BusinessDay 06 Feb 2018

BUSINESS DAY
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a different look at business &market news
NEWS YOU CAN TRUST I TUESDAY 06 FEBRUARY 2018
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NAICOM under pressure to de-license
non performing companies
Notable consumers
of insurance,
as
well as other
concerned stakeholders
who think image and
reputation of the insurance
industry should be
protected, are asking on
the National Insurance
Commission (NAICOM)
to de-license non-performing
insurance companies.
They believe that any
insurance company that
cannot be able to pay
claims as and when due
should not be allowed
to remain in business.
Hence, the expect NAI-
COM to close its eyes and
hit the nail on the head.
But is NAICOM ready
for burial of any dead
company now?, the answer
is NO!. As a top
executive put’s it “Cost of
Burial” for an insurance
company is far higher
than cost of curing the
sickness. This is because
of the uniqueness of insurance
business, being
a long termcontract with
client’s risks for the long
haul.
Rather than come with
a harsh pronouncement,
NAICOM has through
its Customer Complaint
Bureau ensured that all
established claims in
the insurance industry
are paid, and this has
recorded good result.
Meanwhile, NAICOM
has called on insurance
consumers with genuine
unsettled claims problems
to channel their
grievances through its
Complaint Bureau Unit
(CBU).
The Commission also
said the Bureau has been
upgraded and is now
headed by a Deputy Director
in the commission.
The Commission had
signaled the issue of
effective and efficient
service delivery to consumers
as a key priority
with its establishment
of the Unit to deal with
complains from members
of the public against
any insurance operator
that fails to pay genuine
claims.
Many aggrieved consumers
have continued
to access this desk to
register their complaints
with, the Commission
said, advising consumers
to take advantage of
this desk and report your
challenges to us and I
assure you that any company
found in default
shall be compelled to do
the needful,”
Besides that, it is on
continuous monitoring
of the state of affairs of all
the companies, particularly
those with liquidity
issues to ensure that
shareholders fund is not
eroded.
Examining capacity utilisation
in manufacturing sector
Capacity utilisation
measures
the rate
or extent to
which the
productive capacity of a
factory or plant is utilised.
According to Business
Dictionary, capacity utilisation
is expressed usually
as a percentage and
is computed by dividing
the total capacity with the
portion being utilised.
In simple terms, if the
capacity utilisation of a
firm is 30 percent, the
firm is not utilising 70
percent of its installed
capacity.
Capacity utilisation
is not limited to firms
but is also extended to a
country. If the resources
of a country are underutilised,
there are chances
that its capacity utilisation
will be low.Trading
Economics calculated the
capacity utilisation of Nigeria
in the first quarter of
2017 and arrived at 48.50
that a lot of installed capacity
is under-utilised in
the sector.
Factors lowering the
capacities of Nigerian
manufacturers are poor
power supply, lack of raw
materials due to cost of
foreign exchange, high
taxation, unfavourable
policies and poor patronage.
Government’s efforts
at stabilising the foreign
exchange market in
the late first half of last
year did a lot of magic
in raising the capacity
utilisation in the sector.
By introducing the Investors
and Exporters (I &E)
windows, many manufacturers
were able to access
greenback with which to
import inputs. Government
has also mandated
ministries, departments
and agencies (MDAs) to
ensure that 40 percent of
local products are patronised
during bids. This is a
sure way of raising capac-
Konga’s sale to ignite ecommerce fireworks
FRANK ELEANYA
Nigeria e-commerce
space
is poised for
competitive
fireworks as a result of
the sale of Konga to Zinox
Group, an integrated information
and communication
technology firm
and the owners of Yudala,
another promising platform.
Details of the deal
which broke on Saturday,
3 January, show that
Zinox Group which now
holds 99 percent equity
would assume ownership
of the e-commerce
platform Konga.com;
KOS-Express, the logistics
arm of the business; and
KongaPay, the company’s
integrated mobile money
payment channel with
over 100,000 subscribers.
Surprisingly, Gideon
Ayogu, corporate communications
manager,
Zinox Group told BusinessDay
that the new
owners have no plans to
marry Yudala and Konga
into a new platform. Konga,
which was launched
in 2012, will remain as a
separate entity from Yudala
but there are plans
to expand to other African
capitals.
A decision not to marry
the two platforms may
come as a surprise to
some analysts who predicted
its imminence.
To be sure, the search
for a buyer has been on
for quite some time. In
fact, Zinox completed
negotiations after months
of back-and-forth with
foreign investors Naspers
and AB Kinnevik.
Konga under CEO
Shola Adekoya, began to
show symptoms of a company
undergoing seri-
ous financial stress when
in November 30, 2017 it
sacked over 300 members
of staff – around 60 percent
of its total workforce.
Prior to this event, the
company had in January,
2016 announced that its
then CEO Sim Shagaya was
stepping down. Two weeks
later, the company sacked
10 percent of its staff.
After the sack of 300
staff in 2017, the company
told its customers in 2018
that it was ending its payon-delivery
(POD) model.
“The reason Konga
pivoted from POD was
because Fedex and UPS
pulled the plug on delivery
as the return rate was
too high,” a source close
to the Zinox deal told
BusinessDay.
In an article posted on
Medium on 2 February
2018, Shola Adekoya disclosed
that the return rate
was as high as 25 percent;
however, ending it has
reduced the number to
1.9 percent.
A marriage between
Yudala and Konga, according
to some analysts,
could put Zinox on the
right footing to compete
favourably with Jumia,
the number one e-commerce
platform in Africa.
But, the Zinox Group has
said it is not happening.
One thing though the
market can expect is that
Konga is not just competing
in Nigeria alone anymore
but will take Jumia
on the African level too.
The market will win and
the consumers most of all
will win.
“Yudala has been
mostly hype and no substance.
Those who play
within the switches see
minimal transactions,”
the source told this writer.
It could explain why no
marriage is taking place.
percent, from 48.50 percent
in the fourth quarter
of 2016. South Africa’s
was above 75 percent
within the period. While
this may be debatable,
the fact remains that a lot
of potential is Nigeria is
lying fallow.
It is often appropriate
to measure the capacity
utilisation of productive
activities like manufacturing.
Capacity utilisation in
Nigeria’s manufacturing
sector moved up from
44.3 percent in the first
half of 2016 to 55 percent
in the same period of
2017, according to data
from the Manufacturers
Association of Nigeria
(MAN).
Though this may seem
a progress, it still shows
ity if it isimplemented.
However, government
and DisCos have no solution
to poor power supply
in the country. Power
has a stronger impact on
capacity utilisation than
many factors. Without
energy, production does
not take place and installed
capacity remains
un-utilised.
To increase capacity
utilisation metric, analysts
call on the DisCos
to increase power supply
to industrial zones, and
manufacturers to begin
to expand the activities of
MAN Power Development
Company to clusters that
are spending fortunes on
energy, including those in
the South-East, Kano, Kaduna,
Rivers, and Ondo/
Ekiti/Oyo, among others.
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