as it

caters specifically to the professionals.

Psychographic segmentation

The basis of such segmentation is the lifestyle of the individuals. The individual‘s

attitude, interest, value help the marketers to classify them into small groups.

Behavioral Segmentation

The loyalties of the customers towards a particular brand help the marketers to

classify them into smaller groups, each group comprising of individuals loyal towards

a particular brand.

Geographic Segmentation

Geographic segmentation refers to the classification of market into various

geographical areas. A marketer can‘t have similar strategies for individuals living at

different places.

Nestle promotes Nescafe all through the year in cold states of the country as

compared to places which have well defined summer and winter season.

McDonald‘s in India does not sell beef products as it is strictly against the religious

beliefs of the countrymen, whereas McDonald‘s in US freely sells and promotes beef

products

Market Segmentation

Geographic

Demographic

psycographic

Behavioral

Description

of

Venture

3.1 Products

The product composition consists of crushed stone (selected colour quartz, marble

chips) in various aggregate sizes ranging between 0,4 mm – 3mm. Aquaphobe,

Acrylic Binder, Liq. Ammonia, Chemical powder 158(thinker), SPCP (Anti fungus

Chemical), Dolomite powder, Calcite powder, Talc powder, & Chips powder.

Inorganic colour fast pigment and various fungicides, water repellent agents,

plasticizers and other additives are added during the mixing phase to ensure

durability and colour fasting up to a lifespan of 20 years.

The product is applied in an approximate 8mm thickness to walls and ceilings by way

of using a steel trowel to plastering the Royal mix.

The durability allows cleaning with a steel brush without the possibility of damage to

the walls. Our Royal Wall and Ceiling coating are available in unlimited colours. Our

highly trained and skilled staff ensures a neat and tidy execution of any project. The

finish is extremely durable and stylish. Royal colours are achieved by mixing and

matching coloured crushed stone. Gold or Silver Glitter particles can be added to the

mix to change the final look and surface reflection with sunlight or indoor lighting

.

Q

3.2 Services

Royal enterprise comes across with different product from its competitors, which

create an identity in paint industry. Our motto is to provide good quality product to

our customers. This creates benchmark level for company.

Royal enterprise gives 10 years warranty for its paint product to its customers.

3.3 Size of Business

Particular Total(USD $)

Fixed Capital 9,820.31

Working Capital 1,60,293.00

Total 1,70,113.31

Initially the size of the business would be small due to capital constraint. Total

1,70,113.31 USD$ would be required to produce 7488 units in a year. The capital

includes fixed capital & working capital of 9,820.31 & 1,60,293.00 USD respectively.

3.4 Office equipment and personnel

Tools Qty Cost in USD $

Total cost in USD $

Table 1 23.05 23.05

Chair 4 4.61 18.44

Weight Machine 1 138.69 138.69

Computer + Printer 1 341.20+165.99 507.19

Water Cooler 1 181.67 181.67

Total 869.04

To initiate a set up for office & personnel in the enterprise. Some amount of capital

has been devoted which includes equipments for production & resulted into the cost

of 869.04 USD. This would be one time investment for the sets up of enterprise &

would be regarded as the fixed cost.

PRODUCTION

PLAN

4.1 Manufacturing process

Chemicals:

Aquaphobe

Acrylic binder 50%

Liq. Ammonia

Chemical powder 158(thickener)

SPCP (Anti fungus chemical)

Powders:

Dolomite powder

Calcite powder

Talc powder

Marble Chips:

Chips 0.4mm – 1mm

Chips 1mm - 3mm

Machine

Water

Chemical

Powder

Marble Chips

4.2 Plan Lay-out

Ideal Plant Layout:

Plant layout is the overall arrangement of the production processes, store room,

stock room, tool room, materials handling equipment, aisles, racks and sub stores,

employee services and all other accessories required for facilitating the production in

the factory. As it encompasses production and service facilities and provides for the

most effective utilization of the men, materials and machines constituting the

process, it is a master blueprint for coordinating all operations performed inside the

factory.

A good layout is one which allows materials rapidly and directly for processing. This

reduces transport handling, clerical and other costs down per unit, space

requirements are minimized and it reduces idle machine and idle man time.

4.3 Machinery and equipment

High speed Stunner model – 577 15 kwa Silent Diesel Generator

4.4 Supplier of machinery

Mamta Engineering 83,-Tirupati-Estate,-Nr.-Everest Cinema, Saraspur, Ahmedabad-380018. Call :( 079) 22741710 www.mamtagroup.in

Ganchio Engineering ltd. Plot no:3A to C Chohachi road, Lagos, Nigeria.

4.4 Suppliers of raw materials

ACP Chemicals Nigeria

House:6A, Block V Mobolaji Johnson

estate Lekki P.M.B. 21513

Ikeja, Lagos,

Nigeria

Biochemical Derivatives ltd.

53, Lawson Street,

PO Box: 2963

Lagos, Nigeria

Chizzy (Nigeria) Ltd.

Opposite-Saddle-Club-Olowora

Junction,

Isheri Road,

Olowora, PO Box:7880

Ikeja, Nigeria

Emmyson Nigeria ltd.

200, Awolowo Road,

Ikoyi, Lagos, Nigeria

Tel:+23412690674

Fax:+23412692206

Europtalia Chemical Nigeria Ltd.

2nd Avenue, 208 Road B Close,

House 12 Festac Tower,

Nigeria.

Tel:+23415884426

Fax:+23415884476

TSL (Nigeria) Limited.

No.-4-Oslo-Way-off.-International

Airport Road,

PO Box: 2068

Lagos, Nigeria

Tel:+2341615044

Raja marble pvt ltd.

Jaipur high way,

Rajesthan.

+29734575413

Fateh Marble india ltd.

Jalor, Rajesthan.

+2973225123.

MARKETING

PLAN

5.1 Pricing Strategies:-

After selecting a pricing objective you will need to determine a pricing strategy. This

will assist you when it comes time to actually price your products. As with the pricing

objectives, numerous pricing strategies are available from which to choose. Certain

strategies work well with certain objectives, so make sure you have taken your time

selecting an objective. Brief definitions of some pricing strategies follow.

(1) Competitive pricing:-

Pricing your products based on the prices your competitors have on the same

products. This pricing strategy can be useful when differentiating your product from

other products is difficult. When the objective for pricing products is to allow the

business to either maintain status quo or simply survive a difficult period, competitive

pricing will allow the business to maintain profit by avoiding price wars (from pricing

Pricing strategies in product marketing

Product line pricing Skim pricing

Competitive pricing Loss leader

Good, better, best pricing Multiple pricing

Optional product pricing Premium pricing

Penetration pricing Product bundle pricing

below the competition) or falling sales (from pricing above the competition).

(2) Loss leader:-

It is refers to products having low prices placed on them in an attempt to lure

customers to the business and to make further purchases. The loss leader pricing

strategy should be paired with either the quantity maximization or partial cost

recovery pricing objectives. The low price placed on the product should result in

greater quantities of the product being sold while still recovering a portion of the

production cost.

(3) Good, better, best pricing:-

That charges more for products that have received more attention (for example, in

packaging or sorting). The same product is offered in three different formats, with the

price for each level rising above that of the previous level. This pricing strategy

should be used when pursuing revenue maximization and quantity maximization

objectives.

(4) Multiple pricing:-

Seeks to get customers to purchase a product in greater quantities by offering a

slight discount on the greater quantity, In the display of prices, a price for the

purchase of just one item is displayed along with the price for a larger quantity. If you

think the majority of your customers will purchase the greater quantity, you will want

to price the quantity so that your costs are covered and your profit margin is

maintained. The multiple pricing strategies works well with the profit maximization

and quantity maximization objectives.

(5) Optional product pricing:-

Used to attempt to get customers to spend a little extra on the product by purchasing

options or extra features, optional product pricing is best used when the pricing

objective is revenue maximization or quality leadership.

(6) Premium pricing:-

Employed when the product you are selling is unique and of very high quality, but

you only expect to sell a small amount. These attributes demand that a high, or

premium, price be attached to the product. Premium pricing can be employed with

the profit margin maximization or quality leadership pricing objectives.

(7) Penetration pricing:-

Used to gain entry into a new market, the objective for employing penetration pricing

is to at-tract and grow market share. Once desired levels for these objectives are

reached, product prices are typically increased. Penetration prices will not garner the

profit that you may want; therefore, this pricing strategy must be used strategically.

The strategy of penetration pricing can be used when your pricing objective is either

revenue or quantity maximization.

(8) Product bundle pricing:-

Used to group several items together for sale, this is a useful pricing strategy for

complementary, overstock, or older products. Customers purchase the product they

really want, but for a little extra they also receive one or more additional items. The

advantage of this pricing strategy is the ability to get rid of overstock items. On the

other hand, customers not wanting the extra items may decide not to purchase the

bundle. This strategy is similar to product line pricing, except that the items being

grouped together do not need to be complementary. Product bundle pricing can be

employed with revenue maximization or quantity maximization objectives

(9) Product line pricing:-

Used when a range of products or services complement each other and can be

packaged together to reflect increasing value. This pricing strategy is similar to the

multiple pricing strategy. However, rather than purchasing a greater quantity of one

item, the customer is purchasing a different item or service at a higher price that is

still perceived as a value when compared to the price for the individual product or

service. The product line pricing works well with the profit maximization and quality

leadership pricing objectives.

(10) Skim pricing:-

Similar to premium pricing, calling for a high price to be placed on the product you

are selling. However, with this strategy the price eventually will be lowered as

competitors enter the market. This strategy is mostly used on products that are new

and have few, if any, direct competitors when first entering the market. The skim

pricing strategy should be reserved for when your pricing objective is profit

maximization, revenue maximization, or profit margin maximization. Employing this

strategy when your product is new on the market and there is no competition

generates greater revenue, profit, and profit margins since you are the only one

selling the product customers must buy from you if they want what you are selling.

You must use caution, though, so as to not price so high though that customers

aren‘t willing to buy your product even though there are no competitors.

Pricing strategy chosen:

Skim pricing strategy will be used for starting the new venture. Skim pricing is

chosen for various reasons.

1. To enter the market for paint industry the price must be comparatively same

as the competitors to create a perception of better product in minds of the

customers.

2. To recover the investment as early as possible.

3. To reinvest the upcoming profit for the R & D and product innovations.

5.2 Advertising strategy:-

Definition:-

A campaign developed by a business to encourage potential customers to purchase

a good or service. An advertising strategy is generally tailored to a target audience

perceived to be most likely out of the population to purchase the product. Advertising

strategies include elements such as geographic location, perceived demographics of

the audience, price points, special offers, and what advertising media, such as

billboards, websites, or television, will be used to present the product.

(1) Word of mouth advertising:-

Definition:-

Oral or written recommendation by a satisfied customer to the prospective customers

of a good or service, considered being the most effective form of promotion, it is

called as word of mouth advertising which is incorrect because, by definition,

advertising is a paid and non-personal communication.

Personal:-

Personal communication is conversation based. It is difficult to ignore and a powerful

influencing tool.

Face to face personal conversation:-

Face to face communications remain the most powerful way of transmitting a

message from one person to another. Human conversations involve much more than

simply words – cues such as voice tone and body language also convey information

such as enthusiasm, sadness, emotions and truthfulness.

Voice only conversations:-

Voice only conversations are a close second. Live voice-based communication holds

the attention of the listener and allows for the transmission of important tonal cues.

Definition:-

Media messages designed to educate or motivate members of a public to engage in

voluntary social activity such as community service, energy conservation, recycling.

(2) Social media advertising:-

Digital:-

Digital communication can involve conversations or one way electronics

communication. Although less powerful than personal communications. They allow a

message to travel quickly over long distance.

Multimedia based digital message and conversions:-

Image and audio based messages come third in terms of message strength. If text

based digital conversation can be supported by images and audio it adds power to

the message. Example: - face book, email, mms, and you tube.

Text based digital messages and conversations:-

Text only messages are the least powerful, but the easiest to transmit via digital

means. There are countless methods of transmitting a text based messages from

one person to another, including SMS messages, twitter, text only emails, RSS feeds

and instant messaging services.

The word of mouth advertising and social media advertising are an indirect

advertising. And it is person to person, group to group communication. It is a paid

non-personal communication.

If intend word of mouth from a major part of promotional investment, it can‘t just sit

back and hope that it will happen. Use the tools at disposal to encourage word

positive of word of mouth. Determine the objectives and ensure the message, the

means of communication and the people who target work together in order to

promote business.

(3) Print media advertising:-

Definition:-

Print media advertising is a various means (advertising vehicles) such as billboards,

magazines, newspapers and brochures. The industry associated with the printing

and distribution of news through newspapers, brochures, magazines, and posters.

Types of print media:-

Print media includes many different ways in which an advertiser can reach a target

group. Here are some of the different types of print media.

The modern advertising techniques make use of many to convey messages to the

consumers. Print media however, is one of the oldest forms of advertising methods.

It also remains to be one of the most popular forms of advertising because it can

reach a wider target audience. There are various different types of print media, which

help advertisers to target a particular segment of people. Here‘s a quick look at

them.

News papers:-

News papers are the most popular form of the print media. The advertiser in this

case can choose from a daily newspaper to a weekly tabloid. Different types of

newspaper cater to various audiences and one can select the particular category

accordingly. Advertisers then design press advertisement where in the size is

decided as per the budget of the client.

Magazines:-

Magazines also offer advertisers an opportunity to incorporate various new

techniques and ideas. Magazines are one such form of print media that give a more

specific target group to the client. The client can make a choice of the particular

magazines as per the product.

Newsletters:-

Newsletters also form an important part of print media. These target a specific group

of audience and give information on the product.

Brochures:-

Brochures give detailed information about the product. These are mainly distributed

at events or even at the main outlet when a consumer needs to read in detail about

the product.

Posters:-

Posters are form of outdoor advertising. The message in a poster has to be brief and

eye-catching as it targets a person on the move.

A part of from these media, direct mail marketing, flyers, handbills, leaflets, banner

advertising, billboard advertising, press releases, etc. are also various types of print

media.

5.3 Distribution strategy:

Distribution channel:-

A two-tier distribution system (manufacturer, dealer) may be the preferred channel

used by the manufacturer of one or a whole line of its goods. Using distributorships

gives the producer the advantage of dealing with just a few major buyers, the

distributors, who then, in turn, take care of selling the product through to the ultimate

consumer using dealers. In any kind of major equipment business, substantial capital

is involved in carrying and holding merchandise, including parts inventories.

A dealership is sometimes called a retail distributor. It is similar to a distributorship,

except that a dealer usually sells only to the public. You sell a product through a

geographical network of dealers who sell to end-users in their areas. The dealers

may service the product as well.

In Our Distribution Channel is one channels Manufacturer to Dealer. The Royal

Enterprise has its distribution foot prints all across the Nigeria country with the

marble paints. The distributors are 10. The dealer is a most part of our enterprise.

HUMAN

RESOURCE

PLAN

6.1 Nigeria Socio-Economic Structure

Nigeria is the most populated country on the African continent and is seen as a

regional power. With a high potential for economic growth, Nigeria is undergoing a

lot of economic changes and rapid development. Nigeria has been inhabited since

9000 BCE though the modern state only emerged in 1914. During the time of

colonialism the British united several regions, which included independent tribes and

cultures. This unification created a melting pot of cultures, religions, languages and

ethnicities, which has led to a lot of turbulence and conflict ever since. Nigeria is a

forward looking and progressive nation seeking unity. The nation is influenced by

religions such as Islam and Christianity, a variety of indigenous beliefs, as well as a

long history of slavery and colonialism. Understanding this diverse culture is the key

to successfully doing business in Nigeria.

Ethnic Groups: Nigeria, which is Africa's most populous country, is composed of

more-than-250-ethnic-groups Hausa and Fulani.

Yoruba, Igbo, Ijaw, Yakurr, Ibibio, Kanuri, Annang, Etsakor, Tiv, Efik, Nupe, Ebira.

Religion: Nigeria is nearly equally divided between Christianity and Islam.

Population: Nigeria total population is 140,431,790 (Male 71,345,488, Female

69,086,302).

Literacy: Total literacy in Nigeria 78.6% (Male 84.35%, Female72.65%).

Economy: Nigeria is classified as a mixed economy emerging market. Key sector of

Nigeria Petroleum, Tele-communication and natural resource based industries.

GDP: Nigerian GDP as per 20011, $413,402 Billion and per capita income $ 3578

6.2 Business in Nigeria

After an unsettled period of military rule, colonialism and several civil wars, today,

Nigeria is ruled by a democratic government. The government is making an effort to

restructure and improve Nigeria‘s economy. Since the 1960s Nigeria‘s economy has

focused on oil production and export rather than agriculture. As Africa‘s largest oil

producer, Nigeria attracts a lot of foreign business and trade. The National Monetary

Fund expects a potential growth of 8.3% in 2009. Due to the declining number of

people working in the agricultural sector, Nigeria has to import food to provide for the

growing population.

6.3 Labour force in Nigeria

In 2005, Nigeria had a labour force of 57.2 million. In 2003, the unemployment rate

was 10.8% overall; urban unemployment of 12.3% exceeded rural unemployment of

7.4%. According to the latest available information from 1999, labor force

employment by sector was as follows: 70% in agriculture, 20% in services, and 10%

in industry. Labor unions, which have undergone periods of militancy and

quiescence, reemerged as a force in 1998 when they regained independence from

the government. Since 1999, the Nigerian Labor Congress (NLC a union umbrella

organization, has called six general strikes to protest domestic fuel price increases.

However, in March 2005 the government introduced legislation ending the NLC's

monopoly over union organizing. In December 2005, the NLC was lobbying for an

increase in the minimum wage for federal workers. The existing minimum wage,

which was introduced six years earlier but has not been adjusted since, has been

whittled away by inflation to only US$42.80 per month.

According to the International Organization for Migration, the number

of immigrants residing in Nigeria has more than doubled in recent decades – from

477,135 in 1991 to 971,450 in 2005. The majority of immigrants in Nigeria (74%) are

from neighboring Economic Community of West African States (ECOWAS), and that

this number has increased considerably over the last decade, from 63% in 2001 to

97% in 2005. In spite of Nigeria's importance as a destination for migrants in the

region, more people are emigrating from, than immigrating to, Nigeria with the

negative net migration rate (per 1,000 people) steadily increasing in recent years,

from -0.2 in 2000 to -0.3 in 2005, and this trend is expected to continue. According to

recent estimates, the net migration rate could reach -0.4 in 2010.

6.4 Employment Condition in Nigeria:

There are different laws in Nigeria to govern employment condition;

1. Labour Act, 1990 Nigeria

Manner of Payments (Sec.1): The wage shall payable on monthly basis.

Medical Examination (Sec.8): Every worker who enters into a contract shall be

medically examined by a registered medical practitioner at the expense of the

employer.

Working Hours (Sec.13): (2) Normal hours of work 8hrs in a day (7) In every period

of seven days a worker shall be entitled to one day of rest which shall not be less

than twenty-four consecutive hours; if any reduction takes place in the weekly rest-

period- (a) Corresponding time-off from work shall be allowed as soon as possible

(and in any case not later than fourteen days thereafter); or (b) Wages at overtime

rates shall be paid in lieu thereof.

Provision for Transport (Sec14): Where a worker is required to travel sixteen

kilometers or more from his normal place of work to another worksite he shall be

entitled to free transport or an allowance in lieu thereof.

Periodicity of Payment of wages (Sec15): Wages shall become due and payable

at the end of each period for which the contract is expressed to subsist, that is to

say, daily, weekly or at such other period as may be agreed upon: Provided that,

where the period is more than one month, the wages shall become due and payable

at intervals not exceeding one month.

Leave (Sec.16): Subject to the Workmen's Compensation Act, a worker shall be

entitled to be paid wages up to twelve working days in any one calendar year during

absence from work caused by temporary illness certified by a registered medical

practitioner

Annual Holiday with Pay (Sec18): Every worker shall be entitled after twelve

months continuous service to a holiday with full pay of (a) At least six working days;

or (b) In the case of persons under the age of sixteen years (including apprentices),

at least twelve working days.

Maternity Protection (Sec.54): In any public or private industrial or commercial

undertaking or any branch thereof, or in any agricultural undertaking or any branch

thereof, a woman- (a) shall have the right to leave her work if she produces a

medical Certificate given by a registered medical practitioner stating that her

confinement will probably take place within six weeks; (b) shall not be permitted to

work during the six weeks following her confinement; (c) if she is absent from her

work in pursuance of paragraph (a) or (b) of this subsection and had been

continuously employed by her then employer for a period of six months or more

immediately prior to her absence, shall be paid not less than fifty per cent of the

wages she would have earned if she had not been absent; and (d) shall in any case,

if she is nursing her child, be allowed half an hour twice a day during her working

hours for that purpose.

Labour Health Areas (Sec.66): Where the Minister is satisfied that an industrial or

agricultural undertaking is situated in an area which, having regard to the existing

medical and health conditions and facilities, water supplies and communications, is

remote and isolated, he may by order declare the area a labour health area; and,

during the period of employment of any worker in a labour health area, the employer

shall provide such facilities and make such arrangements as may be specified by

regulations made under section 67 of this Act, and shall otherwise comply with the

requirements of any such regulations.

Employment Exchanges (Sec.70): The Minister may make regulations- (B)

providing for the issue of certificates of registration and identity to registered

industrial workers and the replacement, on payment of such fee as may be

prescribed, of any such certificates when lost or destroyed

Prohibition of Forced Labour (Sec.73): Any person who requires any other

person, or l permits any other person to be required, to perform forced labour

contrary to section 31 (1) (c) of the Constitution of, the Federal Republic of Nigeria

shall be guilty of an offence and on conviction shall be liable to a fine not exceeding

N1,000 or to imprisonment for a period not exceeding two years, or to both.

Labour Complaints (Sec.81): (a) an employer or worker neglects or refuses to fulfill

a contract; or (b) any question, difference or dispute arises as to the rights or

liabilities of a party to a contract or touching any misconduct, neglect, ill-treatment or

injury to the person or property of a party to a contract, any party to the contract

feeling himself aggrieved may make complaint to a court having jurisdiction, which

may thereupon issue a summons to the party complained against (the aggrieved

party, the court, the party complained against and the complaint being hereafter in

this section and in sections 82 to 85 of this Act referred to as "the complainant", "the

court", "the respondent" and "the complaint" respectively).

Power of Court (Sec.82): In dealing with the complaint; the court- (a) may adjust

and set off one against the other all such claims on the part of the complainant and

the respondent arising out of or incidental to the relationship between them as the

court may find to be subsisting, whether the claims are liquidated or unliquidated or

for wages, damages or otherwise, and may direct the payment of such sum as it

finds due by one party to the other.

Compensation and Provision of Food (Sec.84): 1) Where the court- (a) Imposes

any fine; or (b) Directs security by way of deposit to be given; or (c) Enforces

payment of any sum secured by a recognizance, it may direct that the fine, deposit

or sum when recovered (or such part thereof as it thinks fit) shall be applied to

compensate any employer or worker for wrong or damage sustained by him by

reason of the act or thing in respect of which the fine was imposed or by reason of

the non-performance of the relevant contract. (2) Where it appears to the court that

the complainant (being a worker) has not the means and is otherwise unable to

obtain food for himself pending the determination of the complaint, it may, subject to

subsection (3) of this section, cause the complainant to be supplied with necessary

Food at the expense of the Federal Government. (3) Where food is supplied to the

complainant under subsection (2) of this section, the cost of the food shall be a debt

due to the Federal Government from the complainant and may be deducted by the

court from any moneys received by the court for or on behalf of the complainant, or

shall otherwise be paid by the complainant.

2. The New National Minimum Wages Act, 2011 Nigeria

As from the commencement of this 2011 National Minimum Wage Act, every

employer is required to pay a wage that is not less than $116.19 per month to every

employee engaged by an employer. The amount of $116.19 (Eighteen Thousand

Naira) must be clear of all deductions except for those authorized by law; for

example, pension contributions.

6.5 Pay & Working Structure of Royal Enterprise

Pay: $116.19 per month to every employee as a minimum wages shall be payable

as per 2011 amendment in minimum wages act of Nigeria. Some allowances are

also payable, If, applicable by law.

Trends in Allowances

Vehicle Loan/ Car Refurbishing Loan. Among other things, the loan is repayable over

4 year‘s period with a 2% charge as administrative cost.

Housing Loan. A loan that is equivalent to at least 8 times the staff annual salary.

Leave of 26 working days per annual.

Sabbatical Leave.

Annual Leave.

Sick Leave.

Working Day & Hours: 6 working days in a week, Monday to Saturday in 8hours shift

and Sunday is holiday.

Other statutory requirements are complying accordingly which are describe in labour

act of Nigeria.

ORGANIZATION

STRUCTURE

Organization Structure

Introduction:

As this venture is a small venture, it is advisable to choose functional structure. After

taking into consideration the functional is chosen. Here the top authority is with CEO

& he enjoyed centralized authority & power on the workers & employees. The

marketing manager will be responsible for managing the marketing executives &

getting maximum sales by different marketing strategies.

The plant manager will be responsible for the continuous & quality production from

CEO

MARKETING MANAGER

MARKETING EXECUTIVES

PLANT MANAGER

ENGINEER

LABOURS

HR MANAGER

engineer & ultimately labours. The HR manager will be responsible for managing the

HR & administration related issues of labours & other employees of the organization.

So, this structure shows the authority as well as responsibilities of different level in

the hierarchy.

ASSESSMENT

OF

RISK

Risk identification and mitigation strategies

The risk associated with paint production can be identified as:

• Machine cut

• Electric shock

• Fire outbreak

• Fall due to slippery ground

• Inhalation of harmful chemicals

• Burglary and theft

• Machine breakdown/damage

Mitigation-strategies:-

Insurance-cover:

The enterprise will take insurance cover with an insurance company in the areas-of-

burglary-and-theft,-and-fire-outbreak.

Material-handling:

Workers shall be properly trained on the best practices of material handling since

paint production is the type of production process that requires a lot of chemicals.

The knowledge of material handling will remain top concern in the production-

process-of-the-industry.

Work-safety:

Work safety in every factory is always top priority. The industry will adopt the simple

saying "work safe today to work tomorrow." Safety gadgets shall be provided to

workers in order to mitigate the risk of accidents in the factory.

Machine-maintenance:

Routine maintenance shall always be carried out on the process equipment from

time to time to ensure at least 90% machine efficiency. This is necessary to avoid

machine breakdown during production which can lead to wasteful batch thereby

accruing loss or leading to high production cost. Proper maintenance and periodic

checks on the process equipment will increase salvage value, thereby yield the

expected returns from-the-investment.

Health:

Workers shall be treated in case of any sickness or accident resulting from the

company's work. Health allowance shall be provided for the workers for increase-

productivity.

FINANCIAL

PLAN

9.1 Financial Projections

A. Fixed Capital [Per Year]

(i) Building area - 200 Sqt. Feet

(ii) Machinery & Equipment =8,951.27 $

Description Qty Price($) Sales

Tax

Int.

Charges Total($)

Name & address of

the suppliers

High speed

Stunner 577 1 2,213.16 5% 12% 2,589.37

Mamta Engineering

83, Tirupati Estate,

Nr. Everest-Cinema,

Saraspur,

Ahmedabad.

Call:(079) 22741710

www.mamtagroup.in

Generator

(15kwa diesel

generator)

1 5,630.00 3% 10% 6,361.9

Ganchio

Engineering LTD

Plot-no:3A-to-C

Chohachi road,

Lagos,

Nigeria

(iii) Cost of Office Equipments=869.04 USD

Tools Qty

Cost

Total ($)

Table 1 23.05 23.05

Chair 4 4.61 18.44

Weight Machine 1 138.69 138.69

Computer + Printer 1 341.20+165.99 507.19

Water Cooler 1 181.67 181.67

Total 869.04

Total fixed cost (ii) + (iii) = 9820.31

B. Working capital [Per year]

(i) Salaries structure:

No Description Employees Salary($) Total($)

1 Technical (Engineer) 1 184.43 184.43

2 Office 2 92.22 184.43

3 Sales (Marketing Persons) 5 184.43 922.15

4 Others (Labour + Office Boy) 6+1 663.96+73.77 737.73

Salaries per month 2,028.74

+

Perquisites (10 to 20% of

Salaries) *

53.47

Total employees & salary 15 2,082.21

Total salary per year 24,986.52

*Per year cost

Perquisites 10% of Salaries

Technical (Engineer) = 18.44

Office = 9.22

Sales (Marketing Person) = 18.44

Others (Office Boy) = 7.37

Total = 53.47

(ii) Raw materials [Per year].

Particulars Kgs Total ($)

per shift

Total ($)

Water 14kg 00.25 624.00

Aquaphobe (Chemical) 0.1 kg 00.34 848.64

Acrylic Binder 50% 6.00k 21.03 5,2490.88

Liq. Ammonia 0.10kg 00.03 74.88

Chemical powder 158(thinker) 0.25kg 02.31 5,765.76

SPCP (Anti fungus Chemical) 0.10kg 00.31 773.76

Dolomite powder 17.50kg 01.13 2,820.48

Calcite powder 2.50kg 00.36 923.52

1 hours process 40.55KG 25.76 64321.92

Calculation of export & import duty on Marble chips & Powder (USD)

Material

required in

year

Per

process

kgs used

Per kg-

Price

USD

Year raw

material *

per kg

price

Per year-

Export

Duty-

35%

Import

Duty-

20%

VAT-

5%

Total ($)

Talc

powder-

6240 kgs

2.50 kgs

0.15 936.00 327.60 187.20 46.80 1,497.60

Chips

Powder-

53664 kgs

21.50 kgs

0.15 8,049.60 2,817.36 1,609.92 402.48 12,879.36

Chips

0.4mm to

1mm-

24960kgs

10.00 kgs

0.15 3,182.40 11,13.84 663.48 159.12 5,091.84

Chips 1mm

to 3mm-

4992 kgs

2.00 kgs

0.16 773.76 270.82 154.75 38.69 1,238.04

TOTAL-

89856 kgs

36 kgs 12,941.76 20,706.82

Total shipment charge for a year

Particular Kg TOTAL ($)

Raw Materials 4,04,352 / 54.22 7,457.62

Machinery 675 / 54.22 12.45

Total 7,470.07

(iii) Other items of expenditure [Per year]

Details Total ($)

Diesel 1,198.74

Advertisement & Publicity 553.30

Transport 2,589.45

Stationery 96.83

Postage & Telephone etc. 331.98

Repair & Maintenance 22.13

Packaging Charge 16,572.00

Total 21,364.43

B. Total Investments

I) Fixed Capital 9,820.31

II) Working Capital 1,60,293.00

Total 1,70,113.31

C. Deprecation on fixed assets [Per year]

i) Depreciation on building @5% = 133.52

ii) Depreciation on machinery & equipments @10%= 895.13

iii) Depreciation on office equipments @20% = 173.81

Total deprecation on fixed assets = 1,202.46 USD

Total Cost

Fixed Cost Total Amt ($) Variable Cost Total Amt ($)

Machinery 8,951.27 Packaging Charge 16,572.00

Office Equipment 869.04 Purchase 85,013.76

Rent 2,67048 Shipment 7,470.07

Diesel 1,198.74

Advertisement 553.30

Transportation 2,589.45

Stationary 96.83

Postage & Telephone 331.98

Repair& maintenance 22.13

Salary 24,986.52

Depreciation 1,202.46

Duty 7,765.06

Total 12,490.79 Total 1,47,802.30

Total Cost = Fixed Cost + Variable Cost

12,490.79 + 1,47,802.30

= 1,60,293.09

Total Cost per Unit = (1,60,293.09/7488 units) 21.41

Profit Margin (30%) = 6.42

Total Sales Price = 28

9.2 Trading & Profit & Loss Account

Trading & profit and loss account for royal enterprise at the end of 31st

December, 2013

Dr. Cr

Particulars USD $ Particulars USD $

Purchase 85,013.76 Sales 1,68,000.00

Duties 8,765.06 Closing Stock 41,664.00

Shipment Charge 7,470.07

Gross Profit 1,09,415.11

2,09,664.00 2,09,664.00

Office Exp.

Gross Profit 1,09,415.11

Diesel 1,198.74

Salaries 24,986.52

Rent 2,670.48

Postage Exp. 331.98

Stationery 96.83

Repaired-&-

Maintenance 22.13

Travelling exp. 2,589.45

Advt. exp. 553.30

Packaging exp. 16,572.00

Other Expenses

Deprecation-on

Assets 1,202.46

Interest on loan 5,000.00

Net Profit 54,191.22

1,09,415.11 1,09,415.11

9.3 Balance sheet

Balance sheet of royal enterprise as on 31st December, 2013

Liabilities USD $ Assets USD $

Capital 1,12,000.00 Machinery 8,951.27

+ Net profit 54,191.22 1,66,191.22 -10% Dep. 895.13 8,056.14

Furniture & Fixture 869.04

Bank Loan 50,000.00 -20%dep. 173.81 695.23

+ Int. on loan5,000.00 55,000.00 Investment 1,70,113.31

Closing stock 4,1664.00

Suspense A/c 6,62.54

2,21,191.22 2,21,191.22

9.4 Financial Assessment

Break Even Analysis: Break even analysis useful tool in accounting for checking the

viability of the venture.

Here, the break even analysis is done for getting breaking volume as well time

period. This analysis show that venture recover the investment in 3 months.

(a.)Net Profit Ratio = Profit

Sales

= 54,191.22

168,000

= 0.32

(b.) Rate of Return = Profit

Total Investment

= 54191.22

170,113.31

= 0.32

(c.) Break Even Analysis (Volume)

= Total Fixed Cost

Selling Price – Variable cost per unit

= 12490.79

28 – 19.74

= 1512

(d.) Break Even Analysis (Period)

= BEA (Volume)

Sales unit per month

= 1512

500

= 3.024 month

= 3 (appx.)

Break Even Table

Number of Units Total Fixed

Costs Total Variable

Costs Total Sales Revenues

0 $12,491 $0 $0

151 $12,491 $2,985 $4,234

302 $12,491 $5,969 $8,467

454 $12,491 $8,954 $12,701

605 $12,491 $11,939 $16,934

756 $12,491 $14,923 $21,168

907 $12,491 $17,908 $25,402

1058 $12,491 $20,893 $29,635

1210 $12,491 $23,878 $33,869

1361 $12,491 $26,862 $38,102

1512 $12,491 $29,847 $42,336

1663 $12,491 $32,832 $46,570

1814 $12,491 $35,816 $50,803

1966 $12,491 $38,801 $55,037

2117 $12,491 $41,786 $59,270

2268 $12,491 $44,770 $63,504

2419 $12,491 $47,755 $67,738

2570 $12,491 $50,740 $71,971

2722 $12,491 $53,724 $76,205

2873 $12,491 $56,709 $80,438

3024 $12,491 $59,694 $84,672

$0

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

$70,000

$80,000

$90,000

0 302 605 907 1210 1512 1814 2117 2419 2722 3024

Break Even Chart

Total Fixed Costs Total Variable Costs Total Sales Revenues

Units Required for Break-Even 1,512

Dollar Sales Required for Break-Even: $42,341.66

Variable Costs Per Unit: $19.74

Total Variable Costs: $29,846.88

Total Fixed Costs: $12,490.79

Months to Break-Even: 3.0

FINDINGS

Findings:

The Production per year is 7488 units.

The investment needed for this venture is 170,113.31

The fixed cost is 12,490.79

The per unit variable cost is 19.74

The venture will generate 54,191.22 USD net profit after the year.

The venture will generate the profit after selling 1512 units. i.e. the breakeven

point for the volume is 1512 units.

This venture can recover the investment amount in 3 months. i.e. the breakeven

point for the period is 3 months.

CONCLUSION

Conclusion:

The venture with investment of 170,113.31 USD can generate 54,191.98 USD

net profit after the year with shows that this venture has high possibility of the

success.

This venture will generate opportunities for the Nigerian workers as well Indian

companies who can provide the raw materials.

Same raw materials will be provided by Nigerian companies which can increase

the opportunities for expanding the small business.

Moreover, this venture will give the profit after 3 months as it sales 1512 units of

the product.

Overall this project gives the 32% rate of return which shows the viability of the

venture is good & the venture can survive & grow with the tremendous more

opportunities.

REFERENCES

Introduction of the Pharmaceutical Sector of Nigeria

Health care provision in Nigeria is a concurrent

responsibility of the three tiers of government in the

country. However, because Nigeria operates a

mixed economy, private providers of health care

have an important role to play in health care

delivery. The federal government's role is mostly

limited to coordinating the affairs of the university

teaching hospitals, while the state government

manages the various general hospitals and the

local governments focus on dispensaries.

Access to quality health care is either limited or non-existent and is a huge financial

burden to families and the rest of the population. The federal government has

however created a five billion naira vulnerable group fund to give the poorest of the

poor access to health care. Considering the size of Nigeria's population, its

pharmaceutical industry is relatively small. The main problems facing the sector are

the national health system's low level of funding and the sales of counterfeit drugs. A

large number of people die every year due to the use of unsafe medicines. The

National Agency for Food and Drug Administration and Control (NAFDAC) are

responsible for regulating and controlling the pharmaceutical industry. Increased

turnovers of manufacturers and the return of multinational drug companies show that

NAFDAC is having a positive effect on the sector.

The health needs of a nation reflect on certain essential medicines consumed by the

populace. With the determining factor in the pharmaceutical business dependent on

increasing disease pattern, over-the-counter (OTC) medicines such as analgesics,

antimalarial and multivitamins make up a large share of the Nigerian market.

Painkillers, also known as analgesics or antipyretics, have the largest market share

of therapeutic classes of medicines locally produced due to their affordability,

availability and widespread use for a wide range of symptoms.

This revelation, contained in a recent document review of the nation‘s

pharmaceutical sector tagged ―Global United Nations Industrial Development

Organization (UNIDO) Project‖, shows that analgesics constitute 25 percent of drugs

produced in the country. Others include antibiotics (15 percent), multivitamins +

hematinic (15 percent), antimalarial medicines (14 percent), antihypertensive (8

percent), cough and cold preparations (5 percent), antiretroviral medicines (6

percent), external/topical preparations (5 percent), antiTB medicines (4 percent), and

others (3 percent).

The report shows that the existing large market size, strong demand and the need

for management of infectious diseases, especially HIV/AIDS, malaria, TB, and

neglected childhood diseases constitute enormous opportunity for pharmaceutical

firms to produce therapeutic drugs to meet the health needs of Nigerians.

Currently, Nigeria is responsible for about 60 percent of medicines consumed in the

ECOWAS by volume, underlining the huge sub-regional market of an estimated 600

million people, according to Pharmaceutical Manufacturing Group, Manufacturers‘

Association of Nigeria (PMG-MAN). Trade incentives introduced by ECOWAS for

pharmaceuticals within West Africa are helping to promote movement of

pharmaceuticals within the sub-region, experts believe. Furthermore, the West

African Pharmaceutical Manufacturers Association (WAPMA) is working to enhance

confidence in the quality of medicines produced locally and promote business in the

sub-region.

Estimates of the size of the nation‘s pharmaceutical market vary. Business Monitor

International (BMI) in 2009 estimated Nigeria‘s pharmaceutical market at $600

million. Out of this figure, BMI attributes the largest share of $418 million to generic

medicines, $121 million to OTC products, and $61 million to patented products.

Equally, Frost & Sullivan, a growing partnership company, estimated a

pharmaceutical market value of $740 million in 2009. Out of this figure, $266.4

million was attributed to generic medicines, $177.6 million to branded products, and

$296 million to OTC products.

Drug manufacturers in the country are faced with several constraints, including low

capacity utilization, under-capitalization, a weak financial base, high production

costs, as well as difficulty in meeting WHO prequalification criteria.

However, with some pharmaceutical firms such as Evans, SWIPHA,CHI

Pharmaceuticals, May and Baker, and Fidson Healthcare plc. in the process of

upgrading and/or building new facilities in preparation to meet these prequalification

requirements, we believe this development will promote local production, given the

increased opportunity to participate in international tenders, such as WHO, United

Nations Children Fund (UNICEF), United Nations Population Fund (UNFPA),

UNITAID and the Global Fund to Fight AIDS, TB and Malaria. No doubt, WHO

prequalification will help the nation to become self-sufficient in the manufacture of

essential medicines, which will invariably have multiplier effects on the economy with

creation of thousands of jobs and more foreign exchange earnings for the country.

Pharmaceuticals are an integral component of health care systems worldwide, thus,

regulatory weaknesses in governance of the pharmaceutical system negatively

impact health outcomes especially in developing countries. Nigeria is one of a

number of countries whose pharmaceutical system has been impacted by corruption

and has struggled to curtail the production and trafficking of substandard drugs. In

2001, the National Agency for Food and Drug Administration and Control (NAFDAC)

underwent an organizational restructuring resulting in reforms to reduce counterfeit

drugs and better regulate pharmaceuticals. Despite these changes, there is still room

for improvement. There are corruption that exists in four essential areas of Nigeria's

pharmaceutical sector: registration, procurement, inspection (divided into inspection

of ports and of establishments), and distribution.

Basic health data on Nigeria:

Table 1 shows health data on Nigeria (Frost & Sullivan, 2009). The country‘s health

system was ranked 187th out of 191 member states by the World Health

Organization (WHO) in2000. The Government has acknowledged that the healthcare

system is poorly organized and resourced and that this has contributed to an overall

decline in health status indicators over the past decade. According to the Federal

Ministry of Health (FMoH), life expectancy at birth is currently estimated at 46 years

for males and 47 years for females, while the under-five mortality rate is estimated at

19 per cent (Table 1). In comparison, estimates for life expectancy in Ghana and

South Africa are: 55 and 59; 50 and 52 years for males and females, respectively.

Under-five mortalities in Ghana and South Africa were estimated at112 deaths per

1000 and 67 deaths per 1000 respectively (WHO: Mortality Country Factsheets

2006).

Table 1: Nigeria - Basic Health Indicators

Source: Frost & Sullivan, 2009

http://www.globalizationandhealth.com/content/5/1/14

http://www.businessdayonline.com/NG/index.php/analysis/editorial/50589-prospect-

for-nigerias-pharmaceutical-

industryhttp://www.tradeinvestnigeria.com/pls/cms/TI_SECOUT.secout_dev?p_sid=2

1&p_site_id=126

Priority Diseases:

Infectious diseases continue to be the leading causes of morbidity and mortality in

Nigeria. The revised National Health Policy (2005) identified target areas for

government intervention to include HIV/AIDS, malaria, and diarrhea, immunization

Description Measurement

Total fertility rate (2003) 5.7 children

Life expectancy at birth for males 46 years

Life expectancy at birth for females 47 years

Infant mortality (per 1000 live births), 2006 115

Under-five mortality (%) 19.4

Full vaccination coverage (children aged between 12 months

and 23 months), 2003

13.0%

HIV prevalence (Adults aged more than 15 years) 3.5%

Number of medical personnel, 2006 403,457

Doctors (per 100,000 population), 2006 30

Nurses (per 100,000 population), 2006 100

coverage, onchocerciasis(river blindness), tuberculosis and reproductive health.

HIV/AIDS, malaria and tuberculosis are prevalent diseases in Nigeria and treatment

is unaffordable for the majority of the population.

Table 2: Contribution to Morbidity

No. Disease conditions Contribution

1 HIV/AIDS 16.0%

2 Respiratory diseases 14.0%

3 Malaria 11.0%

4 Cardiovascular diseases 10.0%

5 Childhood diseases 9.0%

6 Diarrhoeal diseases 7.0%

7 Injuries (Road accidents, drowning, violence) 7.0%

8 Perinatal conditions 4.0%

9 Others (cancer, urinary diseases, TB, etc.) 22.0%

Source: Federal Ministry of Health, Abuja, 2010

The life expectancy at birth

is 48 and 49 years for men

and women respectively.

The infant mortality rate (i.e.

children under 1 year) is 96

per 1,000 live births. For

children under the age of 5,

the mortality rate is 186 per

1,000 live births. The

maternal mortality rate is

800 per 100,000 live births.

[source: top 10 diseases causing mortality in Nigeria is the WHO pilot CountryProfile

Surveycarried out in 2009].

No. Decease

1 Lower Respiratory tract infection

2 Malaria

3 HIV/AIDS

4 Tuberculosis

5 Diarrheas

6 Cardiovascular diseases

7 Coronary Heart Diseases

8 COPD

9 Malnutrition

10 Cancer

Fact about major decease:

Malaria Malaria is responsible for 60 per cent of all outpatient attendance, 30 per cent of all

hospitaladmissions and 300,000 deaths annually (FMoH, 2010). Artemisinin

Combination Therapy (ACT) is the first line treatment in accordance with the national

malaria treatment guidelines. The cumulative prevalence rate for malaria infection in

most parts of the country is 100 per cent in any 10 month period. It is estimated that

at least 10 per cent of all childhood deaths are due directly to malaria and up to 25

per cent indirectly. As of 2003, thevolume of economic output lost because of

incapacity through malaria was estimated at 4per cent of GDP per annum (Amos

Petu, 2004). Undoubtedly, malaria is one of the principal causes of morbidity and

mortality in Nigeria and imposes an enormous socio-economic burden on the

country.

Tuberculosis (TB)

TB is a major public health problem in Nigeria with the country ranking fourth among

the22 high TB burden countries which collectively account for about 80 per cent of

the global burden of TB. According to the FMoH, the number of TB cases notified in

the country increased from 31,264 in 2002 to 90,307 in 2008. There are some

374,000 estimated new cases annually. In view of the magnitude of the burden of TB

in Nigeria, the Federal Ministry of Health declared TB to be a national emergency in

2006. The public health burden posed by TB is becoming increasingly onerous as

the country‘s HIV/AIDS epidemic unfolds. WHO estimates that more than a quarter

of new TB patients are HIV positive. Collaborative-HIV/AIDS services are being

scaled up and the number of TB patients tested for HIV increased from about 7,500

in 2006 to 27,850 in 2007 (FMoH, 2010).

HIV/AIDS According to a UNAIDS Report published in 2009, the HIV prevalence in Nigeria has

beensteadily contracting from 5.8 per cent in 2001 to 3.1 per cent in 2007. This is a

much lower figure than in other African countries, such as South Africa and Zambia,

but the size of the population means that by the end of 2009 there were 3.3 million

Nigerians living with HIV(AVERT). Nigeria is one of 15 focus countries, which

collectively represent 50 per cent of HIV infections worldwide. Although the estimate

of those infected who need ART differs from the UNAIDS estimate, the table is

important as is emphasizes the magnitude of the gap between those who need ART

and those receiving ART. It also indicates the increasing trend in the number of HIV

positive births, underlining the additional challenge of preventing mother-to-child HIV

transmission. It is estimated that only 5 per cent of the population can afford ARVs

withoutany additional financial assistance, while 15 per cent can afford them with

some support and 80 per cent cannot afford them at all.

Figure 1: Top twenty product sales in Nigeria

Professional associations:

1The Pharmaceutical Manufacturers Group of the Manufacturers Association

of Nigeria (PMG-MAN)

PMG-MAN is the umbrella organization for drug manufacturers in Nigeria and

has over100 local pharmaceutical companies as members although not all

indigenous drug manufacturersbelong to the Group. In order to qualify as a

member, a company must have andutilize manufacturing facilities for the

production of drugs and medicines from local andimported raw materials. It

must be a member of the Manufacturers Association of Nigeria(MAN) and be

duly registered for drug manufacture by the PCN and NAFDAC. The

companymust be seen to uphold the principles of Good Manufacturing

Practice (GMP).

The objectives of PMG-MAN include:

Promoting the manufacture of high quality finished medical products and raw

materials in accordance with Good Manufacturing Practice (GMP).

Improving the standards of pharmaceutical manufacturing in Nigeria.

Creating a forum for interaction and understanding between PMG-MAN and

organizations within the same field.

Promoting and influencing drug policy with regard to industrial, labour, social,

legal training and technical matters, etc.

Developing and promoting the contribution of drug manufacture to the national

economy through representations to all relevant government bodies.

The Group’s current activities include:

Setting up a pharmaceutical information data base on drug manufacturing in

Nigeria,including regularly updated profiles of individual companies;

professionaladvocacy - PMG-MAN contributes to government policy

formulation and implementationand supports public sector activities by, for

example, serving on variousGovernment committees where policies,

regulations and quality of medicines, aswell as access to medicines, are

discussed.

Organizing public awareness campaigns.

2West African Pharmaceutical Manufacturers Association (WAPMA)

The West African Pharmaceutical Manufacturers Association (WAPMA) was

launched in Ghana in October 2005. Its objective is to promote

pharmaceutical business, research collaboration and to serve as a credible

body for interaction with ECOWAS and international development partners. In

particular,

it aims to:

Promote the manufacture, marketing and distribution of high quality

pharmaceuticalsin accordance with GMP within the West African sub region.

Provide an information network and a system of cooperative assistance with

pharmaceuticalmanufacturing and marketing companies and associations at

the national,regional and international levels.

Represent the common interests of its members at the regional and

continental levels,as well as to promote measures aimed at ensuring access

to affordable medicinesfor patients in West Africa. This would be achieved by

contributing to and influencingdrug policies and regulations and encouraging

harmonization within the sub region.

Inform its members of trends, developments and implications of any scientific,

legaland technical issues impacting the pharmaceutical industry. A robust

database ofrelevant publications and such information within the sub region

and industry willbe maintained.

Promote the development of raw materials, excipients and other inputs into

pharmaceuticals,especially from herbal and mineral sources within the sub

region.

Promote relations with other regions of Africa and the rest of the world on

pharmaceuticalmatters

Provide scientific, regulatory and legal expertise at the request of national,

regionaland international bodies.

Promote the development of pharmaceutical technology, research and

manpowerwithin the sub region and facilitate appropriate technology transfer.

Advise and facilitate tariffs, taxes and other fiscal policies to promote free

tradewithin the sub region

Cooperate with the Economic Community of West African States ECOWAS,

theAfrican Union and other multilateral bodies in health and trade matters.

2 Role of Pharmaceutical Sector in the economy

The Nigerian Association of Industrial Pharmacists (NAIP) has lamented the under-

utilization of the pharmaceutical industry in the country, loathing the paltry 20 per

cent it currently contributes to the growth of the economy.The first Vice-Chairman of

the association, Mr. Charles Akinsete, explained that the industry was yet to

contribute a significant quota to the nation's Gross Domestic Product (GDP). He

stated this while addressing a press briefing in Lagos.According to him, the industry

was currently contributing only about 20 per cent to the country's GDP, saying that if

developed, it has the ability to transform the economy. "Countries like China, India

and America have not taken this sector for granted because of its huge potential and

its contribution to their GDP," he said.

He said as a way to develop the industry, the association will boost the sector

through its 14th annual national conference scheduled to hold from September 28

and 29, 2011 tagged 'improving the pharmaceutical sector as a catalyst for national

development'.In his words, "We are also going to hear directly from the Indians, who

are coming to share their experience with us. This is an attempt to learn from the

Asian tigers such as India and China whose Pharma Industry today is contributing

substantially to the GDP of their countries."

He stated that the objectives of this year's conference are to increase Nigeria's

capacity to manufacture essential drugs, vaccines and consumables from 40 per

cent to 80 per cent of national need by the immediate implementation of the policy of

local sourcing of drugs for our health institutions, increase contribution to national

GDP by about 10-15 per cent by 2015.The rest include: to promote the raw material

industry as a catalyst for the growth of the pharmaceutical industry and expand the

secondary and tertiary healthcare coverage through the strengthening of the

National Health Insurance Scheme (NHIS).

He also stressed that other objectives include, improvement of health data base and

promotion of research, strengthening secondary and tertiary health care facilities to

enable them support primary health care and enhancing, strengthening the

availability and management of health resources (financial, human and

infrastructural). "We are also looking at increasing the production of manpower that

meet the germane needs of the industry and also calling the attention of government

on the need for capital injection as a bail out for the industry," he added.

"There is no gainsaying the fact that the pharmaceutical industry is one of the most

valuable economic resources, of the global economy. Countries with large

pharmaceutical industry have a lot at stake. National governments need to be aware

of how valuable the pharmaceutical industry is to them as they consider whether or

not to introduce changes to regulations," he said.

"That explains the need to always heed the call to be more cautious in looking at

issues affecting this industry. The considerations of policy affecting the industry

should focus not on how much money might be saved, but how much might be lost if

the right environment is not provided," he stressed.

He recommended that national governments should give higher priority to healthcare

improvement proposals, which encourage higher investment and structural reforms

in both funding and delivery systems to local pharmaceutical manufacturing."This call

underlines my concern over the role of the pharmaceutical industry in contributing to

health and to patient expectations. Healthcare costs can be contained by boosting

the use of generic medicines, the prices of which are, typically 20 per cent to 80 per

cent below that of branded pharmaceuticals," he stated.

http://allafrica.com/stories/201109280907.html

3 Structure, Functions and Business Activities of

pharmaceutical sector

structure

According to the Pharmacists Council of Nigeria (PCN), there were 128 registered

drug manufacturers, 1,534 retail pharmacies, 724 drug distributors and 292 drug

importers in Nigeria in 2010. Nigeria has a total of 14,607 public and 9,034 private

healthcare facilities (National Bureau of Statistics, 2006a). However, it has been

estimated that there are over10,000 unregistered patent and proprietary medicine

stores, which are thought to sell over the counter (OTC) products only. Most such

stores are located in villages and poor communities throughout the country, in areas

where fully fledged pharmacies do not exist.

Function

There are four essential functions of Nigeria's pharmaceutical sector: registration,

procurement, inspection, and distribution. Registration is the first of these decision

points in any pharmaceutical system and is intended to ultimately guarantee a drug's

efficacy in treating a specific disease and its safety profile. This process includes

labeling, marketing, usage, warning and prescription requirements for the drug. As

mentioned earlier, counterfeit drugs in Nigeria include those that were not registered

with NAFDAC, those without active ingredients, expired drugs that were relabeled

and resold, and drugs issued with incomplete manufacturer information. Baseline

studies conducted in 2001 showed that 68% of the drugs available in Nigeria were

not registered with the Nigeria's National Agency for Food and Drug Administration

and Control (NAFDAC) and later reports showed that as at 2004, counterfeit drugs

still accounted for 40-50% of available drugs in Nigeria.

Procurement exists at the interface between the public system and drug suppliers.

The purpose of procurement is to obtain the appropriate amount of drugs in the most

cost-effective manner. Procurement involves managing inventory, aggregate

purchasing, public bidding, analysis of offers, proper allocation of resources,

payments, receipts of drugs purchased, and quality control checks .

Inspection of ports of entry and establishments such as local drug manufacturing

sites is another crucial function of the Nigerian pharmaceutical sector. The majority

of drugs in the country are imported from other countries in Asia such as India and

China. Currently, there are 92 pharmaceutical companies producing only

approximately 30% of Nigeria's internal drug supplies. Between 2001 and 2005, 30

Indian and Chinese pharmaceutical companies and 1 Pakistani company who were

confirmed to be manufacturing counterfeit drugs were banned from exporting drugs

to Nigeria. Inspection of establishments occurs at the local and international level,

where NAFDAC participates in ensuring Good Manufacturing Practices (GMP) of all

establishments involved in the manufacture, sale, storage and distribution of

drugs.Distribution of drugs in the pharmaceutical sector involves allocating,

transporting, and storing drugs appropriately at all times. Some medications have

specific storage requirements such as refrigeration and secure facilities to minimize

the risk of theft and other unethical practices. For this to occur, it is conformation

moves through each step of the system to control inventory and deliveries.Table 3 :

function of governnig body .

Manufacturing activity

There are 146 licensed pharmaceutical manufacturers in Nigeria.

Manufacturing capabilities are presented in below.

TABLE 4: MANUFACTURING CAPABILTY

http://www.globalizationandhealth.com/content/5/1/14

http://apps.who.int/medicinedocs/fr/d/Jwhozip27e/6.2.html

4 Pharmaceutical Markets in Nigeria

According to the 2006 National Census, the population of Nigeria was 140 million

and thusconstitutes potentially the largest domestic market in Africa. A large

proportion of the populations suffer from both infectious and non-infectious diseases

but their purchasing power is weak given the level of poverty. Estimates of the size

of the pharmaceutical market in Nigeria vary significantly. In 2009, the

Pharmaceutical Manufacturing Group of the Manufacturers‘ Association of Nigeria

(PMGMAN) estimated the size of the total pharmaceuticals and healthcare products

market to be in excess of US$ 2 billion annually. The estimated market for

prescription ethical pharmaceuticals is US$ 500 million and that for over the counter

(OTC) pharmaceuticals about US$ 900 million. Furthermore, PMG-MAN estimates

the Nigerian market for biological products (including vaccines, insulin, interferon,

etc.) to be worth about US$ 100 million.

In addition, related healthcare and lifestyle products account for about US$ 500

million. Business intelligence services estimate the pharmaceutical market in Nigeria

at US$ 600million (Business Monitor International BMI 2010) for 2009. Out of this

figure, BMI attributes the largest share of US$ 418 million to generic medicines, US$

121 million to over the counter (OTC) products and US$ 61 million to patented

products. Frost & Sullivan estimated a pharmaceutical market value of US$ 740

million in 2009. Out of this figure, US$266.4 million were attributed to generic

medicines, US$ 177.6 million to branded products and US$ 296 million to OTC

products (Frost & Sullivan 2010).

Nigeria also provides 60 per cent of the health products consumed in the Economic

Community of West African States (ECOWAS) by volume (PMG-MAN, 2010) and,

with an estimated population of about 600 million; the ECOWAS subregion

represents a huge potential market.

Prices of Medicines:

Drug prices in Nigeria are set mostly by market forces, with government tariffs, taxes

and distribution mark-ups accounting for a significant proportion of the final price.

Prices vary between outlets, facilities and types of products, with generic drugs

priced much higher than their equivalents in neighboring countries.

A national survey on medicine prices was undertaken in 2006 by the Federal Ministry

of Health in collaboration with the World Health Organization (WHO), the UK‘s

Department for International Development (DFID), the European Union and Health

Action International.

The 2006 survey concluded that 90 per cent of Nigerians who live below the income

level of US$ 2 per day, as well as Government workers who earn a minimum wage

of US$ 1.4per day, cannot afford medicines. This problem has been addressed in

the revised National Drug Policy, which sets out to present acceptable determinants

of medicine prices in all sectors, thereby making medicines more affordable.

Furthermore, the establishment of the Bureau for Public Procurement will facilitate

bulk purchase of medicines and other products, consequently reducing the cost of

medicines in the market. However, a definite policy on medicine prices in Nigeria is

still required to effectively address all issues related to this issue.

Patients pay between 2-4 times the international reference prices for

medicines at various health facilities in both the private and public sectors.

Prices in the public sector were almost identical to those in the private

pharmacies.

Private health clinics charge about 184 per cent more than the public health

facilities and about193 per cent more than private retail pharmacies.

Innovator brands cost between 2-7 times the lowest priced generic

equivalents.

Drugs Are Expensive In Nigeria:

National President of the Association of Pharmaceutical Importers of Nigeria (APIN),

Chief Nnamdi Obi, has debunked the view that drugs and pharmaceutical products

imported into Nigeria from India and China are either fake or substandard.

He said that activities of a few people, who engage in the importation of fake drugs,

should not override the fact that majority of genuine and affordable drugs in Nigeria

come from either China or India.

Obi, who spoke to Saturday Sun in Lagos, disagreed with the view being canvassed

by some people that the Nigerian authorities should ban the importation of drugs

from India and China.

Drugs imported from India and China are believed to be substandard and fake. How

do you react to that?

As the President of the Association of Pharmaceutical Importers of Nigeria, I can

authoritatively tell you that our members do not import fake drugs. I can also tell you

that there is no basis for comparison between the qualities of drugs produced in

India and China and that of Nigeria. It would interest you to know that the condition

given to companies in China and India for their drugs to be imported into Nigeria is

that they must be certified by the World Health Organization (WHO).

Now, there are 16, 000 drug manufacturing companies in India and over 1, 000 of

them are WHO-certified. Apart from being WHO-certified, drug imported into Nigeria

from these countries are also subjected to extra scrutiny by independent analysts

appointed by NAFDAC and answerable only to NAFDAC.

We all know that Nigeria is yet to industrialize for very reasons bordering on lack of

electricity, lack of funding from banks and other financial institutions for

manufacturing purposes and policy somersaults on the part of the government,

among many other disincentives to investors. You and I know that these things are

taken for granted in these countries. When you run your factory on generator 24

hours, you will understand that your prices cannot be the same with those of another

manufacturers, who does not need to buy a generator at all, who has electricity 24

hours to power his plants. So, cheaper prices are a function of the manufacturing

environment and not about quality.

Are you saying that fake and substandard drugs do not find their way into Nigeria

from these countries?

We are not saying that there are no bad eggs in these countries, just as we have

them here in large numbers. But that is why we have NAFDAC to stop the criminals

and they are so far doing well, with other security agencies. But the government

should take action at the highest level. Sometime ago, the Chinese government

executed the head of China's Food and Drugs Authority for using his office to aid

illegal transactions in drugs. Only recently, the same Chinese government also

executed five persons convicted for their involvement in producing and marketing

baby milk contaminated with melamine. These are actions that indicate zero

tolerance to the activities of fake drugs producers and marketers. The Nigerian

government should stipulate harsh penalties for fake drugs offences to deter other

criminals.

The effects of imported drugs on local production:

I concede to the fact that local industries should be encouraged to produce certain

pharmaceutical products for local consumption. That is the ardent wish and desire of

any right-thinking person because we, as a nation, cannot progress if we have to

import anything that could be produced locally and it is not only pharmaceutical

products. However, we must appreciate the fact that pharmaceutical products are

sensitive items and any decision on the health sector generally must be done with

utmost caution. In this instance, the government, in 2005, banned some

pharmaceutical products. Among all the pharmaceutical products that were banned,

it is only Paracetamol that can be locally produced to a level that could be said to be

self-sufficient.

APIN wants a proper appraisal to be done. Also, we want the establishment of a

scientific basis for decision-making. It happened in 2005 and the government has no

basis for it. Some prices of those products that were banned have gone up to about

500 per cent. Lavampisol, a worm expellant, is a typical example. So, it is the man in

the street that actually bears the brunt. We are saying that government in its wisdom

should take cognizance of the fact that pharmaceutical products are not products

that should be banned because of somebody's employment, as the emphasis has

always been on employment.

The lives of 140 million Nigerians would be adversely affected by the policy decision.

So, whatever decision being considered should be done with utmost caution. There

are no factories in Nigeria that produce some products, like Ibuprofen, Tetracycline.

Without sounding immodest, many of us importers can afford to send our children to

any part of the world for treatment whenever the need arises. So, if the government

wants to ban all pharmaceutical products coming into Nigeria, so be it. But we have

a responsibility to ourselves and to our entire nation to cry out when certain

decisions are being taken that we consider inimical to the collective interest of all

Nigerians.

Availability of drugs is very essential in the health system. Whenever I engage my

colleagues in local production, patriotism is always the mantra. That is, those

importing are not patriotic. But sentiment should be far from it. As we speak, there is

no pharmaceutical industry in Nigeria that is of World Health Organization standard.

That is why no Nigerian pharmaceutical company can apply for loan from Global

Fund. Last year, Global Fund made available over N4 billion for the purchase of

drugs. None was bought from any Nigerian pharmaceutical company. Global Fund is

not looking at patriotism. There are international standards to follow.

The question is: do we have the requisite manpower to produce drugs in Nigeria? As

far as I know, yes. But do we have the infrastructure? No. In the absence of

infrastructure, what do we do? Let it be very clear. If a company comes up with the

idea that it is going to install machinery that can produce a million tablets in one day

in its installed capacity, we should let it know that installed capacity is not the same

thing as production capacity. There are many things to consider. As far as I know,

the only raw material that is found in Nigeria is water. The rest are imported. So, at

the end of the day, due to the assets used to support the industry, the products are

bound to be expensive.

The drug registration fee in Nigeria is one of the most expensive in the region to

further discourage an already export-shy national-companies'-lead pharma industry

of Pakistan by pushing the initial investment costs and already lengthy and

exhaustive registration costs in a country not known for good business practices."

http://www.thenigerianvoice.com/nvnews/28049/1/why-drugs-are-expensive-in-

nigeria.html

http://nelm.org/january2006_Nigeria%20Pharmaceutical%20Industry_the%20need%

20for%20local%20leadership.htm

5 Drug Situation in Nigeria

There is a large market for drugs in Nigeria. Out of over 130 existing pharmaceutical

manufacturers only 60 are in active manufacturing. This is despite the installed

capacity of the industry to produce between 50% and 75% of the nation‘s drug

needs. Capacity utilization is below 30% and about 70% of the drugs are thus

imported. (Okoli, 2000).

(a) Availability:

Drug availability in the public and private health care delivery system in Nigeria is in

a poor state. Various reasons have been adduced for this trend (Erhun, 1996).

These include:

(i) Inadequate funding of hospital Pharmacies and the ―out of stock

syndrome‖

(ii) Involvement of unqualified persons in the procurement and distribution of

drugs

(iii) Inadequate storage facilities, transportation and distribution.

The adoption of an essential drugs program through the promulgation of Decree 43

of 1989 on Essential Drugs was a step taken to ensure the availability of drugs.

Ordinarily, branded drug prescribing is still quite common in many public health

institutions, contrary to specifications of the Essential Drug Act (Govt. of Nigeria,

1990). This has partially eroded the expected gains of the essential drugs program.

In 1996 a health intervention program was put in place under the Petroleum

(Special) Trust Fund. A drug revolving fund (DRF) was established under the

scheme that ran parallel to the existing DRF in public health institutions. Under this

scheme, local manufacturers produced the drugs directly on a contract basis. To a

large extent this intervention increased drug availability in the public health

institutions. The scheme was however phased out in 1999 (Erhun, 2000)

(b) Distribution:

The drug distribution network in Nigeria is in a state of chaos because it consists of

open markets, patent medicine stores, community pharmacies, private and public

hospitals, wholesalers/importers and pharmaceutical manufacturers. It is a common

scene in Nigeria to see petty traders who sell kola nuts, cigarettes, and oranges,

among other items, in market kiosks, motor parks, and road sides hawking drugs

that range from over the counter items to antibiotics (popularly called ―capsules‖)

(Adelusi-Adeluyi, 2000). The medicines are usually left under the sun in such

conditions that could facilitate the deterioration of the active ingredients.

Patent medicine stores are owned by the holders of patent and proprietary medicine

vendors licenses. Ordinarily the patent medicines should be sold in their original

packs. Over the Counter (OTC) drugs are the only drugs authorized to be sold by the

vendors but they generally sell all types of drugs as determined by their financial

capability. Considering the knowledge base of these vendors, whose minimum

academic requirement to obtain a license is the first school-leaving certificate, they

are not in a good position to differentiate between fake and genuine product (Erhun

and Adeola, 1995).

Community pharmacies are statutorily registered with the Pharmacists Council of

Nigeria. A superintending Pharmacist, who is also registered and licensed, oversees

the pharmacy anytime it is opened for business. With such pharmacies there should

not be any serious problem of the sale of fake drugs. Unfortunately however, there

are many unregistered ―pharmacies‖ thriving. And in such premises drugs are

purchased from doubtful sources with its attendant danger to the health of the public

(Erhun and Adeola, 1995).

(c) Drug Related Laws In Nigeria:

There are various laws that regulate and control the manufacture, sale, and

distribution of drugs in Nigeria. They include:

(i) Poisons and Pharmacy Act, Cap 366 of 1990. This Act regulates the

compounding, sale, distribution, supply and dispensing of drugs and

provides different levels of control for different categories of drugs and

poisons.

(ii) Food and Drugs Act Cap 150 of 1990. This Act prohibits the sale of

certain foods, drugs cosmetics and devices as treatment for certain

diseases. The Act prohibits the importation, exportation, distribution and

sale of specified drugs. It also prohibits practices such as misleading

packaging, labeling, and advertising, as well as manufacturing food and

drugs in unsanitary conditions. It conveys the power to appoint inspecting

officers and food and drug analysts.

(iii) Counterfeit and Fake Drugs (miscellaneous provisions) Act, Cap 73 of

1990. This Act prohibits the production, importation, manufacture, sale and

distribution of any counterfeit, adulterated banned or fake drugs. It also

prohibits persons to sell any drug in an open market without permission

from the proper authority.

(iv) Pharmacists Council of Nigeria, Decree 91 of 1992. It repealed the

Pharmacists Act of 1964. This decree established the Pharmacists

Council of Nigeria which is charged with the following responsibilities: (a)

Determine the standard of knowledge and skill required of persons

seeking to becomeregistered members of the pharmacy profession, (b)

Establish and maintain a register of persons qualified to practice as

members of the Pharmacy profession, (c) Prepare and review the code of

conduct, and (d) Regulate and control the practice of the Pharmacy

profession. The Council has an investigating panel and disciplinary

committee to discipline erring pharmacists as appropriate.

(v) National Agency for Food and Drug administration and control Decree No. 15

of 1993. This is the decree establishing the National Agency for Food and

Drug Administration and control (NAFDAC). The Agency performs the

following functions: (a) Regulate and control the importation, exportation,

manufacture, advertisement, distribution, sale, and use of food, drugs,

cosmetics, medical devices, bottled water and chemicals, (b) Conduct

appropriate tests and ensure compliance with standard specifications

designated and approved by the council for the effective control of the

quality of food, drugs, etc., as well as their raw materials and production,

including processes in factories and other establishments. (c) Undertake

appropriate investigations into the production premises and raw materials

for food, drugs, etc. and establish relevant quality assurance systems,

including certification of the production sites and regulated products. (d)

Undertake inspection of food, drugs etc. (e) Compile standard

specifications and regulations and guidelines for the production,

importation, exportation, sale and distribution of food, drugs, etc. (f)

Undertake registration of food, drugs, etc. (g) Establish and maintain

relevant laboratory or other institutions in strategic areas of Nigeria as

may be necessary for the performance of its functions. The Federal task

force on counterfeit and fake drugs established under the provisions of the

counterfeit and fake drugs (miscellaneous provisions) Act operates within

NAFDAC.

(vi) Drugs and related products (registration) Decree No. 19 of 1993. This decree

makes provisions for the prohibition of the manufacture, importation,

exportation, advertisement, sale or distribution of drugs, drug products,

cosmetics or medical devices unless it has been registered in accordance

with the provisions of the decree. It also stipulates the procedure for

applying for registration of a drug product, conditions under which

information supplied by an applicant is disclosed, and provisions for the

suspension or cancellation of certificates of registration and clinical trials.

Penalties for contravention of provisions of this decree are also stipulated

therein.

6 Local Pharmaceutical Productions

The pharmaceutical industry in Nigeria is vibrant, with over 120

pharmaceuticalmanufacturers and a predominantly indigenous ownership. The

sector has a potentialMarket value of between around US$ 600 million (BMI) and

more than US$ 2 billion annually(PMG-MAN) and employs about 500,000 persons in

the manufacturing and distributionchain. The vast majority of jobs are however

attributed to the distribution chain. Some60 per cent of pharmaceutical production in

the Economic Community of West AfricanStates (ECOWAS) is domiciled in Nigeria.

The regulatory environment is improving due tothe enforcement activities of the

National Agency for Food and Drug Administration andControl (NAFDAC) although

drug distribution is still a challenge.

Capacity utilization of local manufacturing facilities is running at about 40 per cent

andthere is adequate capacity for production of certain categories of medicines to

meet nationaldemand and to export to ECOWAS countries. The Pharmaceutical

Manufacturers Groupof the Manufacturers Association of Nigeria, with the acronym

PMG-MAN, is the professionalorganization for drug manufacturers in Nigeria.

Currently, some local drug manufacturers are upgrading their operations with the aim

ofobtaining World Health Organization (WHO) prequalification status which would

enablethem to take part in international tenders. If successful, this will be another

contributingfactor to an increase in local production and has the potential to make

these medicines availablecloser to where they are needed.

The local pharmaceutical manufacturing industry is currently able to meet 25 per

cent oflocal demand. Nigerian manufacturers produce liquid preparations, tablets,

capsules, ointments,lotions, creams and ophthalmic preparations. The local

pharmaceutical industriesare able to meet domestic demand for some classes of

medicines in the proportions listedin Table 13. The remaining 75 per cent of the

market is increasingly dominated by importsfrom Asian companies.

Generally, the production flow scheme is in accordance with Good Manufacturing

Practice.Production processes are step-by-step, mixed manual and automated with

the degree ofautomation varying between around 30 per cent and 80 per cent.

Although nearly all of the15 companies interviewed in the course of this report

indicated that they planned to becomefully automated, none had yet achieved this

goal although some of them had reached the 80per cent stage.

The current installed capacity in the industry, as verified by various Government

Committeesand in this report is shown in Table 13 below and the average capacity

utilization is 40per cent. Although this represents a substantial volume of underthe

local pharmaceutical manufacturing industry is currently able to meet 25 per cent

oflocal demand. Nigerian manufacturers produce liquid preparations, tablets,

capsules, ointments, Lotions, creams and ophthalmic preparations. The local

pharmaceutical industriesare able to meet domestic demand for some classes of

medicines in the proportions listedin Table 13. The remaining 75 per cent of the

market is increasingly dominated by importsfrom Asian companies.

Generally, the production flow scheme is in accordance with Good Manufacturing

Practice.Production processes are step-by-step, mixed manual and automated with

the degree ofautomation varying between around 30 per cent and 80 per cent.

Although nearly all of the15 companies interviewed in the course of this report

indicated that they planned to becomefully automated, none had yet achieved this

goal although some of them had reached the 80per cent stage.

The current installed capacity in the industry, as verified by various Government

Committees and in this report is shown in Table 13 below and the average capacity

utilization is 40per cent. Although this represents a substantial volume of

underutilized capacity, it also means that ample spare capacity is available - without

extensive new capital investment - if manufacturers can become more competitive

with imported products. Utilized capacity, it also means that ample spare capacity is

available - without extensive new capital investment – ifmanufacturers can become

more competitive with imported products.

Painkillers - largest market share of drugs produced in Nigeria

Painkillers also known as analgesics or antipyretics have the largest market share of

therapeutic classes of medicines locally produced in the country due to their

affordability and availability as well as widespread use and misuse for a wide range

of symptoms.

This revelation, contained in a recent document review of the nation‘s

pharmaceutical sector tagged ―Global United Nations Industrial Development

Organization (UNIDO) Project‖, shows that analgesics constitutes 25 percent of

drugs produced in the country.

Others include antibiotics (15%), multivitamins+ hematinic (15%), antimalarial

medicines (14%), antihypertensive (8%), cough and cold preparations (5%),

antiretroviral medicines (6%) external/topical preparations (5%), antiTB medicines

(4%) and others (3%).

The report showed that the existing large market size, strong demand and the need

for management of infectious diseases especially HIV/AIDS, malaria, TB, and

neglected childhood diseases constitute enormous opportunity for pharmaceutical

firms to produce therapeutic drugs to meet the health needs of Nigerians.

In an interview with Business Day, OlatunjiKoolchap, National Secretary, Association

of Community Pharmacists of Nigeria (ACPN) said that the health needs of the

nation is always reflected on certain essentials medicines consumed by the

populace.

With most Nigerians exposed to stressful living and working conditions as well as

increasing poverty prevailing in the society, most people are dependant on

painkillers such as morphins, aspirin, paracetamoletc, to alleviate their health

conditions, a medication that is often abused by people, Koolchap explained.

―While some painkillers are still being imported into the country, a ban on importation

of some essential medicines and increased Value Added Tax (VAT) on these drugs

will promote local production of essential medicines. In this way, local manufacturing

firms would be encouraged to manufacture more drugs to meet the health needs of

the people,‖ Koolchap noted.

As most medicines produced locally are consumed domestically, Nigeria is

responsible for about 60 percent of medicines consumed in Economic Community of

West African States (ECOWAS) by volume, underlining the huge sub-regional

market of an estimated 600 million people, according to Pharmaceutical

Manufacturing Group, Manufacturers‘ Association of Nigeria (PMG-MAN).

Trade incentives introduced by ECOWAS for pharmaceuticals within West Africa are

helping to promote movement of pharmaceuticals within the sub-region, experts

believe. Furthermore, the West African Pharmaceutical Manufacturers Association

(WAPMA) is working to enhance confidence in the quality of medicines produced

locally and promote business in the sub-region.

While estimates of the size of the pharmaceutical market in Nigeria vary significantly,

Business Monitor International (BMI) in 2009 estimate the pharmaceutical market in

Nigeria at US$ 600 million. Out of this figure, BMI attributes the largest share of US$

418 million to generic medicines, US$ 121 million to over-the-counter (OTC)

products and US$ 61 million to patented products.

On the other hand, Frost & Sullivan estimated a pharmaceutical market value of US$

740 million in 2009. Out of this figure, US$ 266.4 million were attributed to generic

medicines, US$ 177.6 million to branded products and US$ 296 million to OTC

products.

As Evans Pharmaceuticals, SWIPHA, CHI Pharmaceuticals, May and Baker and

Fidson Healthcare Plc have commenced upgrading or building of new facilities in

preparation to meet World Health Organisation (WHO) prequalification requirements,

this development would promote local production, given the increased opportunity to

participate in international tenders, such as WHO, United Nations Children Fund

(UNICEF), United Nations Population Fund (UNFPA), UNITAID and the Global Fund

to Fight AIDS, TB and Malaria.

http://businessdayonline.com/NG/index.php/component/content/article/126-

health/50108-painkillers-largest-market-share-of-drugs-produced-in-nigeria

7pharmaceutical value chains

7.1 Supply of inputs:

All active pharmaceutical ingredients (APIs) used in Nigeria are imported, mainly

fromIndia and China. Companies need to make careful forward planning for the

import of APIs because of lengthy delays (three months or more) at the seaport due

to clearance, customs and NAFDAC formalities.

According to PMG-MAN, pharmaceutical grade starch is currently imported primarily

from China and there are local companies which produce industrial grade starch.

The National Institute for Pharmaceutical Research and Development (NIPRD) has

carried out research and development into pharmaceutical grade starch since it

would be very advantageous to local drug manufacturers if starch could be

processed locally to produce pharmaceutical grade starch, pre-gelatinized starch

used as pharmaceutical binder, and dextrose Monohydrate marketed as glucose

powder (nutraceuticals), which is a major ingredient in intravenous infusions.

In 2009, China and India introduced penalties, including life imprisonment (India) and

the death penalty (China) for companies which export substandard finished products

to Nigeria and other countries. At a recent international conference in Morocco on

pharmacovigilance, it was agreed to extend the law to cover APIs and WHO agreed

in principle to commence the mandatory processes for the approval of the inclusion

of API manufacturers in the WHO prequalification scheme.

In most cases, both primary and secondary packaging materials are obtained locally.

In addition, about 25 per cent of excipients are locally sourced. Most of the

machinery and virtually all the quality control analytical equipment are

imported,mainly from Asia and Europe respectively. Some of the drug manufacturers

fabricate a few spare parts but most are imported. Some companies, which are using

similar machines supplied by the same foreign companies in India and in Europe,

also join together to contract expatriate engineers and to organize workshops on

machine maintenance.

7.2 Installed capacity and current output:

The current installed capacity in the industry, as verified by various Government

Committees and in the course of this report, is shown in Table 13 below. The

average capacity utilization is 40 per cent.

The low capacity utilization in the pharmaceutical manufacturing sector is attributed

mainly to the current lack of competitiveness with imported products and to

unpredictable demand for the products. A major challenge faced by local producers

is the cost of importing all their active pharmaceutical ingredients and virtually all

their pharmaceutical excipients.

The burden is then multiplied by the fact that local manufacturers must pay Value

Added Tax (VAT) on the imported raw materials whereas there is no VAT on

imported finished medicines. Furthermore, some foreign pharmaceutical

manufacturers, such as those in India, produce both pharmaceutical raw materials

and the finished products. Such companies have an added advantage when they

export both the raw materials and medicines to Nigeria through pricing that will favor

their finished products.

7.3 Distribution of medicines:

Distribution of medicines in Nigeria is chaotic and involves too many different bodies,

organizationsand stakeholders. Some major manufacturer‘s contract private logistics

organizationsto distribute medicines and some international development partners

even use theservices of courier companies for delivery of medicines. In some cases,

medicines expirebefore they reach the end users.

In the private sector, manufacturers and importers have their own distribution

channelsand can sell to wholesalers, retailers and hospitals. The result of this is that

medicines andmedical supplies are sold in unregistered and unlicensed premises

and, in some cases, bynon-pharmacists.

Moreover, it is generally believed that some 17 per cent of essential generic

medicines as awhole are routinely faked and as much as 30 per cent of antimalarial

in the Nigerian market(PMG-MAN). One way of tackling this problem would be

through the introduction ofRadio Frequency Identification Technology for Logistics

and Tagging.

In the public sector, medicine supplies are currently stocked and distributed through

threedifferent warehouses, the Central Medical Stores, the Federal Medical Stores

and the StateMedical Stores. In 2010, the National Health Logistics Committee was

established to harmonizeall logistics related to medicines supplied by the various

development partners andGovernment. The Committee is expected to propose

merging the existing three layers ofwarehousing of health commodities into one, the

Central Medical Stores, with a branch inOshodi and another in Abuja.

In 2010, the National Health Logistics Committee was established to harmonize all

logisticsrelated to medicines supplied by the various development partners and

Government. TheCommittee is expected to propose merging the existing three

layers of warehousing of healthcommodities into one, the Central Medical Stores,

with a branch in Oshodi and another inAbuja.

In order to improve the distribution of medicines within the public sector, the relevant

stakeholdersagreed on a Mega Distribution model in 2009. Figure 6 below shows the

plannedmodel for medicines and medical supplies in Nigeria, based on information

from the NationalDrug Policy and discussions with the FMoH, the Pharmacists

Council of Nigeria(PCN), NAFDAC, PMG-MAN and the WHO Country Office in

Nigeria. The proposedMega Distribution Company will be privately owned and

managed as an independent corporateentity.

Figure 2: Mega Distribution Company Consensus Model

The Government will be responsible for ensuring an appropriate business

environment forthe company and will call on its services to distribute health products

which GoN has purchased.The proposed company will be responsible for the

collection of health productsfrom factory/export warehouses and distribution to

regional warehouse hubs located in theSouth West, South East and Northern parts

of the country. Wholesalers will then collect thehealth products from the regional

hubs for distribution to retailers who are responsible forselling them to the end users

in clinics, hospitals and institutions.

When, and if, the Mega Distribution Company is established, it will be able to collect

healthproducts from the Federal Medical Stores, Oshodi and distribute directly to

health facilitiesthroughout the country, including General Hospitals, Federal Medical

Centers, and SpecialismsHospitals, Teaching Hospitals, primary healthcare centers,

private clinics and pharmacies.The proposed drug distribution strategy restricts drug

distribution to pharmacists, promotesrational drug use and strengthening of the

inspectorate and monitoring units of theNational Agency for Food and Drug

Administration and Control (NAFDAC). The MegaDistribution Company Consensus

Model (Figure 6) was proposed by the Government andPMG-MAN and has been

agreed by the stakeholders. Technical support is required andlogistics issues need

to be addressed for this private-driven agency to commence operations. Moreover,

adequate quantification of needs for each category of medicine at all levels of m

healthcare service is crucial to the efficient procurement of essential medicines.

Volumes of some medicines manufactured locally in Nigeria:

Surveys conducted by the Federal Ministry of Health in 2008 on the output of

medicines locally manufactured in Nigeria are summarized below:

1. Out of the 49 local drug manufacturers reviewed, 15 were found to be

manufacturing ampicillin/Cloxacillin capsules producing a total of some 1.216

billion and three companies manufactured7.882 million grams of the powder.

2. Two companies manufactured 180 million amoxicillin capsules and five

manufactured 187.6 million grams of the powder.

3. Four companies produced 193.6 million ampicillin capsules and four manufactured

367.2 million grams of the powder for suspension.

4. Nine companies produced 2.4 billion ascorbic acid tablets and eight produced

902.8 million liters of Ascorbicacid syrup.

5. Two companies manufactured both chlorphenamine tablets and syrup.

6. Two companies manufactured a total of 4.961 million liters of glucose infusion 5

per cent, 10 percent, 5 per cent + 0.9 per cent sodium chloride, 4.3 per cent and

two companies manufactured1.33 million liters of sodium chloride.

TABLE 5 :Installed Capacity of Drug Manufacturers in Nigeria

The pharmaceutical industry is one of the leading industries in India, and is soon

becoming one of the most advanced countries of the world in terms of the growth of

the health sector and advancements in pharmaceutical equipment‘s and production

of bulk pharmaceutical drugs. Covering many aspects of the industry, the EXIM

policy is also prepared keeping in mind the interest of the pharmaceutical machines

and drugs manufacturers and the Govt. of India. The government is looking at Exim

policy options to further grow the country's thriving pharmaceutical industry and

check growing examples of takeovers by foreign players.

The leading local drug manufacturers:

The total revenue generated by the 15 leading Nigerian pharmaceutical

manufacturers fromlocal production of some essential medicines is shown below:

TABLE 6: The 15 leading Nigerian Pharmaceutical Manufacturers by Total

Revenue (2008)

Local drug manufacturers are not currently in a position to participate in

internationaltenders for medicines against the three pandemics that require WHO

prequalification. Thisis a major constraint on the local supply of medicines, especially

ARVs, antimalarial andanti-TB agents. In addition, these are the main medicines

attracting substantial fundingfrom international development partners. Some six local

drug manufacturers are currentlymodifying their production processes with the aim of

complying with the WHO prequalification requirements. If they are successful and

able to compete against imports, the volumeof local production of pharmaceuticals

and sales will increase substantially.

Market shares

The market shares of the various therapeutic classes of medicines locally

produced in Nigeria are indicated in below. The class of analgesics/ant

rheumatics/antipyretics has the largestshare due to their affordability and

availability in both urban and rural communities, as wellas widespread use and

misuse of these products for a wide range of symptoms.

TABLE 7 :Estimated Market Share of Local Manufacturers by Therapeutic

Class

Some drug manufacturers have diversified into other products, including bottled

water packaged foods, nutraceuticals, and cosmetics using new industrial

subsidiaries establishedfor such purposes.

8Human Resources in Pharmaceutical sector

8.1 Total Number of Prescribers:

30,885 medical practitioners were registered in 2000 while the total number of

registered dental practitioners for the same period was 2,221. Thus, the

totalnumbers of persons authorized to prescribe drugs, consisting of both

medicaland dental practitioners in the year 2000 was 33,106. The estimated

total for2002 was 36,000.

8.2 Total Number of Dispensers:

According to the Registered Council Data on Health Manpower the number

ofpharmacists in the year 2001 was 9,308 of which 6,412 were registered.

Thus,the patient- pharmacist ratio was 10,743 to 1 based on an estimated

populationof 100 million in the year 2001. Data obtained from 22 out of the 36

statesindicated that there are 864 pharmacy technicians and 224 pharmacy

assistantsworking in the public sector.

8.3 Total Number of Drug Outlets:

The total number of wholesalers in the country is 12,022; out of which about

half(6,753) are registered with the Pharmacists Council of Nigeria. No data

isavailable on outlets in both public and private sectors. However, the

totalnumber of private pharmacies is 4,825 out of which 2,808 are registered

withthe Pharmacists Council of Nigeria.

9 Transparency in Nigeria's public pharmaceutical sector

Pharmaceuticals are an integral component of health care systems worldwide, thus,

regulatory weaknesses in governance of the pharmaceutical system negatively

impact health outcomes especially in developing countries . Nigeria is one of a

number of countries whose pharmaceutical system has been impacted by corruption

and has struggled to curtail the production and trafficking of substandard drugs. In

2001, the National Agency for Food and Drug Administration and Control (NAFDAC)

underwent an organizational restructuring resulting in reforms to reduce counterfeit

drugs and better regulate pharmaceuticals. Despite these changes, there is still room

for improvement. This study assessed the perceived level of transparency and

potential vulnerability to corruption that exists in four essential areas of Nigeria's

pharmaceutical sector: registration, procurement, inspection (divided into inspection

of ports and of establishments), and distribution.

The World Health Organization assessment tool and used in semi-structured

interviews with key stakeholders in the public and private pharmaceutical system.On

the basis,the overall score for Nigeria's pharmaceutical system was 7.4 out of 10,

indicating a system that is marginally vulnerable to corruption. The weakest links

were the areas of drug registration and inspection of ports.A facts of the

pharmaceutical system in Nigeria remain fairly vulnerable to corruption and major

contributing factors are the inconsistency in documentation of procedures, lack of

public availability of such documentation, and inadequacies in monitoring and

evaluation.In many developing countries such as the Federal Republic of Nigeria,

these vulnerabilities are capitalized on and adherence to such high regulatory

standards is severely impaired by a lack of transparency, weak regulatory control,

and the preponderance of corruption in the public pharmaceutical sector, which

negatively impact health outcomes, weaken the nation's economy, and decrease

public trust in the government.

Brief note about four essential areas of Nigeria's pharmaceutical sector

regarding transparency

Registration

Drug registration is the responsibility of NAFDAC under the Registration and

Regulatory Affairs Director. Responsibilities of the directorate include the registration

of drugs, foods and bottled water; auditing, monitoring and reporting on clinical trials;

post-registration surveillance; and advertising control of regulated products. Drug

registration received the lowest score, an average rating of 5.8, indicating that this is

the area most vulnerable to corruption in Nigeria's pharmaceutical sector.

Strength

There is an up-to-date list of registered pharmaceutical products in the country which

provides the minimum level of information about the products. Clearly documented

procedures and standard forms exist and are publicly available for applications for

drug registration. There is written documentation with well-defined standard

operating procedures for assessors on how to process applications and there is a

formal appeals process for applicants who have their applications rejected.

Weakness

the registration process still does not address one of the root causes of

counterfeiting in Nigeria: the fact that non-professionals (i.e. non-pharmacists) are

still largely in control of retail pharmacy. It was reported that some pharmacies are

owned by rich businesspersons who wish to cut corners and maximize profits by

importing and selling substandard products. These individuals hire pharmacists as a

front solely to obtain licensure to open and operate pharmacies. Using their wealth

and influence, they often attempt to intimidate their way through normal regulatory

procedures. At times, some of these syndicates are discovered and the individuals

responsible are prosecuted, but the practice is apparently still prevalent.

Procurement

Procurement of pharmaceuticals is under the mandate of Nigeria's Ministry of Health.

The Ministry purchases a limited number of therapeutic classes of medications,

namely anti-retrovirals, artemisin therapy for malaria, narcotics and controlled

substances, vaccines, sulfadoxine, and anti-tuberculosis drugs. Procurement scored

8.9, indicating this area of the pharmaceutical sector has a low vulnerability to

corruption. This is commendable particularly given the economic importance of this

area and given that in many developing countries, drug procurement procedures are

inefficient, non-transparent, and often corrupt . This high score may be due to the

fact that the Ministry procures a few therapeutic classes of drugs which do not

account for a majority of total drug procurements.

Strength

The process for procurement is competitive, documented, and well-defined (a

concise manual on public procurement reform in Nigeria exists in print). Drugs are

purchased using tenders (both international and local), except vaccines which are

purchased through UNICEF or are donated. Procurement information is publicly

available.Tenders are advertised in at least two national newspapers and in the

Federal Tenders Journal. The bidding process and opening of applications for pre-

qualification are also publicly accessible. Contracts are awarded to bidders who are

pre-qualified and technically evaluated, but most importantly, who can execute the

contract at the lowest cost. Some bidders, out of desperation, may quote prices

unreasonably lower than fair market value. In such cases, contracts are awarded to

bidders with the second lowest financial costs. There is a formal appeals process for

applicants who have their bids rejected.

Weakness

As with drug registration, there is also a lack of written conflict of interest guidelines.

This is concerning because the potential for corruption exists if members of the

tender committee have vested interests in companies offering bids. Another

weakness is a lack of evidence to suggest public availability of audit results. As

discussed previously in registration, lacking conflict of interest guidelines and publicly

available reports decreases transparency in the system and increases the

vulnerability to corruption.

Inspection (divided into inspection of ports and of establishments)

1 Inspection of ports:

Nigerian ports of entry include airports, seaports and its national borders. The

inspection of these ports offers unique operational challenges and multiple

organizations undertake the activity. NAFDAC inspectors, present at all these

ports, are assisted by the National Drug Law Enforcement Agency (NDLEA), the

Nigerian Ports Authority (NPA), as well as other organizations. The

decentralization of inspection, resulting in varying regulations and standards

results in this area receiving a modest score of 6.4, the second lowest score of all

the areas.

Strength

Respondents indicated that the provision in the regulations for inspection at the

ports is comprehensive, well-defined, and available to the companies involved in

the importation of drugs. There are also well-defined written Standards of Practice

(SOPs) for NAFDAC inspectors on how to conduct inspections. Guidelines for

Good Manufacturing Practices (GMP) and Good Distribution Practices (GDP) are

well-defined and are discussed in detail under Inspection of Establishments. The

assistance from NDLEA and NPA inspectors at the ports further strengthens the

ability of port authorities to discover irregularities. Collaborating with NAFDAC by

providing both expertise and greater manpower also increases accountability for

inspection findings.

Weakness

A principal weakness was the absence of written conflict of interest guidelines

except for the incomprehensive "declaration of assets" form. Ports of entry are

highly susceptible to the influx of counterfeit drugs and any laxity in vigilance of

inspectors, which may be created by potential conflicts of interest, would seriously

jeopardize progress in the battle against counterfeit pharmaceuticals.

2 Inspections of Establishments

A country with high capital and sufficient infrastructure, Nigeria has a vibrant local

drug manufacturing capacity. The role of NAFDAC in enforcing good manufacturing

practices among local drug manufacturers is the inspection of establishments.

Although improving under the current NAFDAC administration, inspection of

establishment received a score of 7.0, indicating marginal vulnerability to corruption.

Strength

Written guidelines that classify and define the Good Manufacturing Practices (GMPs)

are available, outlining potential types of deficiencies and subsequent actions to be

taken by the Inspectorate. A company may also seek an 'advisory inspection,' where

a standard fee is paid to NAFDAC for advice from an inspector on GMP

requirements and for recommendations of measures to improve GMP compliance at

that site. To reinforce the emphasis on GMP, training programs for inspectors are

routinely organized enabling them to travel overseas to countries where majority of

manufacturing sites are compliant with GMP.

Weakness

Like the inspection of ports, the score for the inspection of establishments was

hampered by the absence of written guidelines on conflict of interest. Respondents

explained that conflicts of interest seldom truly affect the results of an inspection

because inspections are conducted in teams of at least two individuals per site who

undergo debriefing with a unit head and sign an inspection register after each

inspection, thus no individual is the sole decision-maker. The functions of the

Inspectorate sometimes overlap with the Food and Drugs Department of the FMoH

and the Pharmacists Council of Nigeria (PCN).

Distribution

Distribution of drugs received one of the highest scores with an average rating of 8.9

which indicates a low vulnerability to corruption. Distribution here refers to the

movement of drugs procured by the government to the sites where they are needed

(i.e. central medical stores, hospitals, etc.). The distribution of narcotics and

psychotropic substances falls under the Narcotics and Controlled Substances

Directorate of NAFDAC. Retail distribution of drugs to pharmacies and private and

proprietary medicines stores is not as well regulated.

Strength

Inventory management models are adequate and are monitored regularly (usually

weekly or at least monthly). Products are shelved according to therapeutic class and

stock records are reconciled with physical counts weekly. Appropriate security

management systems such as security personnel, restricted access to storage

facilities, and monitored entry and exit of products are in place.

Weakness

Rural areas pose a big challenge to drug distribution. Many lack electricity, well-

established telecommunication networks, and certain technology like generators to

provide backup power supply and WHO recommended fridges for the storage of

thermo labile medications. As well, equipment is poorly maintained once supplied.

Fuel scarcity also hinders the ability to transport drugs to more rural locations in a

timely manner.

The retail distribution of drugs has been described as chaotic and is considered

virtually unregulated. Pharmacies and private and proprietary medicines stores are

able to procure drugs in bulk from local drug manufacturers. In addition, prescription

and non-prescription drugs are sold on the open market. This creates an entry point

for counterfeit medicines into the pharmaceutical market.

Counterfeit drugs related issue:

Between 2001 and 2005, 30 Indian and Chinese pharmaceutical companies and 1

Pakistani company who were confirmed to be manufacturing counterfeit drugs

were banned from exporting drugs to Nigeria.Corruption and lack of access to

quality affordable essential medicines by the majority of theNigerian population

have contributed to the illegal trade in substandard and fake medicines in Nigeria.

The menace of fake drugs became prevalent in the last decade and the present

situation is alarming in the West African sub-region, including Nigeria. Empirical

observations have shown that there may be more fake than genuine drugs in

circulation (Osibo, 1998). The counterfeiting practices in developing communities

include:

(i) Counterfeiting when demand for an expensive product is high.

(ii) Tampering with original packages with drugs packed in large pack sizes.

(iii) Swapping of labels of two products manufactured by the same company.

(iv) Exploiting similarity in appearance between the original preparation and the

counterfeit.

(v) Labeling low price products with a high price product label.

(vi) Passing off a company‘s product for another.

A disturbing aspect of the counterfeit drug menace is that the effects of consuming

such drugs go unnoticed most of the times except in such cases where it results in

mass deaths. There are generally no reliable data on the mortality or morbidity

arising from the consumption of counterfeit drugs in Nigeria. In 1947, 14 children

were reported dead after being administered chloroquine phosphate injections

and in 1990, 109 children died after being administered fake paracetamol (Aluko,

1994). Usually such incidences stimulate governments into taking positive steps,

principally arising from public outcry.

The trend in the last decade prompted the public and particularly the professional

bodies, notably Pharmaceutical Society of Nigeria, to pressure the government to

take definite steps towards controlling the preponderance of fake drugs in Nigeria.

The government responded by promulgating the counterfeit and fake drugs

(miscellaneous provisions) decree No. 21 of 1988. This decree prohibited the sale

and distribution of counterfeit, adulterated, banned, and fake drugs or poisons in

open markets and without a license of registration. It also created penalties for the

breach of the provisions of the decree and a taskforce was established in each

state of the federation charged with the responsibility of seizing any drug or poison

illegally displayed in unlicensed or unregistered premises. Shortcomings in the

decree led to its being repealed by decree No. 21 of 1989 and subsequent

amendments.

10 Drug Standardization in Nigeria

The Chairman, Neimeth International Pharmaceuticals Plc. Dr. Ambrose Orjiako, has

said about 50 per cent of pharmaceutical products on sale in Nigeria are of

substandard quality.

Orjiako, who said this at the 54th Annual General Meeting of the company in Lagos

on Wednesday, added that investigations revealed that most of these drugs came

from India, China and other foreign countries.

He blamed the influx of substandard drugs from abroad on the lack of support from

the Federal Government for local pharmaceutical industries.

According to him, high circulation of sub-standard drugs in the country is frustrating

the manufacturing capacities of indigenous pharmaceutical companies.

Orjiako said, ―Counterfeit products are taking over the market despite the harm they

portend to the health of Nigerians and the country‘s health system. Unchecked

massive importation and patronage of foreign drugs in Nigeria is another key factor

discouraging pharmaceutical industries in the country.‖

He stated that in spite of these challenges, the company was building a new

manufacturing plant as part of the guidelines to meet up with the World Health

Organization‘s Good Manufacturing Practices accreditation.

Orjiako urged other pharmaceutical companies to strive to attain the WHO

accreditation status by upgrading the quality of their facilities, personnel and

products.

He said, ―The gold standard in the pharmaceutical sector in Nigeria today is upgrade

of facilities to meet the WHO‘s GMP standards. It is the way to compete

internationally and we call on government to support this initiative,‖

Also, the Managing Director and Chief Executive Officer of the firm, Mr. Emmanuel

Ekunno, said the company would collaborate with local researchers in specific

disease areas and form new alliances with reputable international pharmaceutical

companies to develop its own brand of generic products to meet local needs and

enhance health care delivery.

He urged pharmaceutical companies to facilitate and partake in public advocacy

programs aimed at preventing or eradicating common preventable diseases to

reduce the incidences of communicable and non-communicable diseases in the

country.http://spurmag.com/2013/04/11/50-of-drugs-in-nigeria-are-sub-standard-orjiako

11Import & Export Pharmaceuticals from Nigeria to other

countries

Import:

A large percentage of Nigeria's drug needs is import-dependent and despite years of

this scenario, nothing is being consciously done to change the status-quo.

The majority of drugs in the country are imported from other countries in Asia such

as India and China.Over 70% of drugs consumed in Nigeria are imported from India

and China.

Export:

Most of the medicines produced locally are consumed domestically. According to

PMGMAN, Nigeria is responsible for about 60 per cent of medicines produced in the

ECOWAS sub region, which has an estimated population of 280 million and a market

size of US$ 3.5 billion for health products. Table 20 lists Nigerian pharmaceutical

companies which export their manufactured medicines to other ECOWAS countries.

Below country are included in ECOWAS:

Benin, Burkina Faso, Cape Verde, Cote d‘Ivoire, Gambia, Ghana, Guinea, Guinea-

Bissau, Liberia,Mali, Niger Senegal, Sierra Leone, Togo,Niger.

11.1 Ban on pharmaceutical drugs importation

The Federal Government recently announced a ban on the importation of 17

categories of pharmaceutical products under the 2005 Fiscal Policy Measures and

Tariff Amendments. At the same time, the duties on finished pharmaceutical

products not included in the list of banned drugs were increased from five to 20 per

cent. The banned list includes common generic drugs such as Paracetamol tablets

and syrups, Chloroquine tablets and syrups, and Multivitamin tablets, capsules and

syrups, among others. Like the recent ban on Chloroquine and Sulfadoxine-

Pyrimethamine as first line drugs for the treatment of malaria, the current policy has

serious implications for healthcare delivery in the country. On the surface of it, the

ban is meant to encourage the local production of these drugs, build local capacity

and create job opportunities. It is perhaps also for this reason that the

Pharmaceutical Group of Manufacturers Association of Nigeria (PMG-MAN) received

the policy with so much enthusiasm.

According to the PMG-MAN Chairman, Mr Emma Ebere, \"there are over 100 active

pharmaceutical manufacturers in NIgeria with excess capacity for common

medicine...\" However, it is only the PMG-MAN that is jubilating. The Nigeria Medical

Association and the Association of Pharmaceutical Importers of Nigeria (APIN) have

been critical of the policy. They insist that the Federal Government has acted

prematurely and arbitrarily, without a baseline study of drug consumption patterns in

the country, and the actual installed capacity of local drug manufacturers. The

controversy that has attended this policy among the relevant stakeholders points to

only one sad fact: the Federal Government has failed to undertake necessary

arrangements and consultations before imposing such a far-reaching policy on the

Nigerian people. Did the government take the implications of the policy into

consideration? Why would it ban the importation of pharmaceutical drugs without an

assessment of local capacity to manufacture the same drugs? If this was done, is it

not advisable to make the relevant information available to all the stakeholders? In

the not too distant past, similar policies were introduced in other sectors of the

economy only for the Federal Government to apologise and reverse itself later.

The difference in this instance is that the health sector is too critical for government

to play games with. At the moment, the standard of healthcare in the country is poor.

Mass poverty among the population compounds the problem. Even in the best of

circumstances, a large percentage of Nigerians lack access to drugs and quality

healthcare. Banning basic drugs somewhat whimsically can only worsen the

country\'s healthcare situation and further reduce access to healthcare. These fears

are legitimate because already there are reports that the cost of the banned drugs

has risen overnight, coupled with widespread scarcity as pharmaceutical outlets

stockpile drugs in response to the development.

This should not be surprising. Besides, Nigeria is notorious for the sale of fake,

adulterated and substandard drugs. Any policy that seems to encourage the

perpetrators of this nefarious act is definitely not in the national interest. Similarly,

any policy that exposes Nigerians to danger and increases the cost of healthcare

should be discouraged. Not quite long ago, the authorities in Ghana introduced a

similar drug policy. However, it is on record that the Ghanaian government carried all

stakeholders along in the process of arriving at a decision. Adequate preparation by

the government ensured a hitch-free implementation of the policy in that country.

Unfortunately, here in Nigeria, the said ban is being introduced without any prior

consultation or analysis of the capacity of local drug manufacturers. The thrust of the

policy is to stimulate local production of drugs. This, it is believed, would reduce

over-dependence on importation. APIN presently imports 70 per cent of drugs used

in the country. Conversely, local production is running at 30 per cent installed

capacity. What the Federal Government should do is to provide an enabling

environment for the local manufacturers and assist them to build the capacity to

compete by providing necessary incentives. Nigerians want to be assured that the 17

banned drugs will continue to be available, affordable, accessible and in good

quality. The only way to achieve this is to put proper mechanisms in place to raise

the overall standards of the pharmaceutical and health sector.

Table 8:product list: (baned to importation)

No. Medicine Or Raw Material

1 Paracetamol Tablets and Syrups

2 Cotrimoxazole Tablets Syrups

3 Metronidazole Tablets and Syrups

4 Chloroquine Tablets and Syrups

5 Haematinic Formulations; Ferrous Sulphate and Ferrous Gluconate Tablets

6 Multivitamin Tablets, capsules and Syrups [except special formulations]

7 Aspirin Tablets [except modified released formulation and soluble aspirin]

8 Magnesium trisilicate tablets and suspensions.

9 Piperazine tablets and Syrups

10 Levamisole Tablets and Syrups

11 Clotrimazole Cream

12 Ointments – Penecilin/Gentamycin

13 Pyrantel Pamoate tablets and Syrups

14 Intravenous Fluids [Dextrose, Normal Saline, etc

15 Folic Acid Tablets

16 Vitamine B Complex Tablet [except modified released formulations]

17 Ferrous Sulphate and Ferrous Gluconate Tablets

12Global PharmaceuticalCompetitiveness

Over the years, the nation‘s pharmaceutical industry has remained a weak

competitor when compared with international firms, following its inability to

manufacture drugs that meet international standards. This inability to compete in the

global market is hinged on the fact that, as of today, the nation‘s industry cannot

withstand the drugs armada from China and India which have better cost

advantages.

The Indian pharmaceutical manufacturers supply 70 percent of drugs consumed

locally and also export. Between 2009 and 2010, the industry, made up of thousands

of large and small firms, exported $9.1 billion worth of drugs and made a turnover of

$21.7 billion.

According to PricewaterhouseCoopers (PWC) in 2010, India joined among the

league of top 10 global pharmaceuticals markets in terms of sales by 2020 with

value reaching $50 billion. While the domestic market was worth $12.26 billion, sale

of all types of medicines in the country is expected to reach around $19.22 billion by

2012.

Globally, India‘s pharmaceutical industry is ranked 4th and 13th in terms of volume

and value. Indian firms manufacture at far lower costs than their counterparts in

developed countries. This is one half of its success as India spends $23 billion on

Research and Development (R&D), has 160,348 researchers, 40,711 research

articles, and 1,234 patents.

With the pharmaceutical industry seen as one of the most valuable economic

segments of the global economy, the pharmaceutical industry is considered to have

installed capacity that only caters for about 50 to 75 percent of the nation‘s drug

needs.

Annually, millions of patients in resource-limited countries receive life-saving

medicines that are purchased by or through international procurement agencies such

as World Health Organisation (WHO), United Nations Children Fund (UNICEF),

United Nations Population Fund (UNFPA), UNITAID and the Global Fund to Fight

AIDS, TB and Malaria.

With WHO Prequalification of Medicines Programmed ensuring that selected

medicines supplied by these agencies meet international standards of quality, safety

and efficacy, the WHO and the Global Fund spends over N20 billion annually in

procuring drugs for malaria, TB and AIDS intervention programmers in Nigeria from

especially India and Brazil because no pharmaceutical firm in Nigeria is pre-qualified

by WHO.

WHO pre-qualification is a prerequisite for any company that wants the WHO and

other international agencies to buy their drugs through bulk purchase for distribution

for health intervention programmes across the globe.

Prior to prequalification of drugs by WHO, manufacturers apply to WHO to have a

product evaluated, providing comprehensive information about the product‘s quality,

safety, and efficacy.

While WHO inspection team visits the manufacturing sites of both the finished

pharmaceutical product and its active pharmaceutical ingredients to verify that they

comply with WHO good manufacturing practice (GMP), the team, which includes an

inspector from a ‗stringent regulatory authority‘ also verify that any contract research

organization that conducted any studies relating to the product complied with good

clinical and laboratory practices.

When the comprehensive scientific assessment and necessary inspections indicate

that the product meets international standards for quality, safety and efficacy, the

product is added to the WHO list of prequalified medicinal products.

Most pharmaceutical manufacturers in India, China, United States of America,

Germany, etc, produce pharmaceutical raw materials, vaccines, consumables and

finished products and in turn export them to boost their foreign earnings.

Surprisingly, pharmaceutical firms in Nigeria are not currently in a position to

participate in international tenders for medicines against the three pandemics that

require World Health Organisation‘s (WHO) prequalification.

This has been identified as a major constraint on the local supply of medicines,

especially anti-retroviral (ARVs), anti-malarial and anti-tuberculosis agents.

With over 100 pharmaceutical manufacturers in Nigeria, only five local drug

manufacturers- -Evans Pharmaceuticals, SWIPHA, CHI Pharmaceuticals, May and

Baker and Fidson Healthcare Plc- are currently modifying their production processes

with an aim of complying with the WHO prequalification requirements.

In Africa, only South Africa, Morocco and Uganda have prequalified drug

manufacturing companies and the right to sell pharmaceutical drugs to other

countries.

The experience of East Asian newly industrialised countries with successful

manufacturing attests to the fact that efficiency and productivity growth in the

manufacturing sector is the key to promoting competitiveness and growth of the

industrial sector and the economy as a whole.

Expert view

Speaking with BusinessDay, AzubikeOkwor, President, Pharmaceutical Society of

Nigeria (PSN), revealed that life-saving medicines are purchased annually by or

through international procurement agencies for health intervention programmes

globally from pharmaceutical firms that meet internationally standards of quality,

safety and efficacy, a situation that has deprived Nigeria from entering into

international bidding process for pharmaceutical products, particularly from WHO.

While noting that about five pharmaceutical firms are striving to comply with WHO

prequalification requirements, Okwor disclosed that WHO prequalification will help

the nation become self-sufficient in the manufacture of essential medicines.

―This would obviously have multiplier effects on the Nigerian economy as it would

lead to the creation of thousands of jobs and more foreign exchange earnings for the

country. This in turn would reduce the plethora of challenges confronting the

pharmaceutical sector such as counterfeiting of drugs and continued dependency on

the importation of drugs and pharmaceutical inputs for drug production,‖ Okwor

noted.

Lending his view, NnamdiOkafor, Managing Director, May and Baker Plc, disclosed

that the WHO qualification helps to upgrade facilities to global standard. While

stating that another leg of it is this huge fund that comes with it, Okafor stated that

the fund is meant to help Nigeria take care of certain diseases like HIV/AIDS,

Tuberculosis, and malaria.

―When this funding comes in, Nigeria is expected to have counterpart funding in it.

We are told that unless we have WHO prequalification, we cannot participate in it.

This disqualifies all Nigerian companies from participation. What that does to us is

that other factories in other parts of the world are producing products that are

demanded globally.

―In Nigeria, most factories are producing at less than 45 percent capacity and cannot

meet the pre-qualification. For Nigerian companies to do this, government assistance

is needed to achieve this feat,‖ Okafor hinted.

The Indian experience

The emergence of Indian pharmaceutical industry on the global landscape as a

strong generics player was due to 1970 Indian Patents Act which allowed only

process patents in pharmaceutical products.

This move also kept the cost of medicines at affordable levels by enabling domestic

pharmaceutical firms build technical expertise in reverse engineering of existing

medicines by modifying the manufacturing process and, thus, becoming efficient

producers of generic drugs.

Although India shifted to the product patent regime in 2005, the capabilities

developed during the past two decades became a competitive advantage for the

Indian pharmaceutical industry in the 1990s when rising healthcare costs in many

developed countries forced them to seek the cheaper generic drug option.

The Indian pharmaceutical industry was able to exploit the enormous generic

opportunity that was spawned. Interestingly, the share of Indian pharmaceutical

companies in the total pie of approvals for generic drugs (Abbreviated New Drug

Applications (ANDA) approvals in the U.S.), has risen steadily.

More than a third of ANDA approvals were by Indian firms. As a consequence,

formulation exports from India, essentially generic drugs, have grown at 21 percent

compounded annual growth rate (CAGR) between 2005-06 and 2010-11.

With about $150 billion worth of drugs set to lose patent exclusivity between 2010

and 2015, Crisil Research expects the growth momentum in exports to continue over

the next five years, with exports growing at 14-16 per cent CAGR.

In the near-term, the generic opportunity continues to lure more companies. With

competition intensifying, generic drugs will see greater price erosion. Along with

higher competition, the global generic market is set to face another hurdle in the

longer term.

Already, R&D productivity of large global pharmaceutical players (innovators) has

slowed considerably over the past few years. R&D productivity, a function of cost of

new drug development and returns from those new drugs, is of critical importance as

global players invest heavily in R&D (about 20 percent of revenues).

Furthermore, the Indian bio-pharmaceutical industry is in its emerging stage and is

sized at about $1.4 billion as of 2010-11. The Indian bio-pharmaceutical players

largely market vaccines and are yet to make inroads into U.S. and Europe.

Of importance is the fact that the low cost of manufacturing renders India as an

attractive destination for contract research, and the availability of a large patient pool

makes it appealing for clinical trials, which contributes the most, in terms of revenue,

to the contract research segment.

With limited experience and high costs associated with bringing a drug to the market,

Indian players have traditionally shied away from drug discovery, or in a few cases,

out-licensed molecules to multinational companies at early stage of development.

At present, only a handful of Indian companies (leading the pack are: Piramal Life

Sciences, Glenmark and Sun Pharma) are engaged in new drug research. Amid

slower growth in the generics space, large Indian players look to enhance their focus

in this area. The high-risk high-return field of new drug research holds tremendous

potential for Indian players.

Competing globally

Nigeria‘s pharmaceutical industry has a long and arduous way to go. Experts believe

that without clusters (centers of excellence) and well-funded research laboratories

that churn patents protected by law, the industry‘s global ambition is limited. If these

enablers are put in place, it could induce local and foreign investment and

partnership with foreign firms.

While some Nigerian Pharmaceutical firms are modifying their production processes

with the aim of complying with the WHO prequalification requirements, Ola Ijimakin

General Manager, Marketing, FIdson Healthcare Plc, revealed that the company

(FIdson Healthcare Plc) has applied for pre-qualification with their facility been

inspected by officials from the WHO.

―We are among the five companies selected by the WHO team that they intend to

work with to secure the certification. We are putting up a completely new facility that

will come on stream in 2013. This facility is designed and built to conform to the

latest WHO-GMP standards,‖ Ijimakin revealed.

For NnamdiOkafor, Managing Director, May and Baker Plc., when a pharmaceutical

firm wants to export to countries in Asia and Europe, the pharmaceutical firm need to

export products that meet WHO prequalification exercise.

―The first thing we want to do is get our GMP standard so that we can say that our

products compare with the rest in the world so that we should be able to export them

to other parts of Africa, Asian and even Europe. WHO prequalification process is a

long one which could take a year to two to get prequalified.

―From the WHO report, a representative from Who was in Nigeria recently to present

a report to Minister of Health OnyebuchiChukwu on the level of preparedness of

Nigerian companies. He was quite positive that within the next one to one and half

year, the first product will prequalify Nigeria and we look forward to being one of the

companies whose products will be prequalified,‖ Okafor concluded.

Paul Orhii, director general, NAFDAC, believes that once WHO upgrade

pharmaceutical facilities coupled with the pharmaceutical intervention fund, Nigeria

drug firms can then upgrade to a level where it would be par with other

manufacturing companies in the world.

―We believe this would not only ensure that locally manufactured pharmaceutical

products in Nigeria gain international acceptance. The nation can then request that

drugs donated to Nigeria are purchased locally. This feat would help reduce the

challenges confronting the pharmaceutical sector, such as low capacity utilisation,

high production cost, drug counterfeiting, and continued dependency on the

importation of drugs and pharmaceutical inputs for drug production,‖ Orhii concluded.

Table 9:A Price Comparison of Selected Drugs in Nigeria

Compared prices of branded drugs from different countries, in US$.1

Spain is considered to be the one which has the lowest prices all over

Europe.

UK SPAIN NIGERIA price price

Table 10: Institutional prices of HIV/AIDS drugs, antibiotics and others in

US$ in several countries

DRUG(INN) zidovudine 100mg tablet

lamivudine 150mg tablet

AZT+3TC 300+150 mg tab

fluconazole tab 200mg (50mg for Nigeria)

ceftriaxone 1 g vial

ciprofloxacine 250 mg tab

Argentina 0.2g 0.4g 0.8g N/A N/A N/A

Brazil 0.1g 0.3g 0.7g N/A N/A N/A

Colombia 0.7g 1.7g N/A 0.4g 7.2 0.05g

Guatemala 0.4g 2.4 3.9 0.6g 1.8g 0.05g

India 0.2g 0.4g 0.9g 0.6g 1.8g N/A

South Africa 0.4 1.1 1.5 4.1 10.9 0.4

Thailand 0.2 2.5 2.3 0.3g 1.7g 0.06g

Uganda 0.7 1.6 3.7 1.3 4.4 0.14g

Nigeria

1.19

2.52

6.9

4.09 17.23 0.96

Price 12 6.3 9.8 10 10 19

differential: Nigeria vs

Spain

differential: Nigeria vs Spain in %

zidovudine 100mg, tab 1.68 0.47 2.3 x4.89 79

zidovudine 250 mg, tab

4.2 1.18 0.56

zidovudine 300 mg, tab

5.03 1.41 0.69

ZDV/3TC, 300-150 mg, tab

8.03 3.59 3.8 x1.06 5.5

lamivudine 150 mg,tab 3.83 1.96 2.25 x1.15 13

saquinavir 200mg, tab 0.78 0.75 0.8 x1.06 6.25

zalcitabine 0.75 mg, tab

2.13 1.12 1.99 x1.77 43.7

nelfinavir 250 mg, tab 1.51 0.81 2.26 x2.79 64

itraconazole 100 mg tab

2.01 0.88 3.67 x4.2 76

ketoconazole 200 mg tab

0.74 0.27 0.65 x2,4 58

acyclovir 200 mg 0.6 0.41 1.6 x3.9 74

ciprofloxacine 250 mg tab

1.05 0.37 0.96 x2.6 61.5

ceftriaxone 250 mg injec.

3.85 2.14 6.3 x13,5 66

differential: Nigeria vs best price

Price differential Nigeria vs. best price (%)

92 88 89.8 90 90 95

Table 11 :Recent offers by pharmaceutical companies: prices per unit in

US$.

Lamivudine

150mg

Nelfinavir 250

mg

Saquinavir 200mg

Zalcitabine 0.75

mg

Zidovudine 100 mg

ZDV+3TC

300+150 mg

Cipla(India) (generic company) 0.15(or 0.26)

0.14 0.66

Hetero(India) (generic company)

0.13 0.68 0.45 0.04

Aurobindo(India)(generic Cie) 0.12 0.89 0.75 0.08 0.37

Glaxo(Nigeria) 0.3 0.24 0.94

Price differential: Nigeria vs best price

x 2.5 x 3 x 2.5

Price differential: Nigeria vs best price in %

60% 66% 61%

Prices are indicated in US$, per unit Lowest prices are in bold

With the intention to give more information about the availability and affordability of

essential medicines, especially the antiretrovirals and opportunistic infections drugs,

a survey was conducted in Lagos in order to have a clear picture of the

pharmaceutical situation in the country.

13 health structures were visited in the Lagos area during April-May 2001.

Out of the 11 types of anti-retroviral commonly used worldwide, 6 (i.e. only 55%) are

registered in NAFDAC (the National Agency for Food and Drug Administration

Control).

Only 3 types out of 6 were actually seen in the 13 health structures, which brings to

27% the percentage of the available worldwide market. Furthermore, these drugs

are all branded drugs, which means that 0% of generic drugs are available in

Nigeria.

All these brand drugs (from the same companies) were costlier in Nigeria than in

Spain.

On the average, prices were between 13-36% lower for patented products in Spain

than in Nigeria.

1-Differences of prices in different countries for the same branded drug:

Among the range of prices of the medicines studied, the lowest price in the

European Community (Spain) is up to 79% decreased compared to Nigeria. (table1)

The drugs that have been studied in Nigeria come from the companies themselves,

and they are usually imported by importers to Nigeria, from the USA and UK mainly.

Also for much treatment, companies sell the same drug at very different prices in

different countries. For example, Roche‘s rocephine (branded version of

ceftriaxone), is 58% less expensive in Colombia than in Nigeria.

Glaxo‘sCombivir(association of AZT+lamivudine for HIV) is 43% less expensive in

Guatemala than in Nigeria.

The widely divergent prices within developing countries show the lack of

transparency and put into question current pricing practices. The existence of market

monopolies is the most important determinant of these differences; when

multinational drug companies have exclusive marketing rights, they tend to demand

the highest possible prices, leaving out of reach for the vast majority of the

population leaving in developing countries.

There are no links between prices and public health needs.

2-Impact of generic competition on prices:

The presence or the absence of generic competition is a key determinant of pricing

levels. For example in Thailand, after three companies introduced generic versions

of fluconazole in 1998, Pfizer dropped its price for fluconazole. Generics are not

available in Nigeria. A comparison of prices in different countries, where generics

clearly show how the generic competition can influence and lower the prices: prices

are, on average, 91% more expensive than in other developing countries where

there is generic competition. as an example, in Thailand, ceftriaxone inj., an

antibiotic is sold at 1.7 US$, 10 times cheaper than in Nigeria (17,23 US$ per vial).

The offer done by a multinational company in Nigeria is still higher than what some

generic companies can offer in other countries. For instance, prices in Nigeria are

still on average 62% higher than those from generic companies.

This comparison shows how generic competition can decrease prices and therefore

improve access to medicines to the poorest population.

3-Impact of market monopoly:

The monopoly that exists in Nigeria, and the non-availability of generic medicines

have direct repercussions on the prices: table 2 shows an increase of prices in

Nigeria compared to other countries where there is generic competition in the market

up to 91%.

4-Impact of political will:Countries like Brazil (who settled a national protocol on

HIV treatment), Senegal (negotiating the AAI) prove that prices can be brought at

affordable level for the population. On the other side, countries which import drugs

(South Africa, Nigeria) have much higher prices.

This illustrates that the political will has a direct impact on the pharmaceutical

market, and that the government can take national measures which are in favor of

the nation.

http://businessdayonline.com/NG/index.php/analysis/features/43400-global-pharmaceutical-competitiveness

13 challenges facing the pharmaceutical sector

The challenges of the pharmaceutical industry in Nigeria are myriad just like every

other sector of the economy. First we do not have a conducive environment to

operate in. The truth is that the environment is hostile to business growth and

development. However, we are determined and we have charged our people to rise

above the harsh economic environment. We believe that as the day goes by, we will

survive and give thanks to God.

What more can you say in an environment where you generate your own electricity,

build your borehole for water, pay for security, build your roads and drainage, among

others. For instance, in the past one month or so, we had no light because some

vandals stole the cable from the transformer. So, everyday, we run the generator to

keep the business going. For me this is one of the greatest challenges.

Again, as you are probably aware, 70 per cent of all the pharmaceutical products

consumed in this country are actually imported. Therefore, any swing in the foreign

exchange rate directly impact on our businesses. If, for instance, you had made an

order for some products and there is a change in the exchange rate that is not

favourable you will be in trouble. This is an economy where you cannot increase

price arbitrarily because the customer is already complaining of the old price not

being affordable.

The upward swing in exchange rate, which had been our lot in the past few years,

erodes our margin and limit our ability to expand, upgrade facilities, employ more

people, take risks/higher challenges, etc. More so, banks‘ interest rate is not better. It

is the most unfriendly compared to what happens in other climes. We pay as much

as 25 per cent or more. The high cost of production is quite challenging.

Some of our colleagues, including myself, are into importation not necessarily

because we want to but more because it offers a more convenient platform to start

business. I would have preferred to be in manufacturing and we have decided that,

no matter what it is going to cost, we will start our own production soon. The fear all

over the place is that of inadequate power supply. For instance, if your production

line is busy producing and all of a sudden the power goes off and assuming my

generator is faulty, the worst that will happen to me as an importer is the

inconveniences of not being able to use the computer systems or the office, but, it is

not the same for a manufacturer. The loss would be enormous.

http://www.leadership.ng/nga/articles/31152/2012/07/30/70_pharmaceutical_product

s_nigeria_are_imported.html

14 Business relations in Pharmaceutical Sector with India

The value of India's pharmaceutical products exported to oil-rich Nigeria surged to

USD 307 million in the financial year that ended in March 2012, Indian High

Commissioner to the African state, Mahesh Sachdev said during a pharma exhibition

in the country.

The envoy attributed the rise which stands at 35 to 37 per cent, to the fact that Indian

products remain the largest source of pharmaceutical supplies to Nigeria owing to

demand from consumers.

Sachdev who spoke during the two-day Indian Pharma Exhibition and Buyer-Seller

Meet organized by the Indian High Commission in Nigeria and Pharmaceutical

Export Promotion Council ( Pharmexcil) also noted that the high participation during

the event which attracted not less than 70 companies was as a result of strong

relationship between Nigeria and India.

"As we all know, India's status as Nigeria's first supplier of pharmaceuticals has been

earned the hard way over past decades. This privilege symbolizes the trust and the

faith Nigerian consumers repose in quality and efficacy of Indian medicines,"

Sachdev said.

Also speaking at the occasion, Paul B Orhii, Director General of Nigeria's National

Agency for Food and Drugs Administration and Control (NAFDAC) praised Indian

pharmaceutical companies for their steadfastness in insuring that only genuine and

superior pharmaceutical products are brought into Nigeria.

Over 700 pharma buyers had attended the previous Expo in Nigeria in March 2011.

This year more than 1,000 buyers attended the event. India is working with NAFDAC

and other Nigerian agencies to protect promote and diversify Nigerian

pharmaceutical market.The two countries signed a Memorandum of Understanding

on Cooperation in Pharmaceutical Sector in March 2011.

http://www.pharmaceutical-drug-manufacturers.com/pharmaceutical-

classification/customs-duty.html

India set to sign pharma export deal with Nigeria

The government is set to sign an exhaustive deal with Nigeria to boost

pharmaceutical exports to its eighth- largest global consumer, where the reputation

of Indian drugs was recently dented by fake drugs from China bearing 'Made-in-

India' labels.

The department of pharmaceuticals and the ministries of commerce, external affairs

and health will start talks with a visiting Nigerian delegation on Monday on ways to

prevent fake drugs from other countries bearing fabricated 'Made-in-India' labels

from reaching the Rs 1,000-crore West African market for Indian generic drugs

Orchid Chemicals and Pharmaceuticals and MedoPharma are the biggest Indian

exporters to the region. To salvage the reputation of Indian generic drug exporters

and to promote sales of Indian generics, India is likely to use resources from the

'challenge India fund' maintained by the commerce ministry.

"Both the governments (India and Nigeria) will also discuss setting up a network of

retail pharmacies in Nigeria operating with government license, and putting an end to

the existing unregulated medicine outlets," the official, who asked not to be named,

said.

The move will enable the government to put in place a fool-proof system to ensure

that fake drugs are not passed off as imported generic drugs from India. Recently, a

delegation of Indian authorities led by officials from the commerce ministry also

visited Johannesburg to discuss the issue of fake drugs.

At the proposed talks, both the governments will identify steps to encourage Indian

drug companies to set up manufacturing units in Nigeria and explore whether Indian

public sector drug makers can supply low-cost quality drugs to the Nigerian

government.

The African country had seized a large consignment of fake anti-malarial drugs

labeled 'Made in India' in May this year that was later traced to China. Three such

consignments from China were also seized by the Indian authorities at the Chennai

Port. India has also demanded that China should take strict action against the

manufacturers whose names and addresses were printed on the confiscated

cartons.

"Supply of spurious drugs to Africa is on the rise. Urgent steps have to be taken to

ensure that India's \reputation as a reliable supplier of high-quality, low-cost

medicines is not ruined. The sooner we act, the better for us," the official said. Africa

accounts for over 15% of India's total generic exports worth Rs 30,000 crore

annually.

Table 12:They have intensified collaboration to prevent counterfeiting of Indian

pharmaceuticals.

Source:-economictimes.indiatimes.com

http://www.cybex.in/Exim-News/Pharma-Exports-To-Nigeria-Surge-5908.aspx

http://articles.economictimes.indiatimes.com/2009-08-03/news/28456684_1_fake-

drugs-generic-drugs-drugs-from-other-countries

Rank

HS Code

Description Nigeria's Imports from India in 2006

Nigeria's Imports from India in 2007

Nigeria's Imports from India in 2008

% Growth 2007/2006

%Growth 2008/2007

% CAGR over 3 years

4 30 Pharmaceutical products

53.12 95.03 71.12 78.91 -25.16 15.71

15 Law, Policies and Norms for Pharmaceutical Sector

This chapter outlines the main elements of the National Drug Policy (NDP) and other

relevant government policies that show the political will of the Government of Nigeria

to promote local production of essential medicines. As a clear demonstration of the

Government‘scommitment, specific incentives have been approved and

implemented, including banningthe importation of essential medicines which are

produced in adequate volume locally ina move designed to stimulate local

production. A survey of the cost of local equivalents ofbanned medicines showed a

range of between 0.2 and 1.5 times international market prices.

15.1 Legislation

The regulation of the pharmaceutical sector is vested in the National Agency for

Food and Drugs Administration and Control (NAFDAC) and the Pharmacists ‗Council

of Nigeria (PCN). In broad terms, the NAFDAC regulatespharmaceutical products

while the PCN regulates the premises andprofessional practice. Therefore, drug

registration, marketing approval,manufacturing, importation, drug promotion and

advertising are controlled byNAFDAC while licensing and practice of pharmacy and

pharmaceuticalpremises are the purview of the PCN, according to promulgated laws.

Theeffective regulation of traditional medicines remains a challenge for

thepharmaceutical sector.

NAFDAC issues marketing approval for pharmaceuticals sold in the countryafter

evaluation of safety, efficacy and proof of manufacturing and use incountry of origin;

in accordance with WHO certification scheme on the Quality ofPharmaceutical

Products Moving in International Commerce. To date, there areabout 4,363

registered medicines in the country. In 2002, NAFDAC commencedlisting of

traditional medicines with proof of safety. About 83 have so far beenlisted. In 2002,

WHO supported the computerisation of drug registration inNAFDAC to improve the

process.

NAFDAC also carries out regular inspection of drug manufacturing premises

toensure compliance with Good Manufacturing Practices (GMP) and

regularlypublishes the list of registered drugs in the official gazette.

NAFDAC also has the responsibility of regulating promotion and advertisementof

medicines. The contents of advertisements and promotional materials, aswell as

package inserts are pre-approved by NAFDAC. There is explicitprohibition of the

promotion of prescription medicines in the country.

Although there is no legislation requiring generic prescriptions, dispensers

areallowed to substitute generic drugs in the public sector. There is also no

pricingpolicy for pharmaceuticals but there is a 5% tax on pharmaceutical

rawmaterials, and taxes ranging from 20 to 25% for finished pharmaceuticalproducts.

Monitoring of the adverse effects of both orthodox and traditional medicines isnot

institutionalised but NAFDAC does collect some information on adversedrug

reactions.

To control the quality of medicines, NAFDAC has national laboratories and mayalso

use the services of laboratories in academic institutions.

Policy Framework:

Nigeria‘s approach to addressing the Millennium Development Goals (MDGs)

adopted bythe United Nations in September 2000 is expressed in the National

Economic EmpowermentDevelopment Strategy (NEEDS).

NEEDS focuses on four key areas:

Reforming government and institutions to improve service delivery to poor

people,eliminating waste, and fighting corruption.

Expanding the private sector by reducing the influence of government in the

economyand accelerating privatization, deregulation and liberalization. A

particular focusis on economic infrastructure, including transport and

electricity.

Implementing a Social Charter to improve people‘s access to health,

education, welfare,employment, empowerment, security and participation.

HIV/AIDS is acknowledgedas a major threat to the economy and not ‗just‘ a

social problem.

Emphasizing that NEEDS is not ‗business as usual‘ but rather gives special

attentionto privatization, the fight against corruption, freedom of information,

and enhancingthe role of civil society.In 1995, the Nigerian Investment

Promotion Commission (NIPC) was established underthe NIPC Act. The

Commission is a Federal Government agency established to

encourage,promote and coordinate investments in Nigeria. It provides

services including the grantingof business entry permits, licenses,

authorizations and incentives.

Table 13: policy aspects

ASPECTS OF POLICY covered

Selection of essential medicines Yes

Medicines financing Yes

Medicines pricing Yes

Medicines Procurement Yes

Medicines Distribution Yes

Medicines Regulation Yes

Pharmacovigilance Yes

Rational use of medicines Yes

Human Resource Development Yes

Research Yes

Monitoring and evaluation Yes

Traditional Medicine Yes

National Drug Policy:

Nigeria‘s first National Drug Policy (NDP) was launched in 1990 with the main

objectiveof improving drug availability, supply and distribution. This objective faces

substantialchallenges. The first obstacle to a smooth functioning medicine supply

chain is the existing inefficient system of drug administration and control. Added to

this, there is the problemof inadequate funding of drug supplies and drug control

activities and high dependence on imports of finished drug products,

pharmaceutical raw materials, reagents andequipment.Procurement practices are

deemed to be sub-optimal, often resulting in poor selection of successful bids.

This problem can be partially explained by the substantial number of unqualified

staff involved in the procurement, distribution and sale of medicines. The actual

suppliers of medicines to public care institutions also often perform poorly and,

finally, there is a lack of political will to provide the safe, efficacious and good

quality medicines needed to meet the health needs of the population.

Nonetheless, there have been some clear developments in the implementation of

the NDP, including the adoption and subsequent publication of an Essential Drug

List (EDL), a National Drug Formulary (NDF), and the establishment of the

National Agency for Food and Drug Administration and Control (NAFDAC) in

1993, with the introduction of drug registration procedures.

Furthermore, the National Drug Policy aims at reaching 70 per cent local

production in drugs along with other goals including the establishment of an

effective drug procurement system, developing an efficient drug distribution

system, the harmonization of drug legislationwithin the ECOWAS subregion, and

a commitment to the rational use of medicines at all levels of health care.

To attain the aim of an increased share for locally produced medicines, some

incentives have been introduced:

Import prohibition of 18 essential medicines in which local manufacturers

have adequate capacity to meet domestic demand

A tariff structure designed to discourage the import of those essential

medicineswhich are manufactured locally.

Realistic measures to boost research and development of local sources of

pharmaceutical raw materials, including active pharmaceutical ingredients

and excipientsIn 2005, a revised National Drug Policy was unveiled,

designed to cater to changing circumstances in the sector. The revised

NDP aims to provide the Nigerian population with adequate supplies of

medicines that are effective, affordable, safe and of good quality,

ensuringthe rational use of such medicines and promoting increased local

production of essential medicines.

The policy provides guidelines for the distribution of health products to

both public and private health facilities. It also lays down measures to

improve the distribution of medicinesand medical supplies in the country.

These include ensuring that the supply, sale and distributionof medicines

is under the control of pharmacists. The measures also clearly define

therespective roles of manufacturing, wholesaling and retailing within the

medicines distributionchain.

Governing Body Related Pharmaceuticle Industry

COI: Conflict of Interest

FMoH: Federal Ministry of Health

GMPs: Good Manufacturing Practices

NAFDAC: National Agency for Food and Drug Administration and Control

NDLEA: National Drug Law Enforcement Agency

NPA: Nigerian Ports Authority

PCN: Pharmacists Council of Nigeria

Figure 3 :Regulatery control system:

Source: Adapted from Dun & Bradstreet (D&B) 2007

15.2 Import & Export

Legal provisions exist requiring authorization to import medicines. Laws existthat

allow the sampling of imported products for testing.Legal provisions exist requiring

importation of medicines through authorized portsof entry. Regulations or laws exist

to allow for inspection of importedpharmaceutical products at authorized ports of

entry. The import and export of pharmaceutical drugs and pharmaceuticals are

regulated through EXIM Policy. The pharma EXIM policy initiatives taken by the

Government recently have led to quantitative and qualitative improvements in the

Research & Development activities of the industry. The National Pharmaceutical

Policy (NPP)'s objective is to ensure availability of lifesaving drugs at reasonable

prices.

http://www.pharmabiz.com/Services/ExportImport/Countries/Nigeria.aspx

15.3 Licensing

In Nigeria, legal provisions exist requiring manufacturers to be licensed.

Legalprovisions exist requiring manufacturers (both domestic and international)

tocomply with Good Manufacturing Practices (GMP). Good ManufacturingPractices

are published by the government.Legal provisions exist requiring importers,

wholesalers and distributers to belicensed. Legal provisions requiring wholesalers

and distributors to comply withGood Distributing Practices do not exist.

Good Distribution Practices are not published by the government.Legal provisions

exist requiring pharmacists to be registered. Legal provisionsexist requiring both

private and public pharmacies to be licensed. National Good Pharmacy Practice

Guidelines are not published by the government.By law, a list of all licensed

pharmaceutical facilities is not required to be published.

Table 14: Legal provisions pertaining to licensing

Entity requiring licensing

Importers yes

Exporters yes

Distributers yes

15.4 Permission:(registration of imported drug products in Nigeria)

A. GENERAL

1. These guidelines are for the interest of the general public and in particular,

pharmaceutical industries in Nigeria.

2. It is necessary to emphasize that, no drug shall be manufactured, imported,

exported, advertised, sold or distributed in Nigeria unless it has been registered in

accordance with the provisions of ACT CAP F33 LFN 2004 (formerly decree 19 of

1993) and the accompanying guidelines.

B. APPLICATIONS/MANUFACTURER

1. (a) An application for registration of a drug product shall be made by the

manufacturer.

(b) In case of a manufacturer outside Nigeria such shall be represented in Nigeria by a

dulyregistered pharmaceutical company.

(c) An applicant for a manufacturer outside Nigeria must file evidence of Power

ofAttorney from the manufacture which authorizes him to speak for his principal

onall matters relating to the latter‘s specialties. The original Power of Attorney is

to benotarized in the country of origin by a Notary Public and submitted to

NAFDAC.OrContract Manufacturing Agreement (where applicable). This should

be notarized inthe country of origin by a Notary Public and submitted to

NAFDAC.

NOTE:

The representative in Nigeria, whether a corporate body or an individual with

thepower of attorney, will be held responsible for ensuring that the competent

authorityin the country is informed of any serious hazard newly associated with a

productimported under the provisions of the Act or of any criminal abuse of the

certificate inparticular to the importation of falsely labeled, spurious, counterfeited or

substandardmedicinal products.

2. (a) The applicant shall submit to the office of the Director (Registration and

RegulatoryAffairs), a written application, stating name of the manufacturer,

generic name,brand name (where applicable), strength, indications and obtain

the prescribedapplication form which must be properly filled with all required

information.

(b) A separate application form shall be submitted for each drug product. In this

context,a drug product means a separate drug formulation. However the

application forregistration of one dosage form with different strengths shall be

made on a separateapplication form.

C DOCUMENTATION

1 The manufacturer, in the case of imported drug products (from India and China

only), must submit evidence that they are licensed to manufacture drugs for

sale in the country of origin (Manufacturer‘s Certificate). Such evidence must be

issued by the competent HealthAuthority in the country of manufacture.

2. There must be evidence that the drug product is manufactured according to

GoodManufacturing Practice (GMP).

3 There must be evidence by the competent Health Authority, that the sale of the

product does not constitute a contravention of the drug laws of that country. i.e.

Certificate of Pharmaceutical Product (COPP) that conforms to WHO format.

The documents in respect of C1-3 shall be authenticated by the Nigerian Mission in

that country. In countries where no Nigerian Embassy or High Commission exists,

any other Embassy or High Commission of any Commonwealth or West African

country can authenticate

4 The applicant shall submit two (2) dossiers made out in accordance with the

Agency‘s format.

5.Evidence of Trade Mark Approval for brand name from Federal Ministry of

Commerce in Nigeria should be submitted.

6. Copy of current Annual Licence to Practice as a Pharmacist for the

Superintendent Pharmacist issued by Pharmacists Council of Nigeria should be

submitted.

7. Copy of Current Certificate of Registration Retention of Premises issued by

Pharmacists Council of Nigeria

8. Comprehensive Certificate of analysis of the batch of product submitted for

registrationprocessing shall be submitted

D. PRODUCT

1. A drug product shall not be manufactured in Nigeria, unless the factory is

inspected and Certificate of Recognition is issued by NAFDAC.

2 In the case of an imported new drug substance, there must be evidence that

limited local clinical trials have been undertaken, and that such product is

registered in the country of origin and also, in at least 2 or more developed

countries.

3. No combination drug product shall be registered or considered for registration

unless there is proven evidence that such a product has clinical advantage over

the single drug available for the same indication(s).

4. The application should indicate the class or type of registration required -

whether aprescription only product or Over the Counter.

5 Product found to be of doubtful, little or no therapeutic value shall not be

considered for registration.

6 An applicant shall not be allowed to register a formulation in more than one

brand name even where different doses of the active ingredient(s) are used.

7. All dosage forms of a particular brand name must contain the same active

ingredient(s) or at least the major active ingredient(s) e.g.

A cream - Betamethasone 10mg

A soap - Betamethasone 20mg

D. LABELLING

1. Labelling shall be informative, clear and accurate.

2. Minimum requirements on the package label in accordance with the drug

labeling regulations should be:

(a) Name of medicine (brand name) where applicable and generic name.

(b) Name and full location address of the manufacturer.

(c) Provision for NAFDAC Registration Number on product label.

(d) Batch No., Manufacturing date and Expiry date.

(e) Dosage form & strength

(f) Indications, frequency, route, conditions of administration.

(g) Dosage regimen on the package (OTC drugs only if there is no accompanying

leafletinsert.

(h) Leaflet insert, if prescription product and hospital packs.

(i) Net content of product.

(j) Quantitative listing of all the active ingredients per unit dose.

(k) Adequate warnings where necessary.

3. Where a brand name is used, there MUST be the generic name which should be

conspicuous in character, written directly under the brand name e.g.:-VENTOLIN

TABLETS, ―SALBUTAMOL‖

4. Any drug product whose name or package label bears close resemblance to an

alreadyregistered product or is likely to be mistaken for such registered product,

shall not be considered for registration.

5. Any drug product which is labeled in a foreign language shall NOT be

considered for registration unless an English translation is included on the label

and package insert (where applicable).

E TARRIF

All payments to the Agency are payable by bank draft to the National Agency for

Food and Drug Administration and Control.

1 Over The Counter (OTC) Medicines One million naira (=N=1,000,000:00) plus

5% VAT per product

2 Prescription Only Medicines (POM) Two hundred and fifty thousand Naira

(N250,000:00) plus 5% VAT per product

3 Orphan Drugs Eighty thousand Naira (N80, 000:00) plus 5% VAT per product.

4 The Drug form labeled ―FORM D-REG/001‖ N500.00 (five hundred naira)

F TIME LINE

The time line for product registration from submission of samples up to issuance of

registration number is hundred (100) work days. However, this depends on

satisfactory compliance by the applicant.

G NOTE

(1) Registration of a product does not automatically confer Advertising permit. A

separate approval by the Agency shall be required if the product is to be

advertised.

(2) NAFDAC may withdraw the certificate of Registration in the event that the

product is advertised without express approval from the Agency.

(3) NAFDAC reserves the right to revoke, suspend or vary the certificate during its

validity period.

(4) Filling an application form or paying for an application form does not confer

registration status.

(5) Failure to respond promptly (within 30 work days) to queries on enquiries raised

on the application, will automatically lead to suspension of further processing of

the application.

15.5 Taxation: (Duties and Taxes on Pharmaceuticals (Market))

Nigeria imposes duties on imported active pharmaceutical ingredients (APIs) and

duties on imported finished products are also imposed. However, there are noduties

imposed on medication for HIV, malaria and tuberculosis. Value-addedtax (VAT) or

other taxes are not imposed on finished pharmaceutical products. A policy is in place

to apply VAT on pharmaceuticals, but it is not implemented by customs. A

withholding tax of 5% is applied. Provisions for tax exceptions or waivers for

pharmaceuticals and health products are in place.

Regulatory requirements for local drug manufacturing

A pharmaceutical manufacturing company intending to manufacture pharmaceuticals

inNigeria should apply for a pre-production inspection by NAFDAC and should have

at leastone registered pharmacist on its Board of Directors. It must also appoint a

superintendentpharmacist who is duly registered with the Pharmacists Council of

Nigeria (PCN). In addition,the pharmaceutical manufacturing premises should be

registered with PCN. Some ofthe necessary documentation for this registration is

listed below.

Table15 : Requirements for the Registration of Pharmaceutical Premises

Documentary Requirements for the Registration of Pharmaceutical Premises

List of qualified staff, their qualifications and status

List of products to be manufactured

List of equipment for production and quality control

List and sources of suppliers of raw and packaging materials

Water source and treatment facilities

Water analysis report (raw and treated water)

Disposal of poison records

Details of standard operational procedures

Production flow chart

Factory layout chart

Organizational chart

15.6Product registration

Pharmaceutical products are required by law to be registered before marketing in

Nigeria, as in other countries. This applies to both locally manufactured and imported

products.

The major steps involved include:

Submission of a letter of application stating the name of the manufacturer;

generic/ common name and brand name of the product; product strength and

indications.

Obtaining an application form upon payment of the application fee.

Submission of five hard-covered copies of the application dossier to NAFDAC,

includinga comprehensive certificate of analysis; certificate of incorporation of

the applicant; evidence of trademark and brand name approval from the

Ministry of Commerce; three vetting samples; current premises licence;

annual licence for the superintendent pharmacist.

Payment of a registration fee, renewable every five years (700,000 Naira

equivalent to US$ 4,605)

Request for permission to advertise the product.

Foreign manufacturers must be represented by local agents with duly registered

premisesand applications must be accompanied by evidence that a Power of

Attorney has been granted to the local agent. A proposal for reciprocal registration of

locally manufactured products within regional blocs by the African Union has not yet

been implemented.

15.7Medicines Advertising and Promotion

In Nigeria, legal provisions exist to control the promotion and/or advertising of

prescription medicines. The regulation of promotion and advertisement of medicines

is the responsibility of the honorable Minister of Health. This is responsibility is

delegated to the NAFDAC as a parastatal entity of the FMoH.

Legal provisions prohibit direct advertising of prescription medicines to the public and

pre-approval for medicines advertisements and promotional materials is required.

Guidelines and Regulations exist for advertising and promotion of nonprescription

medicines. There is a national code of conduct concerning advertising and promotion

of medicines by marketing authorization holders. The code of conduct applies to both

domestic and multinational manufacturers, for which adherence is voluntary. The

code contains a formal process for complaints and sanctions. A list of the complaints

and sanctions for the last two years is publicly available.

15.8 Clinical Trials

In Nigeria, legal provisions exist requiring authorization for conducting Clinical Trials

by the MRA. There are additional laws requiring the agreement by an ethics

committee or institutional review board of the Clinical Trials to be performed. Clinical

trials are not required to be entered into an international/national/regional registry, by

law11. However, there are plans to start implementing legal provisions requiring the

registration of clinical trials, but for the moment trials can be approved without being

registered in the registry.

16 SWOT analysis

An overall assessment of the pharmaceutical sector in Nigeria using Strengths,

Weaknesses,Opportunities and Threats (SWOT) analysis is indicated below.

Strengths

60 per cent of pharmaceutical production in ECOWAS countries is domiciled

in Nigeria (although current capacity utilization is only about 40 per cent).

There is abundant under-utilized manufacturing capacity that can be applied

to manufacture new products upon demand.

The attainment of WHO cGMP and prequalification status by some

companies (currently in progress) will enable them to participate in

international tenders for supplies of antiretroviral, antimalarial and anti-TB

medicines and will thus represent a very large expansion of potential demand.

Technical skills, trained manpower and basic manufacturing infrastructure

already exist, with about 120 local drug manufacturing companies. Nigeria

thus has the potential to become a leading manufacturer and distributor of

essential medicines in sub-Saharan Africa.

Weaknesses

Poor infrastructure (power, water, transportation) which increases the cost of

local medicine manufacture and distribution and constrains growth.

No Nigerian medicine manufacturer has yet attained WHO cGMP or WHO

prequalification status. Consequently, local firms cannot participate in

international tenders for pharmaceutical supplies and their ability to participate

in the international pharmaceutical trade is limited.

Access to affordable funding for local manufacturers is hampered by high

bank interest rates Consequently, funds required for working capital and

upgrading of facilities are limited.

Opportunities

The large market size, strong demand and the need for improved

management ofinfectious diseases (especially HIV/AIDS, malaria, TB, and

―neglected childhooddiseases‖).

Increased research and development efforts at the National Institute for

PharmaceuticalResearch and Development and national universities can lead

to the emergenceof new therapeutic agents, nutraceuticals and

phytomedicines from Nigeria‘s abundantindigenous biodiversity and traditional

medicines.

Positive economic growth in recent years and macroeconomic stability are

helping toreduce poverty and increase purchasing power.

60 per cent of drug manufacturing in the ECOWAS subregion takes place in

Nigeria,underlining the huge subregional market.

The increasingly visible and active National Agency for Food and Drug

Administrationand Control (NAFDAC) and, in particular, its aggressive

campaign against substandardhealth products have shown a positive impact

on reducing the counterfeitdrugs trade.

Regional regulatory harmonization (in progress) through the West African

DrugRegulatory Authorities Network (WADRAN) to promote trade within the

West Africansub region.

Trade incentives introduced by ECOWAS for pharmaceuticals within West

Africaare helping to promote movement of pharmaceuticals within the sub

region.

The establishment of the West African Pharmaceutical Manufacturers

Association(WAPMA) which aims to strengthen local medicine production.

Government policy aiming to achieve local production of 70 per cent of

essentialMedicines.

Government ban on imports of some essential medicines for which there is

adequatedomestic capacity and technical skills.

Establishment of the National Health Insurance Scheme (NHIS) to provide

universalhealthcare coverage by 2015 will provide funds for the required

essential medicines.

Threats

The unacceptable level of poverty - very weak purchasing power threatens the

scopefor marketing health products and encourages the proliferation of

informal openmarkets. This informal market for medicines exists throughout

Nigeria and in villages.and rural communities it is the only means of access to

medicines. The cost ofmedicines sold in the informal market is significantly

lower than that of those sold atregistered pharmacy stores.

Failure to remedy the dysfunctional distribution system; a combination of

political will, capacity building and technical/logistics support is needed if the

distributionsystem for health products is to be improved.

The stigma of substandard health products affects the international marketing

ofmedicines produced in Nigeria. However, the activities of WADRAN and

WAPMAwill promote marketing of health products manufactured by members

of the PMGMANwithin the sub region.

Drug price control policy has not yet been articulated by the Federal

Government.The current prices of health products in the market are high and

most Nigerianscannot afford them.

Corruption is widespread in most transactions. This practice, if not adequately

addressed,may eventually discourage local manufacturing of health products.

17 Business Opportunities in future

Nigeria and Algeria are on the radar of Indian pharmacos, as they offer excellent

export opportunities for the Indian firms. After South Africa, Nigeria and Algeria have

emerged as leading importers of pharmaceutical products from India and to further

consolidate India's hold in the African markets, regular buyer seller meets and

exhibitions are being held to showcase India‘s pharmaceutical capabilities, says Dr P

V Appaji, director general, Pharmexcil.

India‘s exports to African countries especially Nigeria and Algeria have been on the

rise during the past the one decade. At present Algeria is emerging as the second

biggest pharma market in Africa with about $3 billion worth of imports and there is lot

of potential for Indian pharma industry to explore and grab the opportunities in this

market.

Keeping this in view, the Pharmaceuticals Export Promotion Council of India

(Pharmexcil) is pushing further and planning to organize Buyer Seller Meet (BSM) for

the first time in Algeria along with the second edition of Expo-cum-BSM in Nigeria.

Taking this as an opportunity, particularly exporters of APIs, semi formulations

(pellets), specialty formulations like oncology, anti-retrievals, herbals, nutraceuticals,

medical devices etc., can make maximum out of it by way of developing new

business relations with suppliers, manufacturers, pharma associations and

regulators for a sustainable future growth.

―With the kind of success we have achieved in our first edition in Nigeria last year,

this year we are moving forward a step further and planning to organize an exclusive

BSM (Buyer seller meet) meet in Algeria.

Apart from this, as a part of our second edition in Nigeria we have planned an Expo-

cum-BSM and expecting a very good response from the Nigerian manufacturers and

suppliers. With the active support of Indian embassy and unrelenting efforts by

Pharmexcil we are determined to further boost Indian pharmaceutical exports to the

African nations,‖ said Dr. Appaji.

When asked about the various hurdles faced by the Indian pharma exporters to the

African countries, DrAppaji felt that understanding the drug regulations of each

country is important.

Though the African countries have acknowledged the quality generics from India,

countries like Nigeria are restricting the formulation exports from India.

Another important issue hindering Indian exports to African countries is the issue of

counterfeit drugs. Some self-interested groups are supplying fake drugs in the name

of Indian exporters.

This is a big concern for the country‘s pharma industry. Moreover, defining and

understanding counterfeit drugs is important, because legitimate generics are being

propagated as counterfeit.

To overcome these issues Indian embassy is closely associating with National

Agency for Food and Drug Administration and Control (NAFDAC) and in regular

touch with various pharma and manufacturing associations in African countries to

improve understanding and transparency.

http://www.infodriveindia.com/Export-Import-News/News/News.aspx?Id=12590&Tag=export-

news&GridInfo=export+news+Export+Import+News01_Latest+Export+Import+News020

Nigerian drug regulator to open Indian offices

AHMEDABAD: Reacting to the seizure of fake Chinese drugs carrying a made-in-

India tag, the Nigerian drug regulator has decided to set up its offices in India.

The presence of Nigeria's National Agency for Food and Drug Administration and

Control (NAFDAC) offices in prominent cities like New Delhi, Mumbai and

Ahmedabad (likely city in Gujarat) will ensure that the regulator is in the know of

the Indian drug supplying companies.

NAFDAC's director general Paul B Orhii, told ET on Wednesday: "We are here as

we want to work jointly with the Indian government to fight the counterfeit drug

menace. We plan to have a number of offices in India by the end of this year."

It makes a lot of sense for Nigeria to have an office in India because India is the

second-largest drug exporter to Nigeria, after Europe. As per the industry

estimates, Nigeria's pharma market is about $10 billion and 60% of its drug

requirements are through imports. Indian drug companies command a 12-15%

share in Nigeria's imports.

A NAFDAC delegation was on a visit to Ahmedabad on Wednesday to meet the

top pharma companies and representatives of Indian Pharmaceuticals Alliance

(IPA) and Indian Drug Manufactures' Association (IDMA).

IDMA's Gujarat chapter honorary secretary ChiragDoshi told ET after the meeting

that the association suggested not only to set up offices in India but also to have a

registered agent system in place to avoid recurrence of such incidents (supply of

fake drugs) in future. IDMA and IPA are engaged with NAFDAC as the issue has

serious implications on the image of Indian generic drug industry.

To begin with, NAFDAC may come up with three offices. "We are looking for

suitable locations to set up our offices, but certainly for now, Delhi, Mumbai and

Gujarat are on the radar", MrOhrii said. Gujarat, that contributes 40% of India's

pharmaceutical production, is an important state for NAFDAC to set up its office.

The offices will help in identifying the Indian drug suppliers in advance and would

help NAFDAC to know the place of origin of the imported drugs, MrOhrii said.

He further emphasized that the Indian government had the resources and

manpower to tackle the menace and that NAFDAC has sought support from the

Indian authorities. On Tuesday, NAFDAC met top officials in New Delhi and

discussed the fake drug issue. According to the Nigerian delegation, India has

assured to extend help to Nigeria in building its drug production capacity, setting

up a detection center, and a drug testing & quality testing center

Recently, NAFDAC confiscated a large consignment of fake anti-malarial generic

pharmaceuticals with `Made in India' tags shipped from China in the month of

May. According to NAFDAC, had the drugs not been seized, they could have

affected as many as 6, 42,000 patients.

Following the incident, the Chinese authorities have admitted that the

consignments originated from China and the local manufacturers needed to be

punished. Meanwhile, Nigerian government has contacted Interpol to take up the

issue of fake drugs originating from China. On this MrOrhii, said, "We would

certainly like the perpetrators of the crime to be tried in Nigeria."

http://articles.economictimes.indiatimes.com/2009-08-

05/news/28488385_1_nafdac-supply-of-fake-drugs-indian-drug-manufactures-

association

19 CONCLUSIONS AND SUGGESTIONS

There are various conclusions and suggestions in this report.

There are number of companies available in pharmaceutical sector.

India has vider scope of it.

India has to go for some listed drugs industries. For some various drugs

Nigeria has limited scope and availability.

Painkiller sector is most preferable sector for export.

There are various competitive advantages in it.

So from that industries will gen high rate of return.

To make some changes in governing policies because it is make easy to

entrance of other industries.

The study also indicates the good structure of it.

It also indicate that huge scope is to import grugs of large deases.

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05/news/28488385_1_nafdac-supply-of-fake-drugs-indian-drug-manufactures-

association

http://www.botany.uwc.ac.za/sci_ed/grade10/ecology/introduction.htm http://www.ngex.com/business/public/newsinfo.php?nid=2 Reference books:

Giddens, N., J. Parcell, and M. Brees. Selecting an Appropri-ate Pricing Strategy.

Ames: Iowa State University Extension, 2005.Paresh shah, Marish gupta