I’m opposed to minimum wage. And I know I’m saying this at the risk of losing readers. The minimum wage hurts the poor and vulnerable in whose name and interest Labour claims to strike.

Sounds foolish, right? How can more naira in the pocket of the Nigerian worker currently on a minimum wage of N30,000 be bad?

In a country where each of 469 lawmakers earns N13.5 million monthly, minus allowances, and office holders in the executive branch use large convoys and maintain large personal staff at the public expense, why should there be any fuss about the government paying N494,000 monthly as minimum wage to workers?

Bad example

The obscenity of public sector waste has been one of the strongest arguments for a new minimum wage. On top of that, there has been the inflationary impact of the adjustments announced last year by President Bola Tinubu, especially after the removal of the petrol subsidy and efforts to close the arbitrage in the foreign exchange market.

The argument for minimum wage is that if some folks, especially politicians, have assumed the prerogative of helping themselves to the treasury by ingenious means, what is sauce for the goose must also be sauce for the miserably impoverished gander.

Yet, a minimum wage is one slippery slope guaranteed to take the gander from economic misery to wretchedness. Basic Economics by Thomas Sowell makes the point very clear, and the lives of those who might disagree will bear out the evidence.

Wage law trap

One, minimum wage laws set artificially high wages that can lead to lower employment opportunities, particularly among low-skilled workers. Take Nigeria, for example. Of the estimated 80 million labour force, skills among the largest demographic of this population (those between 25 and 34 years of age) are inferior.

A 2022-23 study showed that only one in 10 workers are managers, professionals, technicians, clerical support workers or occupations that require high skill levels. Most need to be better skilled and would be seriously disadvantaged in competing for any opportunity that may attract relatively high wages.

Remember that the essentially overpaid, underworked, and yet restive public service – whether at the federal, state or local government levels – comprises only a tiny fraction of the workforce. Nearly 90 per cent of Nigeria’s workforce, which may be affected by any artificial wage adjustment, are in the informal sector, that is, outside white-collar jobs.

Cutting your nose

If employers are forced to make hard economic choices about hiring or firing due to artificially fixed wages, the low-skilled and vulnerable ones whose battle Labour claims to be fighting would be the first to go. Minimum wage laws do not necessarily guarantee jobs, yet they make it more expensive to hire or retain low-skilled workers that such laws are supposed to protect.

Two, minimum wage may lead to further increases in prices. In 1974, when the government of General Yakubu Gowon accepted the Udoji commission report and nearly doubled salaries across the board, taking primary school teachers from N540 to N1,080, for example, price levels skyrocketed, even before the government implemented the new wages in the public sector! It’s convenient to say it won’t get worse until your maize seller or maiguard hears you’re now on a monthly salary of N494k!

Third, another unintended consequence of minimum wage is that it might reduce job opportunities for young people because employers may be forced to prioritise experience and skills. Also, minimum wage laws could reduce the chances of employment amongst groups, like the physically challenged, for example, who may be perceived to be less productive.

Of course, there is the other side – those who argue that if left alone, the typical employer would squeeze the last productive juice from the worker before any wage adjustments.

Supporters of this position say that the fair thing to do to reduce income inequality, boost economic growth, reduce labour turnover, and promote social mobility, among other things, is to fix wages. Prominent economists Paul Krugman and Joseph Stiglitz belong here.

I don’t. And I have no regrets. Not that I don’t believe that fair is fair. My point is that that is not a lesson the government is competent to teach the market. If an employer – any employer – decides to mistreat its workers, it would only be a matter of time before such an employer would be out of business. In a free market, the skills and talents of the worker will, sooner than later, find better, more rewarding opportunities.

Other options

And who says minimum wage laws are the only way to encourage fairness and social mobility in the workforce? Earned Income Tax Credits (EITC), which target low-to-moderate-income earners or a more transparent variety of the Nigerian equivalent – conditional cash transfers (hopefully with a more reliable database) – is another way. Several African countries, including Kenya, South Africa and Ghana, have modified and adopted this system.

Also, market-indexed wages (here again, Ghana could serve as an example) remove the unending, disruptive cycle of national minimum wage negotiations and strikes. There are other options, including performance-based pay and flexing compensation.

Many workplaces today were built on the expensive brick-and-mortar model, which has become too costly and inefficient. Employers could consider flexible work hours or more remote options to reduce commute and overhead costs and encourage moderate wage compensations.

On whichever side you belong, the consensus among economists is that minimum wage laws increase unemployment among low-skilled workers, a bitter truth that Labour may be unwilling to face.

Of course, it’s not only minimum wage that is bad for jobs. Over-regulation concerning capital, high corporate taxes and levies, poor infrastructure and bureaucratic hurdles to contract enforcement are also bad for jobs, businesses, and workers.

Thatcher way

I don’t like Magaret Thatcher, primarily for her duplicity over apartheid. But she gets full credit in my books for saving Britain from the wild strikes of wild unions that brought the country to its knees.

Of course, it’s also fair to say that, unlike Nigerian governments, Thatcher did not break workers’ eggs to make her omelettes. She was not for the turning in her determination to free the economy from the shackles of unions and in her government’s example of austere living.

Yet today, Britain appears to be losing its competitive business edge. Partly a result of the resurgence of the unions and right-wing rhetoric, it falls among countries which have been worst for income in the last 15 years, with incomes across the board growing by just six per cent since 2009, making it a laughing stock among countries in its league.

Half-full

Nigeria is not listed among countries with the slowest wage growth at least in the last 15 years, a list which includes countries like South Sudan, Central African Republic, the Democratic Republic of Congo, Niger, Malawi and so on. Apart from bureaucracy and corruption, the main challenge for Nigeria has been the tendency, especially among states, the main power blocs, to prioritise rent and politics over creativity and competition.

The strikes and disruptions over wages are not funny at all. In the cauldron of Nigeria’s post-election politics, this may look, smell, and even feel like a continuation of the war by other means. But in the end, we all pay a price. And you know what? The serious world doesn’t care. It is moving on!

** Ishiekwene is Editor-In-Chief of LEADERSHIP and author of the new book Writing for Media and Monetising It.

How to build businesses that last

America is not just the land of red-blooded capitalism. It has an esoteric tradition of capitalist altruism, too. Take Trader Joe’s, an own-label grocery chain like m&s in Britain. It somehow retains a local-community feel, like an indoor farmers’ market with good prices and wonderful staff, despite having 549 stores. Whole Foods Market, a 530-store Mecca for well-heeled health nuts and epicureans, has a similar vibe. Or at least it did until 2017, when it was sold to Amazon for $13.7bn. Its co-founder, John Mackey, has recently published a book full of joie de vivre about his 42 years at its helm. “The Whole Story: Adventures in Love, Life and Capitalism” comes a few years after an even quirkier memoir by the founder of Trader Joe’s, the late Joe Coulombe. They are strikingly different characters who approached retailing in unusual ways. Each offers good lessons in entrepreneurship.

Mr Mackey’s book starts with him as a college dropout having an lsd-fuelled epiphany: “I was IT. And it was me, and I was there. And it was ALL.” Don’t be put off. Whether or not would-be entrepreneurs should drop acid for inspiration, in his case it worked. The Texan’s quest for self-discovery leads to a new philosophy of natural-food retailing that conquers America. Coulombe’s book, “Becoming Trader Joe”, has no New Ageiness, even though his chain started in California in 1967. As a lesson in how to beat the big guys in business, it does exactly what it says on the tin. His first anecdote is about the merits of relabelling Peruvian tuna as pilchards to avoid import quotas and cut prices.

Such contrasts are telling. Though Mr Mackey is a proud capitalist, he seeks to make Whole Foods a “values-based” company that puts the interests of customers, suppliers, staff and the environment alongside those of shareholders. He becomes an advocate for “stakeholderism”, though is refreshingly candid about the difficult trade-offs involved. Coulombe put Trader Joe’s success down to more nuts-and-bolts factors: well-paid employees; cheap, interesting produce; an encyclopedic understanding of retail regulations (and how to get around them). Given the struggles that pepper Mr Mackey’s book, from internal coup attempts and vulture investors to customer boycotts, Trader Joe’s more down-to-earth approach looks, to say the least, less exhausting.

The two firms do share similarities. Both have been celebrated as good places to work while being staunchly anti-union. Coulombe wrote that his core value from the start was high compensation, which he says boosted productivity so much it was worth it. “You can’t afford to have cheap employees.” Mr Mackey says pay was of secondary importance, but that Whole Foods’ sense of mission and community attracted workers. Both founders had a nose for changing customer tastes. In the 1960s Coulombe realised that Americans were becoming better educated and travelling more, which made them keen to explore new tastes. Early items he sold were wine, which offered a guaranteed profit thanks to price controls, and Brie, on which Wisconsin’s cheese lobby had neglected to demand import restrictions. Mr Mackey bet boldly on his hunch that even young Texans would crave healthier foods. Later, after a proselytising lecture he heard on olive oil, he was quick to see the potential in foodies as well as hippies.

Both men, for all their community values, had a shrewd eye for the bottom line. Coulombe’s business epiphany came when he centralised the stores’ buying and delivery activities, slashed the number of items available, put most of them under the Trader Joe’s brand, and sought a gross profit on every one (“No ‘loss leaders’,” he wrote). Whole Foods had a less centralised approach. But it kept tight control of administrative expenses, and reinvested profits in the business. It was a master at making the stores that it acquired quickly profitable, enabling further expansion.

As father figures of their firms, their differences are more obvious. “I’m going to disillusion those dear souls—there seem to be a lot of them out there—who think that Trader Joe’s sprang, fully developed, from my brain, like Athena from the head of Zeus,” Coulombe wrote. He was not one to dwell upon himself. Mr Mackey, in contrast, puts himself and his personal life (including paramours) at the centre of the Whole Foods story. Likewise, they built their companies in different ways. Coulombe said that in order to survive, Trader Joe’s had to be regularly reinvented from the bottom up. Mr Mackey, to begin with, treats Whole Foods as his baby. As it expands, he accepts that it should become more independent of him. But there is not enough reinvention.

Stakeholder in the heart

For all Mr Mackey’s faith in “conscious capitalism”, Whole Foods developed a problem in the wake of the global financial crisis of 2007-09, when its pricey fare earned it the moniker “Whole Paycheque”. It stuck. He admits in the book that the firm’s inability to cut prices, partly because of a fixation on high margins, was a big strategic error. That was never a problem for Trader Joe’s, which still prides itself on offering value for (not much) money.

The fallout for Whole Foods was momentous. First came accusations from regulators in California and New York City that it was overcharging customers on pre-packed food. These led to a fine and a settlement. Then shareholder activists tried to oust Mr Mackey. In response, he sold the company to Amazon, which swiftly cut prices and raised hourly pay. He writes that he regrets the circumstances that led to the sale more than the sale itself. But he gives the impression that Whole Foods quickly lost its individuality. Frustrated, he quit in 2022. Coulombe had regrets, too. In 1979 he sold out to the Albrecht family, co-founders of Aldi, a German discount retailer, though he stayed on as boss for nine years. He died in 2020, wishing he hadn’t sold. Like Mr Mackey, he built his business to last, not for the quick buck.

 

The Economist

In a not-so-surprising development, the federal government has admitted that Nigeria, Africa’s largest oil producer, will be spending up to N5.4 trillion on oil subsidies in 2024. This admission follows months of repeated denials by government officials who had insisted that there were no subsidies.

The revelation came during a presentation by Wale Edun, the Minister of Finance and Coordinating Minister of the Economy, on an Accelerated Stabilisation and Advancement Plan (ASAP). The plan is designed to address key challenges affecting reform initiatives and stimulate development across various sectors of the economy.

“At current rates, expenditure on fuel subsidy is projected to reach ₦5.4 trillion by the end of 2024. This compares unfavorably with ₦3.6 trillion in 2023 and ₦2.0 trillion in 2022,” stated a draft copy of the ASAP presented by Edun.

Previously, the federal government had maintained that it would no longer subsidise fuel costs, opting instead for a deregulation policy.

In April, Heineken Lokpobiri, Minister of State for Petroleum Resources (Oil), asserted, “As far as I’m concerned, the President removed the subsidy and it remains removed till today. Anybody who is saying that subsidy is being paid, it is left for the person to bring the facts and then we will talk about them.”

Approximately four months ago, Mele Kyari, Group Chief Executive Officer of NNPCL, also denied the return of fuel subsidies. “No subsidy whatsoever. We are recovering our full cost from the products that we import. We sell to the market, and we understand why the marketers are unable to import. We hope that they do it very quickly and these are some of the interventions the government is doing. There is no subsidy,” he stated to State House Correspondents after a meeting with the President at Aso Rock Villa.

President Bola Tinubu, during his inauguration on May 29, 2023 declared that the petrol subsidy was “gone”. This latest admission, however, contradicts those earlier declarations.

Médecins Sans Frontières (MSF), also known as Doctors Without Borders, is facing an overwhelming influx of severely malnourished children at its medical facilities in Northern Nigeria. The global humanitarian organization raised the alarm in a statement on Tuesday, issued by its Field Communication Officer in Nigeria, Abdulkareem Yakubu.

According to the statement, MSF in-patient facilities in Northern Nigeria have recently recorded an "extraordinary increase in admissions of severely malnourished children with life-threatening complications," surpassing last year’s figures by over 100 percent in some locations.

"For the MSF teams, this is an alarming indication of a premature peak of the lean season and the increase in acute malnutrition that accompanies it, typically anticipated in July. We are resorting to treating patients on mattresses on the floor because our facilities are full. Children are dying. If immediate action is not taken, more lives hang in the balance. Everyone needs to step in to save lives and allow the children of Northern Nigeria to grow free from malnutrition and its disastrous long-term, if not fatal, consequences," said MSF’s Country Representative in Nigeria, Simba Tirima.

MSF called for urgent humanitarian assistance, urging Nigerian authorities, international organisations, and donors to take immediate action to diagnose and treat malnourished children and engage in long-term initiatives to address the root causes of the crisis.

"We’ve been warning about the worsening malnutrition crisis for the last two years. 2022 and 2023 were already critical, but an even grimmer picture is unfolding in 2024. We can’t keep repeating these catastrophic scenarios year after year. What will it take to make everyone take notice and act?" Tirima queried in the statement.

In April 2024, MSF reported that its medical team in Maiduguri, Borno State, admitted 1,250 severely malnourished children with complications to its in-patient therapeutic feeding centre, doubling the admissions of April 2023. By the end of May, the centre was urgently scaled up to accommodate 350 patients, far exceeding the 200 beds initially designated for the peak malnutrition season in July and August.

Similarly, the MSF-operated facility in Kafin Madaki hospital, Bauchi State, recorded a 188 percent increase in admissions of severely malnourished children during the first three months of 2024 compared to the same period in 2023. In Zamfara State, in-patient centres in Shinkafi and Zurmi saw a 30 percent increase in admissions in April compared to March, while Talata Mafara’s facility experienced a 20 percent increase. Major cities like Kano and Sokoto also reported alarming surges, with increases of 75 and 100 percent, respectively. The therapeutic feeding centre in Kebbi State documented a rise of over 20 percent in admissions from March to April.

Despite the dire situation, MSF stated that the overall humanitarian response remains inadequate. Other non-profit organizations active in the region are also overwhelmed. In May, the United Nations and Nigerian authorities issued an urgent appeal for $306.4 million to address the nutritional needs in Borno, Adamawa, and Yobe states, but this amount is deemed insufficient for the broader region.

"The catastrophic nutritional situation seen in recent years calls for a bigger response. Reductions in already limited funding for the North-west have dangerously affected the provision of crucial therapeutic and supplementary food. Supplies were completely unavailable in Zamfara for the first four months of this year and are now only available in lower quantities," the statement noted. This reduction has limited treatment to the most severe malnutrition cases, compromising early intervention and increasing the risk of mortality.

MSF warned, "We are alarmed by the reduction in aid at these critical times. Reducing nutritional support to only severely malnourished children is akin to waiting for a child to become gravely ill before providing care. We urge donors and authorities to increase support urgently for both curative and preventive approaches, ensuring that all malnourished children receive the care they desperately need."

Seventy-five percent of the clients at Thornaby’s Sprouts Community Food Charity (SCFC) are now Nigerian students grappling with financial difficulties, charity manager Debbie Fixter revealed. The charity, which offers food, clothes, and household items, has experienced a surge in Nigerian students seeking help.

Fixter told BBC News that the charity has reached its “maximum capacity.” SCFC reported a shift in its clientele in recent months, with the majority of visitors being Nigerian master’s degree students from Teesside University.

Nigerian students in the United Kingdom have recently been making headlines, with some being blocked from continuing their studies and ordered to return to Nigeria due to unpaid tuition fees. The devaluation of the Nigerian currency has reportedly wiped out some students’ savings, forcing them to cut back on essentials.

Fixter noted that an increasing number of Nigerian students in the UK are turning to community charities and organizations for much-needed assistance. “They’re really struggling, they need help, and they’re part of our community,” she said.

Boluwatife Elusakin, a Nigerian student in the UK, told the BBC that he has had to “dive deep” to afford the cost of living and studying in the UK. “Things are no longer the same, I’ve had to cut costs because of the currency crash. It hit my savings as I’d already budgeted funds to come here. It makes me feel sad, but I hope I can endure just one year and all will be well,” he said.

Another student, who wished to remain anonymous, criticized the university for changing its payment plans from seven installments to three, exacerbating the problem. He also pointed out that students hoping to find jobs to fill funding gaps are limited by the number of hours they are legally allowed to work.

“When I was applying, the exchange rate was around 600 naira per pound, but by the time I arrived, it was 1,400. At the time we filled out forms, we had proof of funds to cater for nine months. But the money is not enough; you don’t have a job or the means to get one. The little you have is depleting, and a lot of us are facing difficulties. When you don’t have funds in your pocket, frustration sets in and many are experiencing mental health issues. Some wish they had never come.”

Fixter emphasized that more needs to be done to address the crisis, stating that SCFC is currently at “maximum capacity” and struggling to meet the demand for assistance.

On Wednesday, a train bound for Kaduna from Abuja derailed at Asha station in the federal capital territory (FCT), leaving many passengers stranded. A passenger reported to TheCable that the derailment occurred at approximately 3:52 pm, less than 30 minutes after the train departed from Kubwa station in Abuja.

"Passengers are currently stranded as there are no signs of authorities being notified," said the passenger, who wished to remain anonymous.

This incident marks the second derailment on this route in two weeks. On May 26, a train traveling from Rigasa station in Kaduna to Abuja derailed in a mountainous area near Jere. In that incident, three carriages went off the tracks, but there were no casualties.

Security operatives were reportedly present at the scene to assist and safeguard the stranded passengers.

Israel says jets strike school containing Hamas compound, Gaza media says 27 killed

Israel targeted a Gaza school on Thursday that it said contained an Hamas compound, killing fighters involved in the Oct. 7 attack that sparked the eight-month war, but Gaza media said the strike killed at least 27 people seeking shelter.

Ismail Al-Thawabta, the director of the Hamas-run government media office, rejected Israel's claims that the U.N. school in Nuseirat, in central Gaza, had hidden a Hamas command post.

"The occupation uses lying to the public opinion through fabricated stories to justify the brutal crime it conducted against dozens of displaced people," Thawabta told Reuters.

Israel's military said that before the strike by Israeli fighter jets, the military took steps to reduce the risk of harm to civilians.

Israel has said there will be no halt to fighting during ceasefire talks.

In an apparent blow to a truce proposal touted last week by U.S. President Joe Biden, the leader of Hamas on Wednesday said the group would demand a permanent end to the war in Gaza and Israeli withdrawal as part of a ceasefire plan.

The remarks by Hamas leader Ismail Haniyeh appeared to deliver the Palestinian militant group's reply to the proposal that Biden unveiled last week. Washington had said it was waiting to hear an answer from Hamas to what Biden described as an Israeli initiative.

"The movement and factions of the resistance will deal seriously and positively with any agreement that is based on a comprehensive ending of the aggression and the complete withdrawal and prisoners swap,” Haniyeh said.

Asked whether Haniyeh's remarks amounted to the group's reply to Biden, a senior Hamas official replied to a text message from Reuters with a "thumbs up" emoji.

Washington is still pressing hard to reach an agreement. CIA director William Burns met senior officials from mediators Qatar and Egypt on Wednesday in Doha to discuss the ceasefire proposal.

Since a brief week-long truce in November, all attempts to arrange a ceasefire have failed, with Hamas insisting on its demand for a permanent end to the conflict, while Israel says it is prepared to discuss only temporary pauses until the militant group is defeated.

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Biden has repeatedly declared that ceasefires were close over the past several months, only for no truce to materialise.

Last week's announcement came with far greater fanfare from the White House, and at a time when Israeli Prime Minister Benjamin Netanyahu is under mounting domestic political pressure to chart a path to end the eight-month-old war and negotiate the release of Israeli hostages held by Hamas.

Hamas, which rules Gaza, precipitated the war by attacking Israeli territory on Oct. 7, killing around 1,200 people and capturing more than 250 hostages, according to Israeli tallies. Around half of the hostages were freed in the war's only truce so far, which lasted a week in November.

Israel's military assault on Gaza has killed more than 36,000 people, according to health officials in the territory, who say thousands more dead are feared buried under the rubble.

ISRAEL LUKEWARM

Although Biden described the ceasefire proposal as an Israeli offer, Israel's government has been lukewarm in public. A top Netanyahu aide confirmed on Sunday Israel had made the proposal even though it was "not a good deal".

Far-right members of Netanyahu's government have pledged to quit if he agrees to a peace deal that leaves Hamas in place, a move that could force a new election and end the political career of Israel's longest-serving leader.

Centrist opponents who joined Netanyahu's war cabinet in a show of unity at the outset of the conflict have also threatened to quit, saying his government has no plan.

Meanwhile, Defence Minister Yoav Gallant said there would be no let-up in Israel's offensive while negotiations over the ceasefire proposal were under way.

"Any negotiations with Hamas would be conducted only under fire," Gallant said in remarks carried by Israeli media after he flew aboard a warplane to inspect the Gaza front.

Israel announced a new operation against Hamas in central Gaza on Wednesday, where Palestinian medics said airstrikes had killed dozens of people.

The armed wings of Hamas and Islamic Jihad said they had fought gun battles with Israeli forces on Wednesday in areas throughout the enclave and fired anti-tank rockets and shells.

Two children were among the dead laid out on Wednesday in the city's Al Aqsa Martyrs Hospital, one of the last hospitals functioning in Gaza. Mourners said the children had been killed along with their mother, who had been unable to leave when others in the neighbourhood did.

"This is not war, it is destruction that words are unable to express," said their father Abu Mohammed Abu Saif.

 

Reuters

RUSSIAN PERSPECTIVE

Putin outlines Russian response to long-range strikes

Russia is considering “asymmetric” measures against Kiev’s sponsors due to Ukraine’s use of Western-supplied weapons against its territory, Russian President Vladimir Putin has said. 

The Russian leader’s remarks came at a meeting with heads of international news agencies on Wednesday, on the sidelines of the St Petersburg International Economic Forum (SPIEF).

“We have no illusions in this regard,” Putin added, repeating his prior comments that Ukrainian troops might be pulling the trigger but the US and its allies are providing the intelligence and targeting information.

Russia will respond by boosting air defenses and destroying these missiles, Putin said. 

“Secondly, if someone deems it possible to supply such weapons to the war zone, to strike our territory… why shouldn’t we supply similar weapons to those regions of the world, where they will be used against sensitive sites of these countries?” the Russian president added. “We can respond asymmetrically. We will give it a thought.”

If the West continues to escalate, such actions “will completely destroy international relations and undermine international security,” Putin noted.

“If we see that these countries are being drawn into a war against us, and this is their direct participation in the war against Russia, then we reserve the right to act in a similar way. This is a recipe for very serious problems,” he warned.

The Russian president also brought up the fact that some military instructors and advisers from NATO countries have already been deployed to Ukraine, and that a number of them were killed in Russian strikes. 

The US and its allies have insisted that providing weapons and equipment to Ukraine does not make them party to the conflict with Russia, and maintained certain restrictions on their use to preserve that perception. Last month, however, as Russian troops began advancing towards Kharkov, Ukraine began to demand the relaxation of those rules. A British-led pressure campaign eventually resulted in Washington complying with Kiev’s wishes.

 

WESTERN PERSPECTIVE

Putin says Russia could use nuclear weapons if its sovereignty or territory was under threat

President Vladimir Putin, asked about the risks of nuclear war over Ukraine, cautioned the West on Wednesday that Russia could use all available means to defend itself if its sovereignty or territorial integrity were threatened.

Putin said that the West had repeatedly accused Russia of nuclear sabre rattling but said this was wrong, and pointed out that it was the United States which had used nuclear weapons against Japan in World War Two.

Putin, speaking to senior editors of international news agencies in St Petersburg, said that Russia's nuclear doctrine permits such weapons to be used in response to a number of threats.

"For some reason, the West believes that Russia will never use it," Putin said. "We have a nuclear doctrine, look what it says. If someone's actions threaten our sovereignty and territorial integrity, we consider it possible for us to use all means at our disposal. This should not be taken lightly, superficially."

 

RT/Reuters

Anyone paying attention to the electricity sector in Nigeria would recognise the dire need for infrastructural upgrade and improvement of the transmission network nationwide.

Traditionally, infrastructure has always been a governmental responsibility - especially in sectors like roads, airports, affordable housing, and utilities. As public finances are currently being stretched, private capital via Public Private Partnership needs to spring up and close the gap in funding to rescue the transmission infrastructure by constructing new transmission lines, upgrading, and installing new substations with the potential to increase electricity reliability.

Nigeria has twenty-three (23) power-generating plants connected to the national grid with the capacity to generate 11,165.4 MW of electricity. It’s being widely suggested that the current state of the transmission network in the country often limits the Generating companies (GenCos) from supplying electricity at their full capacity, due to the inability of the network to sufficiently deliver what should be evacuated to the national grid, leading to an inefficient use of the GenCos resources.

These Infrastructures refer to all the components notably 330kV, 138kV transmission lines, substations and towers needed to convey electricity usually over long distances from various power plants to electricity distribution networks connecting customers and suppliers.

Governments have often been reluctant to open this subsector for private participation. Following the Nigeria Electricity Act 2023 signed by President Bola Tinubu repealing the Electricity and Power Sector Reform Act of 2005, it introduced a range of key features including granting access to states, companies, and individuals to generate, transmit and distribute electricity.

Currently, the Transmission Company of Nigeria owned by the Federal Government is the sole custodian of the transmission ecosystem, which often comes with its lapses, for instance, high levels of network losses, low productivity, inadequate maintenance and recently strike inspired National Grid shutdown. The liberalization of the sector showcases the opportunity for private capital to be involved. The sector is, however, attractive to investors who are looking for long-term, inflation proof investments with a reliable return profile due to the essential nature of these assets.

The growth of private capital in transmission infrastructure is springing up in Nigeria. On July 11, 2023, the chairman of Geregu Power Plc Mr. Femi Otedola after a meeting with the Lagos state Governor Mr Babajide Sanwo-Olu and the President of the African Development Bank Group Dr Akinwunmi Adesina hinted on plans to develop a power transmission project in partnership with the Lagos state government, Nigeria’s first-ever PSP power transmission project. Although the full scope of the project remains unknown, we could generally infer the project aims to boost electricity reliability within the state by augmenting the transmission network, either by greenfield or brownfield transmission expansion investments.

Other state governments need to be proactive to take advantage of the Nigeria Electricity Act 2023, to complement existing infrastructure provided by the federal government. This can be done by engaging stakeholders, stimulating discourse to identify infrastructure intervention areas within their territories where electricity transmission can be improved, usually through a Build, Own, Operate, Transfer (BOOT) model and pitching their plans to the private sector.

An interstate collegial arrangement with the private sector would be ideal to fix this problem, collectively positioning Nigeria as a desirable destination for global infrastructure capital, drawing the attention of prominent foreign investments firms such as Actis, BlackRock, Brookfield, and Macquaire, participating in the golden age of infrastructure investment. There is a global competition for these sorts of private capital, and to be involved Nigeria’s leadership must be hands-on.

The experience from other developed economies demonstrate that multiple transmission owners can coexist without compromising efficiency or security of the transmission system. This has worked well because the National System Operator provides ongoing coordination from the design phase through system operations, while concessionaires are required to comply with the decisions of the sector regulator.

Transmission expansion projects take a long time to plan, approve and build, and their value depends on the quality of the intervention areas between the power plants and electricity demand on the other end of the line.

Hence, Nigeria and its subnational entities need to be intentional about its electricity sustainability and while we focus on accommodating other sources of renewable energy, for instance, waste to power systems and solar energy, the state of our transmission network should be excellent.

** Olumakaiye wrote from Warwick, United Kingdom.

 

The world’s biggest solar plant has come online in China, capable of powering a small country with its annual capacity of more than 6 billion kilowatt hours.

The facility in a desert region of the north-west province of Xinjiang covers 200,000 acres – roughly the same area as New York City.

The 5GW complex, which was connected to China’s grid on Monday, is powerful enough to meet the electricity demands of a country the size of Luxembourg or Papua New Guinea.

China has led the world in solar poweradoption, boosting its capacity in 2023 by more than 50 per cent. The new solar farm overtakes the Ningxia Teneggeli and Golmud Wutumeiren solar projects, which are both also in China, to become the largest in the world.

A recent report by the International Energy Agency (IEA) described China’s drive towards renewables as “extraordinary”, with the country commissioning as much solar capacity last year as the entire world did in 2022.

“China accounts for almost 60 per cent of new renewable capacity expected to become operational globally by 2028,” the report stated.

“China’s role is critical in reaching the global goal of tripling renewables because the country is expected to install more than half of the new capacity required globally by 2030. At the end of the forecast period, almost half of China’s electricity generation will come from renewable energy sources.”

Analysis from leading manufacturer Longi Green Energy Technology in 2023 estimated that fitting solar panels to rooftops and buildings in China would produce enough electricity to power all the households in China and South-East Asia combined.

The massive ramp-up in production of solar panels in China has led to recent concerns that overcapacity could lead to trade tensions resulting from a global market glut.

Last month, in an effort to prevent this, US President Joe Biden announced that tariffs on Chinese solar cell imports would double from 25 per cent to 50 per cent.

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