Toyota Starlet ticks the right boxes, offers great value

BY MIKE OCHONMA

From the first time Toyota Starlet hit dealer showrooms in Nigeria, competition within the compact hatchback segment became more pronounced among auto dealers especially in the new car segment.

Initially, the resurgence of the Starlet into the country after many years of extinction generated mixed feelings and before one could say Jack, it was gradually becoming an immediate hit selling like brandy specials on a Friday night in Lagos, the centre of excellence, in Abuja, the nation’s political capital, and the country’s oil rich city of Port Harcourt. And this no doubt shows the power of brand loyalty.

In Nigeria, it is estimated that not less than 72 percent of passenger sales are in the small car market and the Toyota Starlet appears to be racing towards strong reckoning to be among the most popular B hatchbacks sold in the market today.

Analytical minds in the global automotive industry say the Starlet is still based on the Suzuki Baleno with a revised front end with new headlights, wide-mounted fog lamps and chrome detailing tying it all in.
Depending on the market, there is a five-speed manual or four-speed automatic transmission option which would probably have an effect on price.

Toyota Starlet

The interior has also received an upgrade with “swooping accent lines”, a centrally mounted infotainment screen and a good old-fashioned instrument binnacle. There are also new front seats with improved lateral and shoulder support.

In terms of infotainment the different variants get a seven-inch touchscreen and the XR a nine-inch screen, which are all Apple CarPlay and Android Auto compatible. There are also USB ports behind the back.

The clutch is light and gear changes smooth and easy, and with the new engine providing a bit more power, there won’t be as many changes when driving.

Safety features have been improved across the range with stability control, ABS, EBD and hill start assist and rear parking sensors standard. The XR gets a reverse view camera.

While on motion, the steering is exactly as one would expect from a car in this segment. It is quite light with enough feedback when the driver is tackling sharp corners and, considering its target market, it suits its purpose.

The body shell has been improved in terms of rigidity and stiffness and changes to the rear torsion beam as well as 20mm more suspension travel and 10mm wider tyres across the range all add up to a comfortable and compliant drive.

The Starlet will always be a good buy and there is definitely still an appetite for affordable hatchbacks in Nigeria, especially when already existing hatchbacks are a popular choice among buyers. It provides decent value for money and it will be interesting to see how it fights for top spot in the sales charts.

Africa’s largest private sector event gets underway in Abidjan

Over 1,500 business leaders, investors and policymakers from Africa and around the world are in Abidjan, the Ivorian capital, for the annual summit of the Africa CEO Forum, the largest international meeting of the African private sector.

The two-day event spanning 13 and 14 June, 2022 will feature conferences, debates and high-level meetings dedicated to highlighting the driving role of the private sector in the development of the continent.

Organised by Jeune Afrique Media Group in collaboration with the International Finance Corporation (IFC), an arm of the World Bank, the forum offers CEOs access to high-level networking with the continent’s leading decision makers. For investors, it creates new business opportunities in an environment conducive to transactions, while governments benefit from the analysis of consultants from leading consultancy firms to guide or reinforce their strategy.

Speakers at the 2022 Africa CEO Forum include Dinesh Rathi, CEO, Lagos Free Zone; Abdul Samad Rabiu, executive chairman, BUA Group; Don Graves, deputy secretary of commerce, U.S. Department of Commerce; Makhtar Diop, managing director, IFC; Mountaga Sy, managing director, APIX; Soren Toft, chief executive officer, MSC; Mohamed Anouar Jamali, CEO, OCP Africa; Alioune Ndiaye, chief executive officer, Middle East and Africa, Orange, among others.

Africa CEO Forum

Nigeria’s Vice President Yemi Osinbajo is among political leaders taking part in the event. He will join Ghanaian President Nana Akufo-Addo and other business and political leaders in the opening panel to discuss the topic “Economic Sovereignty: From Ambition to Action”.

The vice president will also hold bi-lateral meetings with different stakeholders, including Queen Maxima of Netherlands, United Nations Secretary-General’s Special Advocate on Inclusive Finance for Development, Makhtar Diop, managing director, IFC, among others.

Founded in 2012, the AFRICA CEO FORUM is an annual gathering of decision-makers from the largest African companies, as well as international investors, multinational executives, heads of state, ministers, and representatives of the main financial institutions operating on the continent. As a platform for high-level business meetings and a place to share experiences and to identify trends that affect the business world, it is committed to offering concrete and innovative solutions to help the continent and its companies move forward.

Copper trends lower over renewed China lockdowns, recession fears

BY ONOME AMUGE

Copper prices plunged deeper into bearish territory as investors lost appetite over the prospect of weak economic growth hitting metals demand after renewed Covid-19 lockdowns in China and a rise in interest rates.

Three-month copper on the London Metal Exchange (LME) was down 0.8 percent at $9,540 a tonne, after dropping 1.2 percent in the previous session.

Nitesh Shah, commodity strategist at exchange-traded fund provider WisdomTree, explained that copper is coming under several sorts of pressure as a result of the prolonged lockdown in China, noting that the country’s zero-Covid policy is hindering economic growth.

“You’ve also got central banks in other parts of the world maintaining a very hawkish tilt and that puts into question whether economic growth outside of China is going to decelerate faster,” Shah added.

Official data also showed a decline in China’s industrial usage as tight Covid-19 curbs resulted in weak demand for steel, aluminium and other industrial commodities.

Meanwhile, a group of indigenous Peruvian communities in Peru, the world’s second largest copper producer, agreed to temporarily lift a protest against MMG’s Las Bambas copper mine. The protests, according to reports, had forced the company to halt operations for over 50 days, leading to tight supplies from the South American region.

Other base metals also traded lower as LME aluminium lost 1.9 percent to $2,709.50 a tonne, nickel slipped 2 percent to $27,450 a tonne, zinc fell 0.7 percent to $3,736 a tonne, lead was down 1.9 percent to $2,154, and tin dipped 1.5 percent to $36,200 a tonne.

Sugar, coffee futures slip on ICE

BY ONOME AMUGE

Raw sugar futures were slightly lower on the Intercontinental Exchange (ICE) as dealers awaited a recovery in production of the sweet commodity following a slow start to the season, though it is likely to remain below the same period last season.

July raw sugar fell 0.6 percent to 19.18 cents per pound (lb), while August white sugar was down 1.1 percent to $572.10 a tonne.

Market dealers also noted that strong exports and an improved production outlook in India have continued to keep a lid on prices.

Commerzbank, in its report on the commodity, remarked that this is probably one reason why the sugar price has been unable to lastingly exceed the 20 cents per pound mark.

In the coffee market, prices remained bearish as September arabica coffee shed 0.8 percent to $2.3290 per pound, while September robusta coffee lost 0.1 percent to $2,106 a tonne.

Dealers, however, noted that the coffee futures remained supported by the low level of ICE-certified stocks and strong differentials in the physical market.

The United States Department of Agriculture (USDA), in its foreign agricultural service report, said coffee production in Vietnam was expected to total 30.93 million bags in 2022/23, down from the previous season’s 31.58 million bags.

The report on the world’s top robusta producer further stated that though production is slightly lower than the previous year, the 2022/23 crop is also considered a good year for coffee production thanks to favourable weather conditions.

Cocoa also traded lower at both ends of the Atlantic as September New York cocoa declined 0.3 percent to $2,466 a tonne, while September London cocoa fell 0.2 percent to 1,759 pounds per tonne.

The International Cocoa Organisation (ICCO), in its production forecast for the current 2021/22 season, said global production is projected to decline by 6 percent to 4.923 million tonnes. It added that several factors including adverse weather conditions and diseases are negatively affecting production for the ongoing season, with concerns for the size and quality of the ongoing mid-crop in West Africa, especially in Cote d’Ivoire and Ghana, the largest producing countries.

“Following the Russia-Ukraine conflict, trade disruptions, sanctions and high freight rates are affecting cocoa and fertilizer trade. The shortage of fertilizers on cocoa farms will very likely affect the quantity, quality and size of cocoa beans next year,” ICCO projected.

Despite the geopolitical and economic challenges, cocoa demand for the first half of the 2021/22 season has recorded a sustained positive stance, supported by the resumption of activities in the air travel sector, which is a major gateway for chocolate sales, as well as the recommencement of seasonal festivities globally, with confectionery sales, which include chocolate, steadily heading to pre-Covid-19 era trends.

Meanwhile, cocoa prices recorded an upward trend in Ondo, Nigeria’s biggest cocoa-producing state, according to a market report by the Cocoa Association of Nigeria (CAN).

Segun Adewumi, executive secretary of the association, said graded cocoa stood at N1.2 million or $2,887 a metric tonne from its previous rate of N1.1 million per tonne, after being certified fit for export by government inspectors.

Adewunmi attributed the price surge to the improved quality of the beans on sale and favourable weather conditions, adding that more buyers and exporters had increased purchases of the country’s most profitable soft commodity export.

Coscharis dangles free service voucher promo for Renault customers

BY MIKE OCHONMA

 

Coscharis Motors Plc has announced a free service voucher worth N150,000.00 for every Renault vehicle purchased from any of the company’s showrooms in Nigeria.

Making the announcement during the recently concluded Lagos Motorfair, Sola Adigun, general manager, Renault sales, Coscharis Motors, said, “We want to use the opportunity of our presence at this motor fair to announce to our customers and prospects that we will be offering a free service voucher worth N150,000.00 (one hundred and fifty thousand naira only) for every Renault vehicle purchased from Coscharis Motors at this motorfair and afterwards.”

Explaining further, Adigun mentioned that the free service voucher is one of the exciting giveaways which Renault customers stand to gain from buying a Renault vehicle from Coscharis Motors Plc. However, the free service voucher offer promo extends beyond the just concluded motorfair to all showrooms across the country until July 30th this year.

Also still available for customers to have an easy access to purchase any of their preferred Renault vehicles is the finance scheme from the sister company, Coscharis Mobility, that provides payment spread over a period of time after 30 percent initial deposit of the principal value.

Renault Oroch

Also commenting during the event, Abiona Babarinde, general manager, marketing corporate communications, Coscharis Group, said the company is still assembling two variants of the Renault brand locally at its assembly plant in Awoyaya, Lagos, namely, Logan and Duster.

”Clearly, we have the capacity to add more variants to our local assembly line and hope that the time will soon come when the infrastructural deficit in the country will improve to give a conducive business environment to investors like Coscharis that still believe in our nation Nigeria. Then we shall gladly increase the number of locally assembled variants and probably assemble all the variants that we market in the country,” Babarinde said.

“More importantly for us is that this gives us the opportunity to deliver value to the bigger economy in terms of job employment amongst other economic advantages with the sustenance and expansion of the local assemblies across the country,” he said.

Coscharis also offers a trade-in option to customers who currently own a Renault vehicle and wish to exchange for a new model.

Renault was one of the brands which put up an outstanding presence at the recently concluded Lagos Motor Fair. Five variants of the brand were put on display for visitors at the last motor fair, including Logan and Duster, which are both assembled in Nigeria. Others are Koleos, Oroch and Kwid.

The Koleos is designed with a sense of detail and personality enhanced by its sleek appearance and athletic curves. Behind its chic urban styling, Koleos has the DNA of a true 4X4. The all-mode 4×4-i technology allows you to select the transmission mode that your vehicle will need to be equally at home on dirt, mud or sand as it is on tarmac. It comes with a range of driver assistance technologies including active emergency braking, blind spot detection system, easy trunk access and R-Link 2 media system.

For the Duster, customers can choose from 1.6-Litre to 2.0-Litre engine but whichever engine, it is built with a robust off-roader looks. With the superb ground clearance, the Duster is a practical and durable vehicle for the Nigerian road. The interior of the all-new Duster reflects its generous, adventure-seeking nature. The spacious cabin is bright and reassuring. The driver and passenger seats provide plenty of support to ensure your comfort wherever you go. The upholstery features a high-quality finish, as does the dashboard, where particular emphasis was placed on ergonomic design.

Simple and intuitive, the multimedia system Media Nav with a touch screen allows you to navigate through all the different functionalities: navigation, phone, radio, Aux/USB ports and Bluetooth® connection to listen to your favourite music. It also comes with a hands-free card to lock and unlock the doors from a distance as well as assist to start the air-conditioning before getting into the car.

On the other hand, the new Renault Logan has an even more modern and dynamic design. With redesigned front and rear-end panels featuring the new Renault brand light signature, New Renault Logan is a beauty to behold. New Renault Logan has five generous seats to comfortably accommodate all your passengers.

Enjoy useful and smart new storage areas, including a phone pouch and a front passenger side net pouch. There is a new 12V output in the rear for charging your devices. There is also a 1/3-2/3* split-fold rear bench seat and a spacious boot to transport everything you need in the way that suits you. Combine utility and pleasure for a journey you are sure to love.

Inside the Renault Kwid, there is plenty of headroom, legroom and elbowroom for the driver plus up to four passengers. There are ingenious storage spaces everywhere. The Renault Kwid’s class-leading boot space of 290L can be extended up to 1100L, making it the perfect partner for a long road trip.

NIGERIA MONETARY POLICY COMMITTEE – At last, the hawks carry the day

BY VETIVA CAPITAL

What shaped the past week?

Global: Global investors continue to favor stocks in the Asian-pacific region, as a weaker Yen and easing of restrictions in parts China drives buy-side action in the region. The Hang Seng, Nikkei-225 and Shanghai Composite all closed in the green w/w, rising 3.43%, 2.80% and 0.23% respectively. Investors also reacted favorably to the latest economic data out of the region; in Japan, gross domestic product contracted 0.5% y/y in Q1’22 compared to a contraction of 2.2% in Q1’21. Meanwhile, in China May inflation printed at 2.1% y/y according to data from the National Bureau of Statistics. Moving to Europe, investors remain bearish due to the impact of runaway inflation and higher energy prices on company earnings in the region. The German DAX, French CAC, and London FTSE-100 all fell sharply w/w, losing 3.70%, 4.01% and 3.14% respectively. On the data front, the Eurozone reported a 5.4% y/y expansion for GDP, while GDP for the European Union expanded by 5.6% y/y. Additonally, European Central Bank (ECB) announced its decision to “leave the interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility unchanged. The bank stated that it is planning to hike its key interest rates by 25 bps at the July meeting. Furthermore, the bank revealed that the Asset Purchase Programme (APP) will end on July 1 Finally, in North America sentiment remains bearish as well, as the latest inflation numbers from the U.S. dampen investor sentiment. US inflation surged to a 40-year high of 8.6% in May after moderating to 8.1% in April. At time of publishing the S&P 500, Nasdaq and Dow Jones were down 3.84%, 2.22% and 3.34% respectively.

Domestic Economy: According to Debt Management Office, Nigeria’s debt stock increased by 5.1% q/q to ₦41.6 trillion in Q1’22. The slight uptick was driven majorly by a net-accumulation of ₦1.3 trillion from domestic sources and the $1.25 billion Eurobond issuance in the month of March. As a result of the uptick, Nigeria’s Debt-to-GDP ratio has increased to 24%, below the 40% medium-term threshold of the DMO. Although the debt-to-GDP ratio is quite modest, external debt stock continues to rise amid falling crude receipts and a weaker Naira. Despite increased external borrowings in recent times, the debt-mix showed that Nigeria has more outstanding domestic debt (60% of debt stock) than external (40% of debt stock). The pace of external borrowings could ease as tighter financing conditions prevents Nigeria from raising $990 million in the international debt market. Thus, we expect more domestic borrowings in the near term, as the Government moves to fund its amended budget.

Equities: It was a mixed week of trading across the NGX; however, the bulls came out on top as they drove activity at the latter stages of the week, propping up the market. The local market rose 0.50% w/w, as interest in the telecommunications space, helped push the market higher. MTNN rose 4.35% w/w, to settle at ₦240.00; the stock remains the second most capitalized stock on the NGX after rival AIRTELAFRICA. As earlier mentioned, sentiment across the market was mixed with the Banking and Consumer Goods sectors trading lower w/w, while the Industrial Goods and Oil and Gas sectors closed higher w/w. In the Banking sector, losses in ETI, FCMB, ZENITHBANK and FBNH saw the sector plunge 2.18%, while in the Consumer Goods space, sell-side action in brewer NB and other mid-small cap players in the space saw the sector sink 0.12% w/w. on the other hand, WAPCO saw renewed interest following last week’s sell-side action in the counter; the cement maker saw its stock rise 3.70% w/w to settle at ₦28.00. Finally, in the Oil and Gas space, interest in oil marketers was the primary driver of its performance as the sector rose 1.14% w/w.

Fixed Income: In the fixed income market, trading activity was mixed this week, with yields trending upwards in the NTB and OMO spaces, while the bonds segment was majorly buy-side driven. In the bonds space, investor activity was largely mixed with a bullish skew, as we observed aggressive buy-side action at the short-mid end of the market, while select counters at the long-end saw some pockets of demand as well. Yields on benchmark bonds eased 3bps w/w as a result. Moving to the T-bills segment; action in the market was largely bearish this week, with investors selling off tenors at the short end consequently, yields rose 19bps on average. Finally, the OMO space also witnessed selloffs at the short end of the curve as result, average yields rose 15bps w/w.

Currency: The Naira depreciated by ₦1.50 w/w at the I&E FX Window to close at ₦421.25.

What will shape markets in the coming week?
Equity market: Despite today’s positive close, market sentiment remained slightly bearish as the session ended with more losers than gainers (18 to 14). Although we anticipate further recoveries in some of the stocks with beaten down prices, however we do not rule out sell-offs in specific counters next week.

Fixed Income: In the absence of significant market catalysts, we anticipate further bearish trading in the bonds market next week. Meanwhile, the NTB and OMO spaces are expected to trade quietly, as attention shifts to next week’s T-Bills PMA.

Currency: We expect the naira to remain largely stable across the various windows of the currency space as the CBN maintains interventions in the FX market.

NIGERIA MPC – At last, the hawks carry the day
At its third meeting of the year, the Monetary Policy Committee (MPC) raised the Monetary Policy Rate (MPR) by 150bps to 13.0%. While six members voted to raise interest rates by 150bps, four members preferred a 100bps hike, while one opted for a 50bps hike.

Nigeria joins other African economies like Egypt (+200bps YTD) and Ghana (+450bps YTD) in raising interest rates to curb inflation. On a comparative basis, however, Nigeria’s negative real rate of return is still above Egypt and South Africa’s levels. If there were no capital controls, the MPR needs to rise to 15.0% – 15.5% to match the current real rate of return in Egypt and South Africa, respectively.

The backdrop remains the same
The background underpinning this decision is similar with the last meeting – the ongoing war in Ukraine, backlash from sanctions on Russia, lockdowns in China, swift change in monetary policy stance, and risk aversion in the global financial markets.

The Ukraine-Russian war aggravated supply chain disruptions as major trade routes were closed amid sanctions on Russia. Should the war escalate, this could worsen already high food inflation, as food prices rise to levels not seen in 40 years. In our view, the resurgence of the pandemic in China could spill over to resource-dependent emerging economies in form of lower external demand and lean current account balances, while reducing demand for oil. The decline in Chinese demand is however inadequate to stop the oil bull, as oil prices sit comfortably at $114/barrel. China could decide to buy Russian crude at discounts, risking international sanctions, that could boomerang on emerging markets in form of higher imported inflation.

The surge in inflation has led many central banks to raise interest rates and curb external pressures on their economies. Notwithstanding, there have been net portfolio outflows from emerging markets since the US Fed began raising its policy rate in March this year. The strengthening of the dollar to multi-year highs has attracted portfolio interests and led to reduced demand for safe-haven assets such as gold, a trend that has occurred in previous hiking cycles. Thus, the stock markets’ rout is far from over. Nigeria appears to be exempted with a positive year-to-date return of 21.6% in naira terms. However, this is due to the existence of capital controls and FX backlogs, which have dented foreign appetite for Naira assets.

Soybean records biggest weekly gain in 2 months as demand firms

BY ONOME AMUGE

Despite a dip at the closing session, soybean futures jumped to their biggest weekly gain in two months, underpinned by a strong demand and delayed U.S. soybean cultivation.

At the close of the week, the most-active soybean contract on the Chicago Board of Trade (CBOT) traded flat at $17.68 a bushel, after hovering around $18 a bushel, its biggest rise since early April.

The United States Department of Agriculture (USDA), in its latest report, said weekly old-crop soybean export sales totalled 429,900 tonnes, up 41 percent from the average of the previous four weeks.

Customs data showed that China imported 20 percent more soybeans in May compared to April, due to the arrival of some delayed cargoes. The world’s largest soybean importer also imported 9.67 million tonnes of the oilseed in May, 8.08 million tonnes above April.

Tobin Gorey, director of agricultural strategy at the Commonwealth Bank of Australia, remarked that the U.S.’ strong export sales of soybeans have added support to old crop prices. Gorey added that slow U.S. soybean planting and the resulting forward shunt of crop development has raised concerns over new crop prices.

On a similar trend, wheat and corn closed the week over 3 percent and 6.2 percent higher, respectively. The wheat market surged to its first weekly gain in almost a month on the back of tightening global supplies, while concerns about hot and dry weather stressing the U.S. Midwest crop during its early stages of development added support to corn prices.

Meanwhile, Argentina’s Rosario grains exchange projected a drop in the country’s 2022/23 wheat output at 18.5 million tonnes, down from 19 million tonnes previously estimated, citing reduced planting by farmers due to dry weather.

The exchange also shrank its forecast for the planting area of the crop to 6.2 million hectares, down from a previous estimate of 6.35 million hectares, the lowest in 12 years.

Léon Walras: The whole economy through General Equilibrium Theory

BY ANTHONY KILA

“We have to know what we want to do. If we want to harvest in the short term, we need to plant carrots and salads; and if we have the ambition to plant oak trees, we must be wise enough to say: my grandnephews will owe me this shading.” These words were written in a letter to a friend at the end of the 19th century. The author of the words is our economic thinker of interest today, and his name is Léon Walras. He was a mathematical economist bent on developing a pure economic theory and conscious of the slow fate of truth and the destiny of complex thinking and thinkers; he hoped that his efforts would be recognised and appreciated in the very long run. It is safe today to say he was right.

Léon Walras was born in December 1834 in Evreux, a commune in and the capital of the department of Eure, in the French region of Normandy, as Marie-Esprit-Leon Léon Walras, to Antoine Auguste Walras, a school administrator and an aficionado economist and Louise Aline de Sainte Beuve, the daughter of an Evreux notary linked to French nobility from whom Léon Walras will later inherit close to 100,000 francs. Though not a professional economist, Antoine Auguste Walras was the major teacher of his son Léon and the father’s passion for economics is perhaps one of the most influencing factors that converted the son into becoming an economist.

Though one of the very few members of our Unforgettable Pantheon remembered simply as an economist, Léon Walras started his restless life far away from economics. He studied engineering, went into banking, worked as a journalist, he also tried his hands on writing romantic novels before eventually turning to economics. Unlike most scholars, Léon Walras came into the study of economics from practice to theory. Part of the many things he did before becoming an economist was to manage a cooperative bank in the mid 19th century. His idea of finding a compromise between socio economic classes rather than lead a confrontation as socialists insisted or assimilation as classical economists advocated was the core motif of his first public lectures around 1866 to 1868.

Léon Walras

With no formal training as an economist and with very unorthodox views and methods perceived as esoteric at his time and place, Léon Walras struggled to be admitted into the community of economic scholars as a peer let alone an authority. One of my own unforgettable teachers, the ever witty and always unsettling Prof Carlo Del Monte, a mathematical economist, once remarked to us in his own class of a group of selected doctoral students of economics that the “position of Léon Walras then was like mine today as I try to show you in this room the other side of economics.”

Things changed for Léon Walras in 1860 when during an international congress on taxation he caught the attention of Louis Ruchonnet, a rich Swiss public figure. Louis Ruchonnet intervened to ensure that an untenured professorship of economics was awarded to Léon Walras at the Academy of Lausanne in Switzerland. That Academy will later turn into the University of Lausanne, the chair given to Léon Walras will later be the professorship of Vilfredo Pareto, another of our Unforgettables and a disciple of Léon Walras. It was in that physical environment and socio economical and intellectual milieu that the School of Lausanne was established.

Léon Walras is generally known as the father of the Theory of General Equilibrium, a concept not immediately appreciated but later reviewed and highly revalued. To get a feel of how important the initially underappreciated “Theory of General Equilibrium” later became to economists, it suffices to say that in a moment many still wonder about, Joseph Schumpeter felt the urge to declare Léon Walras as “the greatest of all economists.” It was in his Theory of General Equilibrium that Léon Walras mathematically showed us the interrelation of the economy as a whole instead of as a collection of single market events and processes. The prevailing view then was the partial equilibrium theory proposed by Alfred Marshall. Unlike the Walrasian equilibrium that focused on the whole, the Marshallian equilibrium analyses merely specific markets or sectors of the economy. It was thanks to the general equilibrium of Léon Walras that we see how supply and demand interact and move towards a balance in a system of multiple markets working concurrently. His holistic theory, also known as Walras’s Law, allows us to note that the competing levels of supply and demand in different markets end up creating a price equilibrium. It must be noted here that this “price equilibrium” is a tendency; in Léon Walras’s own words, “The market is like a lake agitated by the wind, where the water is incessantly seeking its level without ever reaching it.”

Beyond the Theory of General Equilibrium though, general education tends to forget that separately and with no contact but simultaneously, with William Stanley Jevons and Carl Menger, Léon Walras developed the concept of marginal utility, which makes him a founder of the “marginal revolution”. Amazingly, Léon Walras himself thought that his marginal utility theory was his biggest contribution to economics. Unlike the works of the celebrated duo, rightly considered as co-founders of the marginal revolution, Léon Walras’s development had the added value of being clearly more detailed, more elegant and more rigorous; plus, it established the correct relation between utility and demand.

Like the Oak tree, he defined himself and his efforts. Léon Walras has grown to create a shade for the grandchildren of his grandchildren; his theories are today still the basis of most of our analysis. He continues to gradually and quietly grow since many students go through our classrooms without discovering the most controversial and fascinating radical sides of his takes; like his ideas on totally abolishing taxes which he believed was unjust and confiscatory. Luckily, Léon Walras did not plant carrots, he knew the Oak tree grows and will shade many to come, beyond those shaded today.

Join me on twitter @anthonykila to continue these conversations.

Anthony Kila is a Jean Monnet professor of Strategy and Development. He is currently Centre Director at CIAPS; the  Centre for International Advanced and Professional Studies, Lagos, Nigeria. He is a regular commentator on the BBC and he works with various organisations on International Development projects across Europe, Africa and the USA. He tweets @anthonykila, and can be reached at anthonykila@ciaps.org

 

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A consuming nation or a productive economy

BY SUNNY CHUBA NWACHUKWU

The state of being industrious, hard-working or diligent, for the actualization of a time-bound target that is matched with adequate performance in the course of executing an economic programme strategically designed to achieve and record positive results defines an actively engaged system. This significantly explains the framework for productivity in an economy. It is also pertinent to note that, without daily economic and commercial activities visibly observed and clearly identified to be operational in a system, the eventual outcome(s) shall definitely be failure (from a position of not being a productive entity, all things being equal).

On the other hand, a narrative is given of a sluggard, who is characterized as a lazy and sleepy fellow that is not a hard-working personality, but who is actually expected to be gathering food at harvest times and storing the same in summer, for the winter. The principles of sustainable existence in life abhor idleness and non-productivity at all times and in any situation or circumstance. It is actually a natural phenomenon; and the law of nature (for survival) has no place for joblessness. The law forbids it, otherwise failure sets in as everything can be brought to a halt without means of sustainable maintenance, because of the lack of obvious means of livelihood. This scenario is a template extrapolated from a microeconomic situation to a macroeconomic level where consumption surpasses productivity.

Examining the Nigerian economy (significantly impacted by importation which weighs against national economic efficiency), a lot of the observed economic indices from the nation’s performance scorecards show that the nation has actually performed poorly and very much below expectation, considering the enormous opportunities at her disposal (socio-economically, commercially, growth-profiling, and political-advancement), and her very rich natural endowments. This outlook as critically observed and equally analyzed (without any bias in scale-rating, on the key performance indicators), portrays an economy that needs to improve greatly in her governance structure, infrastructural reforms; internal and external economic and commercial activities, over a given periodic plan for future economic repositioning in all known economic sectors. Especially, in the agricultural and the renewable energy sectors that can further fuel, power and drive the rest of the sectors to sustainability now that the oil and gas sector that produces fossil fuels that lay the golden eggs for the nation’s significant foreign exchange earnings, is being downplayed globally in the ongoing energy transition programmes.

A “consumer nation” status or “productive economy” profiling is the main thrust of this article under known economic principles that manifest economic factors for growth and development. Growth and development indicate ultimate performance targets of national achievements through assiduous efforts for commercial activities carried on along every known value chain. Diligent hard-work is also required for results to be made from healthy economic competitiveness amongst the comity of nations, in international trade and commerce arena, and in world economic politics. The major focus for Nigeria should be rebuilding the economy, making the economic wrongs of yester-years right; and most importantly, emerging as a global champion through innovative and inventive strategies by concentrating more on food (for food security) and renewable energy productions.

The world’s food supply chain and pricing are already threatened by the ongoing war in Ukraine, since the Russian military invaded the country on 24 February 2022. The feared future global food insecurity and hike in food pricing have drawn the attention of various nations to the need for re-strategizing ways and means to mitigate impact of future food scarcity. For the Nigerian economy, agricultural programmes and agribusiness strategic plans that would involve all stakeholders in agro-allied industry, along with big-time players and professionals in foods and nutrition, farmers groups and associations in the various designated agrarian communities in the land (through their respective farmers co-operatives); need to join hands and apply all their known subsistence farming methods and approaches to deliver food sufficiency, through the support of the governments (at local, state and federal levels), by providing the needed agricultural mechanization tools and equipment to enhance high productivity yields for the various small holder farmers within the 774 local governments. Each of these, with their various recognised livestocks and crops, known for their respective comparative economic advantages, can boost agribusiness in a very short run, for a productive economy. This the various governments must do, to not only improve food sufficiency in the country but, go further to grow the gross domestic product and contribution to the economy; as the productivity profile of the economy starts improving by the day, through agriculture and agribusiness, as well as agro-allied businesses.

Sunny Nwachukwu (Loyal Sigmite), PhD, a pure and applied chemist with an MBA in management, is an Onitsha based industrialist, a fellow of ICCON, and vice president, finance, Onitsha Chamber of Commerce. He can be reached on  +234 803 318 2105 (text only) or schubltd@yahoo.com

  • business a.m. commits to publishing a diversity of views, opinions and comments. It, therefore, welcomes your reaction to this and any of our articles via email: comment@businessamlive.com   

How managers can motivate their workers (2)

OLUFEMI ADEDAMOLA OYEDELE

The Hawthorne studies allegedly discovered the influence of human relations or social factors on workers’ motivation (Fritz Roethlisberger and William John Dickson, 2003, “Management and the Worker: An Account of a Research Program Conducted by the Western Electric Company, Hawthorne Works, Chicago”).

According to Lyman Porter (1997) and Henry Mintzberg (1989), motivation is only a secondary link in the chain represented by management. To Porter and Mintzberg, both motivation and market evolution are evolving in a linked relationship. This analogy is called the “Contingency Theory”. The contingency theory is a behavioural theory that says that there is no one best way to manage a company, to lead an organisation or to make decisions.

But the critical path analysis, the employees’ suggestion programmes, SMART analysis, analytic hierarchy process etc, are decision making processes that have been proved to work better than others in their categories. For example, the only way to manage an underfunded organisation is to provide “adequate funds” through injecting more funds or downsizing. Frederick Herzberg (1959) stated that we have basic needs (hygiene needs) which, when not satisfied, cause us to be dissatisfied. Meeting these needs does not make us satisfied; it merely prevents us from becoming dissatisfied.

‘Hygiene’ is a medical word and an analogy of the necessity to do something that is essential, but which does contribute towards making a patient well (it only prevents infection). Hygiene needs are needs which when put in place will make workers work better. These needs are also called “maintenance needs”. Herzberg stated that there is a separate set of needs which, when resolved, do make us satisfied. These are called motivators. A manager does not need to provide all employees’ needs before being a motivator. All he needs to do is to make an employee happy through identifying their state of mind while in office and talking over moody employees’ problems.

Henry Mintzberg in 1989 stated that to be able to motivate employees, different factors would have to be put in place as much as we have employees. If management could go to the extent of carrying out opinion surveys on employees, they will be able to motivate all employees and it will affect production positively. Recently, a company in Glasgow carried out a survey on motivating employees in the period of economic crunch. The question is: should the company sack some workers and increase salaries of retained workers? Or, should the company leave its employee population at status quo and reduce salaries of employees across board? All employees voted for ‘lower salaries and remaining as family.’ They all believed the economic conditions were not permanent and ‘will change’. If the organisation has assumed that increased salaries and wages will motivate “retained workers” and sacked less-productive workers, the organisation would have been wrong and be in performance problems.

Frederick Herzberg in 1987 identified two main categories of motivational factors: contextual factors and descriptive factors. The first factors include salaries, working conditions, organisation strategy, organisation goodwill, etc. The second factors include, threats and opportunities, competences, achievements, sense of belonging, etc. In 1959, Herzberg discovered that the factors that lead to dissatisfaction are completely different from those that provide satisfaction. He described the positive factors as “motivation factors”. These met human needs in a unique way and include achievement, personal development, job satisfaction and recognition. Improving these factors can provide employees’ job satisfaction.

Herzberg concluded that organisations should aim to motivate employees through job satisfaction, rather than reward or pressure (target setting and coercing).

In 1987, Herzberg believed workers were not motivated by salaries and wages. But his study of 200 Pittsburgh Engineers and Accountants was based on middle-, and high-, cadre workers and cannot be generalised for low-cadre employees. Most low-cadre employees see salary and wages as motivating factors more than any other incentive. Harry Levinson (1989) opined that, “every manager must motivate and encourage employees somehow reconciling the individual needs with the goals of the organisation.

All employees have life-goals, aspirations and objectives which they want to achieve through their organisations. Responsible managers’ job is to help them to achieve their “modest aspirations”. K. Lewis-McClear and M. S. Taylor (1998) stated that employee “contract breach” may act as ‘de-motivator’ and is related with the employee’s intention to quit an organisation. Having clearly set-out objectives can motivate employees. Small business owners in UK were informed in 2010 that their staff did not know what their objectives are for 2010 and are not feeling motivated, according to a report by the Department for Business Innovation and Skills (BIS, 2009).The BIS 2009 report revealed that only 25% of staff have had objectives for 2010 clearly communicated to them and a further third do not even know if a vision for their business’ future exists.

To be continued next week

Olufemi Adedamola Oyedele, MPhil. Construction Management, managing director/CEO, Fame Oyster & Co. Nigeria, is an expert in real estate investment, a registered estate surveyor and valuer, and an experienced construction project manager. He can be reached on +2348137564200 (text only) or femoyede@gmail.com

business a.m. commits to publishing a diversity of views, opinions and comments. It, therefore, welcomes your reaction to this and any of our articles via email: comment@businessamlive.com