For The Record
Suspension Saga: Sanusi Responds To Allegations Of Financial Recklessness
This is the concluding
part of this Special series published last Wednesday. Please, read on.
Briefing Note Allegation 21: that the CBN paid an additional N140 Million over and above the agreed fees for the external auditors.
Response:
i. The 2012 financial statements of the CBN stated that the amount paid to the two firms of external auditors for the 2012 financial year was N200Million. The subsequent graduating revision of the fee was to the sum of N230Million effective from 2013.
ii. The N140Million purportedly paid to the external auditors as “additional fees”, was paid as reimbursement of the expenses incurred by these firms in the execution of their mandate as external auditors of the Bank for previous audit exercises. See Annexure K for evidence of payments made to the auditors. Payment of reimbursables is a standard contractual practice when dealing with professional service firms.
22. Alleged Abuse of Due Process
The MoU for the Banking Sector Resolution Cost Sinking Fund
Briefing Note Allegation 22: that the CBN issued treasury bills using themoney in the Banking Resolution Costs Sinking fund (Sinking Fund) without the constitution and approval of the Board of Trustees as required under the MOU signed by the CBN and all the deposit moneybanks operating in Nigeria.
Response:
i. The contributors to the Sinking Fund are the CBN and all deposit money banks in the country. All the parties agreed at Bankers Committee that the monies contributed should be invested in treasury bills for safety. The CBN, as custodian, simply implemented that agreement. The board of trustees for Sinking Fund has not been constituted as the legal framework for the Sinking Fund i.e. the Banking Sector Resolution Cost Fund Bill is still pending before the National Assembly.
ii. It should be noted that AMCON redeemed its due bonds on 27 December, 2013 from this account.
23. Write off of N3.85 Billion Loan
Briefing Note Allegation 23: that the leadership of the CBN wrote-off loans supposedly made to staff members to the tune of N3.85 Billion in 2012.
Response:
i. The write-off above was not made in favour of CBN staff. Rather the Board of the CBN approved the write-off of the loan as forbearance to Heritage Bank on 17 December, 2010 as part of the process of facilitating its resumption of business as a regional bank. See Annexure L for the board approval given on 17 December 2010.
24. Overdrawn Accounts by Ministries, Departments &Parastatals
Briefing Note Allegation 24: that the deposit accounts of parastatals have debit and overdrawn positions and that this is contrary to government policy.
Response:
i. MDAs generally maintain bank accounts with the CBN. Overdrawing of banks accounts is an incidence of banker–customer relationship. However, the CBN experienced some technical problems prior to mid-2012, which affected about 6 of the over 1000 bank accounts maintained by MDAs at the CBN, but the error has been rectified since the middle of 2012. There were some insignificant over drawings on about six (6) of the accounts and the attention of the Office of the Accountant-General of the Federation has been drawn to the matter. See Annexure Mfor the letter to the Accountant-General and the Accountant-General’s response of January 29th, 2014.
25. Investment in International Islamic Liquidity Management Corporation (IILMC)
Briefing Note Allegation 25:that the investment in the IILMC was not brought to the attention of His Excellency, Mr President, and was not within the exception in Section 31 of the CBN Act.
Response:
i. Nigeria, through the CBN, is signatory to the establishment agreement of the IILMC. Before proceeding with the investment, I requested for and obtained the written approval of His Excellency, Mr President,via a letter dated 8 December, 2010. His Excellency, Mr President would recall that he approved this request on 22.12.10. See Annexure N.
ii. The investment in question is permitted by Section 24 of the CBN Act, in pursuance of which it was made as investment of Reserves By the Reserve Management Department of the CBN. If at any point, the CBN wishes to divest from the IILMC, one or more of the member central banks will purchase this investment.
iii. It is worthy of note that in the letter seeking Mr President’s approval for the investment, it was stated explicitly that all the member central banks were treating their investment as part of their external reserves.
iv. It was also alleged that, till the date of the issuance of the Briefing Note (7th June, 2013), the CBN had not received its share certificate for the apex Bank’s investment in the IILMC. However, the said share certificate, dated 6th April, 2013, has indeed been received and is hereby annexed as Annexure O.
26. Non-adoption of IFRS Standards
Briefing Note Allegation 26: that the CBN did not comply with the IFRS accounting standards in preparing its 2012 financial statements.
Response:
i. It has been and remains a cardinal policy of the CBN to comply with statutory requirements and policy guidelines of regulators. In recognition of the peculiar nature of the CBN as a central bank and its peculiar responsibilities, its migration to the IFRS would require extended time to comply with the Act.
ii. In view of this reality, I wrote the FRCN via a letter dated 14thFebruary 2013, requesting for a temporary exemption to allow the CBN prepare the 2012 financial statements based on the existing financial reporting framework.
iii. The FRCN waived the requirement for the CBN to comply with the IFRS standards in preparing its 2012 financial statements by its letter of exemption dated 26 February 2013. See Annexure Pfor the FRCN’s letter.
iv. In January 2010, the published Report of the Committee on the Roadmap for the adoption of IFRS in Nigeria (the Roadmap), allowed Public Interest Entities, in the nature of CBN,to delay the adoption of the IFRS financial statements until 31 December 2013. See Annexure Q for the Roadmap.It is probably for the same reason the FRCN itself did not prepare its audited financial statements in accordance with IFRS for the year ended 2012.
v. It is worth noting that very few Central Banks in the world are able to comply with IFRS due to a number of factors peculiar to the nature of central banking, especially in the following areas:
a. Accounting for Change in the value of Gold reserves.
b. Management of government foreign exchange reserves and exchange rate fluctuations.
c. Disclosure challenges around monetary policy interventions and its activities as lender of last resort to financial institutions, and guarantor to government borrowing.
d. Valuation of assets held in foreign currencies.
e. Challenges around weekly Treasury Bill sales.
f. Management of years of deficit after surplus has been transferred to the government in the year of surplus.
g. Funding government deficit financing as enshrined in section 38 of the CBN Act 2007.
27. Non-Compliance with ITF Act
Briefing Note Allegation 27: that the CBN failed to comply with the ITF Act by not paying the mandatory one per centum of the amount of its annual payroll to the ITF.
Response:
i. The CBN, at the time, contested in court its obligation to pay one per centum of its payroll to the ITF on the ground that the CBN is not engaged in commerce or industry, which under the ITF Act is the basis for an employer to make payments under the ITF Act.
ii. However, upon further considerations, the matter was amicably settled by the CBN and ITF. The CBN has duly complied with the ITF Act and has paid all levies up to the 2012 financial year. See Annexure R, which bears this out.
28. AUDITING
Briefing Note Allegation 28: that the joint auditors of the CBN’s financial statement did not certify that the accounts give a true and fair view of the financial position of the CBN as at 31 December 2012.
Response:
i. Without any iota of evidential proof, and in a most sweeping statement,the FRCN Briefing Note alleged that the joint auditors’ opinion was a technical qualification; that the accounts should not be relied upon for decision-making.
ii. To set the records straight, auditors do not certify accounts but only express opinions on the financial statements.
iii. The joint auditors stated that the CBN’s 2012 financial statements were properly prepared and accorded with accounting policies and the provisions of the CBN Act 2007 and other applicable regulations.
iv. The opinion, as expressed by our auditors, is consistent with what obtains in respect of central banks in a number of other jurisdictions. We enclose by way of example, a sample of opinions relating to the central banks of the United States of America, South Africa and Ghana. See Annexure S. The allegation made by the FRCN in relation to this aspect of the auditors’ report is troubling when viewed in this light.
29. Non-consolidation of accounts with Subsidiaries
Briefing Note Allegation 29: that the CBN did not consolidate its account with those of its subsidiaries.
Response:
i. The CBN does not have subsidiaries and the assumption that AMCON is a subsidiary of the CBN is wrong. The shares in AMCON are held by the Federal Government as borne out by Section 2 of the AMCON Act. Furthermore, the accounting reporting period of the CBN is statutoryand does not coincide with that of AMCON.
30. Abridgement of Financial Statements
Briefing Note Allegation 30:that the financial statement was highly abridged, with poor disclosures of transactions and events of a financial nature.
Response:
ii. The financial statement cannot by any stretch of the imagination be described as “highly abridged”. Rather, all transactions in the financial statement were substantiated and were prepared in line with the CBN’s framework with all relevant notes, schedules and disclosures copiously made for clarity.
31. Non- Challance and AMCON’s Operations
Briefing Note Allegation 31: that AMCON made a loss (after taxation) of N 2,439,701,422,000 (over N 2.4 Trillion) and also had a negative total equity ofN2,345,620,364,000 (over N 2.3 Trillion) at the end of 2011. The FRCN alleges that I should have brought it to the attention of His Excellency, Mr President, that a large portion of the AMCON bonds would be due for redemption by 31 December 2013 and that the inability of the Federal Government to fulfil the guarantee may affect the credit rating of Nigeria negatively. In other words, the CBN breached its statutory objects under Section 2(e) of the CBN Act by not drawing His Excellency’s attention to the matter.
Response:
i. A major achievement of the Central Bank was that the AMCON bonds in question that matured at the end of 2013 were successfully redeemed without any budgetary appropriation or call on the Federal Government to guarantee the repayment as referenced above.
ii. It must be emphasized that AMCON bonds are not instruments issued by the CBN. On that score, it would be most inappropriate and against every known principle of standard accounting convention for the CBN to incorporate full disclosures on the maturity profile of AMCON’s bonds in its audited financial statements (balance sheet and notes).
iii. Rather, in accordance with international best practice, the CBN is only required to disclose in its accounts, the portion of the bonds held by it (the CBN). To this extent, the CBN made appropriate disclosures in the financial statements on the bonds it held as at 31 December 2012. See Annexure T – which is note 6 to the CBN’s 2012 financial statements showing the amount CBN has invested in AMCON bonds.
32. Non-approval of 2012 financial statement by CBN Board
Briefing Note Allegation 32:that the date of the Board’s approval of the financial statements was not indicated or disclosed and accordingly, the response provided to the President’s request for clarifications indicated that the management letter on the financial statements was yet to be discussed by the Board Audit and Risk Management Committee.
Response:
i. The financial statements were presented to the board and approved on 26 February 2013. The date of approval was stated clearly on the balance sheet page behind the signature of each of the directors. (See Annexure Ufor a board approval dated 26 February 2013 approving financial statements).Issues of a material nature requiring adjustments had been fully incorporated into the Financial Statement prior to presentation to the Board.
ii. The items in the Management Letter were suggestions for improvement made by external auditors and these were subsequently considered by the Board Audit and Risk Management Committee and are being implemented by Management on an on-going basis.
33. Compliance with the PPA
Briefing Note Allegation 33:non-compliance with the provisions of the Public Procurement Act (PPA).
Response:
i. The only issue that has been raised to the knowledge of the CBN, is that the CBN, over a period in the past, did not obtain ‘Certificate of No Objection’ from the BPP before awarding contracts.
ii. On 11 August 2008 (before my tenure), the CBN wrote to His Excellency, President Yar’adua, requesting for certain exemptions in CBN’s procurement process.See Annexure V.On 20 August 2008, the President gave his approval to the CBN’s application. See Annexure W.
iii. In line with this approval, the CBN continued to approve its contracts in full compliance with the Public Procurement Guidelines, with the only exception that it did not apply for a ‘Certificate of No Objection’ based on the Presidential waiver.
iv. It should be noted that the CBN’s own procurement process is more or less identical to the procurement process under the Public Procurement Act (PPA). Indeed, the BPP has had occasion to write in the past commending the CBN’s commitment to transparency and making recommendations for further improving the process. See Annexure X.
v. In the course of the CBN interaction with the BPP on this subject, we provided an explanation by way by a letter of 11 August 2013, informing the BPP of the Presidential waiver. After an exchange of correspondences between the CBN and the BPP on this issue, the BPP disagreed that the Presidential waiver constituted an exemption from the requirement to obtain a Certificate of No Objection and insisted that the CBN should start doing so.
vi. The CBN, out of an abundance of caution, immediately began to obtain Certificates of No Objection in respect of subsequent procurements within the stipulated threshold. In this regard, the CBN did obtain Certificates of No Objection dated 17 December 2013, 31 December 2013 and 14 February 2014. See Annexure Y [A-D] for these.It is important to note that the contracts for which these Certificate of No Objections were issued were approved based on the same process that apply to all the other contracts approved by the Bank. This, in itself, is testimony that the Bank has always complied with the provisions of the Act.
vii. It is also important to note that in October 2013, the BPP-appointed consultant (Messrs SadaIdris& Co) also gave the CBN a good bill of health after reviewing the bank’s procurement processesfor 2010and2011.See Annexure Z. In its final report, the consultant in fact mentioned that the CBN satisfactorily complied with the provisions of the PPA.
viii. Furthermore, the CBN has facilitated compliance with the provisions of the PPA by making it a requirement for entities seeking to access the CBN Intervention Projects Fund, to comply with the PPA and to obtain a Certificate of No Objection to Contract Award, where required. See Annexure AA for the BPP Letter of No Objection of 12 October 2010in relation to procurements by the Nigeria Police Force.
34. Unlawful Expenditure on CBN Intervention Projects
Briefing Note Allegation 34: that CBN Interventions in areas like Education,Community, etc. are unlawful.
Response:
i. A principal focus of the CBN Corporate Social Responsibility (CSR) policy in the last decade (even before my tenure) has been the Educational sector in Nigeria. The CBN Act lists its objects, functions and prohibited activities, and the Board is empowered to approve the budget and formulate policies of the CBN. The Intervention Projects mentioned are CSR interventions that fully comply with the CBN Act and were duly approved by the Board.
ii. It is worth noting that the CSR policy of the CBN is consistent with the activities of many other central banks of developing countries including, Bank Negara Malaysia, the Bank of Namibia, the Bank of Botswana and the Bank of Indonesia.
iii. The Federal Governmentof Nigeria has been aware, supported and encouraged the CBN intervention projects, in recognition of their positive contribution to development.
iv.During the recent strike by the Academic Staff Union of Universities (ASUU), the CBN intervention projects in universities were an important fulcrum in the settlement negotiations between the FG and ASUU as borne out in the Memorandum of Understanding between the FG and ASUU, where the Intervention Projects were recognised as part of the contributions of the FG to Education in tertiary institutions.
v.Furthermore, the FG standing committee on the Implementation of Needs Assessment of Nigerian Public Universities requested that the CBN channel a portion of its annual budget to the identified projects. See Annexure BB- TheInterim Report of the Technical Sub-committee of the Committee on the Implementation on Needs Assessment of Nigerian Public Universities.
vi. A major aspect of the CBN intervention projects is the Centre for Excellence, which are not merely physical structures. The CBN entered into Memoranda of Understanding with partner Universities to develop a holistic and multi-faceted scheme which includes the establishment of Centres for Excellence under which the CBN would, in the principal areas of Economics andFinance, fund the endowment of Professorial Chairs, create access for Nigerian students to participate in virtual and remote learning with foreign tertiary institutions like Harvard, Princeton, Oxford Universities, and special programs for students of Business and Economics. In this regard, the CBN is in the process of establishing Centres for Excellence across the geo-political zones of the country including:
Ahmadu Bello University, Zaria
· University of Nigeria, Enugu
· University of Ibadan, Ibadan
· Nigeria Defense Academy, Kaduna
· University of Lagos, Lagos
· University of Maiduguri, Borno
· University of Port Harcourt, Rivers
· University of Jos, Plateau
· Bayero University, Kano
vii. Consistent with our policy of development, upon the instruction of His Excellency, the President, the CBN intervened by paying N19.7 Billion to the Ministry of Police Affairs for the purchase of armoured helicopters and other security equipment.
viii. Also, upon the application of the Secretary to the Government of the Federation, the CBN paid N2.1 Billion for the automation and renovation of the Federal Executive Council Chamber. See Annexure CC.
ix. The CBN also initiated, with His Excellency, the President’s approval, the construction of the International Conference Centre for Nigeria. See Annexure DD.
x. His Excellency, the President, also requested that the CBN pay N3.2 Billion for the construction of a new counter terrorism centre for the office of the National Security Adviser.See Annexure EE.
xi. The FRCN itself is a beneficiary of the CBN’s intervention policy as the CBN paid the sum of N220 Million to the FRCN and also organised the banking sector, through the Banker’s Committee, to payN280 Million, totalling a sum of N500 Million, for the construction of the IFRS Academy. See Annexure FF.
xii. All of these requests were duly submitted to the CBN Board of Directors and were duly approved.
xiii. It is also important to emphasise that the grants under the Intervention Program were duly budgeted for, and made on a limited and selected basis.
xiv. Intervention in National Security: At the height of security uncertainties in Nigeria, the Ministry of Police Affairs petitioned His Excellency, the President, for access to the CBN Intervention Fund. His Excellency approved that this be done in his letter of 6 October 2010 referenced MPA/PSD/S/0243. See Annexure GG. The CBN Board of Directors then reviewed and approved this request. See Annexure HHfor the issuance of a grant by the CBN from the Intervention Fund to the Nigerian Police Force, for the procurement of:
o Armoured Helicopters,
o Armoured Patrol Vans,
o Anti-Riot Equipment;
o Hand held Communication Equipment.
35. Akingbola Petition &the N40 Billion Loan Waiver
Allegation 35: attached to the my letter of suspension was a petition written by the former Managing Director of the defunct Intercontinental Bank Plc (ICB now Access Bank Plc)- Erastus Akingbola (MrAkingbola), on an alleged waiver of a N40 Billion loan to a Nigerian bank.
Response:
Before responding to the allegation, it should be stated that the said MrAkingbola is a man found by a final judgment of the Courts in England to have been liable for financial improprieties in the management of the affairs of ICB.
i.In his self-serving petition, MrAkingbola alleged that the CBN, on my watch, wrote-off a loan in favour of Dr. BukolaSaraki. This is untrue.
ii. The CBN was at no time involved in the decision of ICB (or any other bank for that matter) to write-off its loans. The CBN never gave prior approval to the Management and Board of ICB to write-off any particular loan. It is important to state up-front that all the non executive directors on the Board of ICB were appointed by its shareholders while Akingbola was CEO and they were the majority on the Board that approved the write-offs.
iii. From the submissions of ICB to the CBN, the said loan write-off, involved over 1000 customers accounts, totalling N49.07 billion, including accounts held by companies related to Dr. BukolaSaraki.
iv. It is well known that decisions on loan write-offs in the process of recovering non-performing loans are taken by the management and board of banks in line with their internal credit policies. The outstanding amounts are then written off the books of banks after receiving approval of the CBN. ICB therefore only approached the CBN, after it has completed all its negotiations and agreements with its customers, to seek CBN ‘No Objection’ approval to write-off the loans. Indeed, after a careful review of the submission by ICB, the CBN initially raised objections to the justifications provided for the write-off of the debts on the accounts related to Dr. BukolaSaraki. See Annexure II.
v. In response to these objections, the Management of ICB wrote explaining the rationale for the Board decision. (This is also contained in Annexure II). It is important to note that decisions on loan write-offs involve significant exercise of judgement by those involved. Usually a number of factors come into play including whether or not the loan is secured, the value of collateral and if the bank is in a legal position to realise same, the general liquidity in the secondary market and the liquidity position of the bank itself which determines if it is negotiating from a position of strength or weakness. Ultimately, while we may debate these issues, the judgement has to be exercised by those actually managing the bank in the best interest of shareholders and the responsibility lies with them.
vi.In the case of ICB it is well known that the bank was in a grave situation as a result of years of mismanagement by Akingbola. The loans in question were largely loans secured by shares in the capital market and therefore were vulnerable to what is called Market risk. The collapse of the Nigerian capital market following the Global Financial Crisis in 2008 meant that the collateral for these loans had been totally wiped out. The losses suffered by the bank were therefore a result of very bad credit decisions taken by Mr. Akingbola himself which led to the bank taking on huge amounts of risk that crystallised. In this situation all that was left for Management was to minimise its losses and recover as much as it could before the situation got worse.
vii. With specific reference to the ICB loans to companies related to Dr Saraki, the bank’s Management explained that there were four loans totalling N9.489 billion, of which three were margin loans secured by shares and the fourth was secured by real estate. The value of the collateral underlying the Margin loans had been eroded and the bank was compelled to give waivers to make some recovery while still retaining the shares for sale at a future date. It should also be added that the real estate used to secure the non-margin loan were not perfected by the management under Mr. Akingbola, which is another indication of bad credit policies under Mr. Akingbola.
viii. There was no waiver granted to Dr Saraki on the fourth loan as it was paid in full (plus accumulated interest). Of the N9.4 billion, a total of N4.04 billion was repaid, representing a waiver of 57.42 %. Losses on Margin loans were common at this time in the entire industry. To illustrate this, when AMCON purchased margin loans from Intervened banks on December 30, 2010 it offered a premium of 60% above the average price of the shares in the preceding 60 days. In spite of these generous terms AMCON paid an average of only 24.27% of the value of margin loans purchased. Without the premium AMCON would have purchased the loans at 15.17% of their book value. This actually would suggest that the Management of ICB did get a reasonably fair deal for the bank in these circumstances. The best construction we can place on Mr Akingbola’s petition is that he is complaining that the Management that succeeded him could have done a better job of cleaning up the mess he created and left behind.
ix. As for Akingbola’s allegation of fraud, conspiracy, forgery and stealing against Dr. Saraki in connection with Joy Petroleum Ltd, the Central Bank was in the process of collaborating with law enforcement agents involved in the investigations when we received a copy of a letter written by the Honourable Attorney-General and Minister of Justice declaring that these allegations were unfounded and there was no basis in law for any criminal investigation in respect thereof. See Annexure HH. The Central Bank therefore cannot be held in any manner responsible for this decision as this was a position taken by the nation’s chief law officer.
36. Conclusion
i. It is now clear that each of the allegations made by the FRCN in the Briefing Note could easily have been resolved upon a simple request to the CBN for clarification or a little more careful review. There is no doubt that if the CBN had received the Briefing Note, which was prepared in June 2013, all the misconceptions, misrepresentations and erroneous inferences contained therein would have been cleared, and the misleading of His Excellency would have been avoided.
ii. It is now my sincere hope that, having painstakingly provided detailed explanations, backed by verifiable documents, His Excellency, Mr President will find the response satisfactory, and in line with his adherence to fairness and justice, revisit and redress the issue of my suspension.
iii. Furthermore, it is my wish that His Excellency, Mr President, will apply the same rationale and rigour to other agencies of the Federal Government that have had serious allegations and queries levied against them, and presume upon them to provide responses and explanations with the same level of clarity and transparency.
iv. In closing, I would like to place on record the dogged professionalism and patriotism of the staff of the CBN. They have, over the years, served this country creditably, loyally and diligently.
I hereby restate my enduring passion for, and commitment to, our great country Nigeria.
Concluded.
For The Record
Can Rivers Assembly Remove Governor’s Powers To Appoint Executive Officers?
Background
On Thursday, February 15, 2024 at its 109th Legislative sitting, the House passed into Law, the Rivers State House of Assembly Service Commission (Amendment) Bill, 2024. The Bill repealed the Rivers State House of Assembly Service Commission (Amendment) Law, No. 3 of 2006 and further amended the Rivers State House of Assembly Service Commission Law of 1999. The Bill was sent to the Governor for his assent and after the statutory 30 days, the House re-passed the Bill into Law on 22nd March, 2024.
The Rivers State House of Assembly Service Commission was established by the Rivers State House of Assembly Service Commission Law of 1999. Section 2 provides:
“The Commission shall comprise a Chairman and four other members who shall in the opinion of the Speaker be persons of unquestionable integrity.
“The Chairman and members of the Commission shall be appointed by the Rivers State House of Assembly acting on the advice and recommendation of the House Committee of Selection and shall in making the appointment be guided by the geographical spread and diversity of the people of Rivers State.”
The above section was repealed by the Rivers State House of Assembly Service Commission (Amendment) Law No 3, 2006. In Sections 2 and 3, the Amendment Law provides that:
S. 2 “Section 2 of the Principal Law is amended by repealing subsection (1) and substituting the following subsection:
“(1) The Commission shall comprise a Chairman and 4 (four) other members.
S. 3 “Section 2(2) of the Principal Law is amended by repealing subsection (2) and substituting the following subsection:
“(2) The Chairman and members of the Commission shall be appointed by the Governor subject to the confirmation by the House of Assembly and shall in making the appointment be guided by the geographical spread and diversity of the people of Rivers State.”
The import of the 2024 Amendment Bill passed into Law by the House is that the Governor will no longer have the power to appoint the Chairman and members of the Rivers State House of Assembly Service Commission and the power of appointment shall be vested in the House of Assembly.
Legal Issues
The first issue to consider is the Constitutional power of the Governor. Section 5(2) of the Constitution of the Federal Republic of Nigeria, 1999 provides that the executive powers of the State shall be vested in the Governor of that State.” Further, Section 176(2) provides that: “The Governor of a State shall be the Chief Executive of that State.”
This follows that the Governor is the Chief Executive Officer of the State Government and by the powers vested on him, is responsible for making appointments into various executive bodies, subject to the provisions of the 1999 Constitution and other statutes. All Commissions and other parastatals are executive bodies under the control of the Governor. The House of Assembly Service Commission is an executive body and as such, the Chairman and members can only be appointed by the Governor. The House of Assembly has no powers to make any appointment into an executive body as no statutory body is under the control of the legislature. The Rivers State House of Assembly should not mistake the presence of the building of the Service Commission in its premises as conferring powers on the House to appoint the Chairman and members of the Commission.
The second issue to consider is the Constitutional alteration of 2023. In that alteration, the Third Schedule was amended to include State Houses of Assembly Service Commissions, which invariably follows that a State House of Assembly Commission is one of State bodies established by section 197 of the 1999 Constitution. Let’s be reminded that Section 198 of the 1999 Constitution gives the Governor the power of appointment into various executive bodies, subject to confirmation by a resolution of the House of Assembly of a State. The job of the Rivers State House of Assembly ends with the confirmation of the appointees.
The alteration to the Third Schedule, paragraph 1A provides that the composition, tenure, structure, finance, functions, powers, and other proceedings of the Commission shall be as prescribed by a law of the House of Assembly of the State. Notice that the appointment of the Chairman and members of the Commission is not listed. Therefore, it can be safely inferred that the power to appoint the Chairman and members of the House of Assembly Service Commission lies with the Governor, as is the case with the other bodies listed under Section 197 of the 1999 Constitution.
There is nothing in the Alteration that, by any stretch of imagination, can be inferred to confer the power of appointing the Chairman and members of the Rivers State House of Assembly Service Commission on the Rivers State House of Assembly, notwithstanding the fact that the law creating the Commission was enacted by the Rivers State House of Assembly.
Thirdly, is the Rivers State House of Assembly Service Commission and its staff under the control of the State Government? To answer this question, we will take our voyage to Section 318 of the 1999 Constitution. That section gives the definition of a Public Service of a State to mean: “the service of the state in any capacity in respect of the government of the state and includes service as: clerk or other staff of the House of Assembly; member of staff of the High Court, the Sharia Court of Appeal, the Customary Court of Appeal or other courts established for a state by the Constitution or by a law of a House of Assembly; member or staff of any Commission or authority established for the state by this Constitution or by a law of a House of Assembly; staff of any Local Government Council; staff of any statutory corporation established by a law of a House of Assembly; staff of any educational institution established or financed principally by a government of a State; and staff of any company or enterprise in which the government of a State or its agency holds controlling shares or interest.
The purport of this section is that the Assembly Service Commission is not an appendage of the legislature but under the control of the State Government. Even at the national level, the members of the National Assembly Service Commission are appointed by the President in collaboration with the National Assembly.
Fourthly, what is the position of the Rivers State House of Assembly Service Commission Law vis-à-vis the National Assembly Service Commission Act? Section 4(5) of the 1999 Constitution provides: “If any Law enacted by the House of Assembly of a State is inconsistent with any law validly made by the National Assembly, the law made by the National Assembly shall prevail, and that other law shall, to the extent of inconsistency, be void.”
Further, in A.G Bendel v AG Federation & 22 Ors (1982) 3 NCLRI, the Supreme Court held per Fatayi Williams CJN (as he then was) “neither a State nor an individual can contract out of the provisions of the Constitution. The reason for this is that a contract to do a thing which cannot be done without a violation of the Law is void.”
The fifth issue is: “can a statute revive a repealed statute?” In the case of Idehen v University of Benin, Suit No FHC/B/CS/120/2001, delivered on 19th December, 2001, the court held that:
“Contrary to the contention of the University, the effect of a repealing statute is to erase the repealed statute from the statute book. When a statute is repealed, it ceases to exist and no longer forms part of the laws of the land. In other words, the effect of the repeal is to render the repealed statute dead and non-existent in law. Like a dead person, it cannot be revived.”
The court also held in Onagoruwa v IGP (1991) 75 N.W.L.R (pt. 193) 593 that in law, a non-existent statute is dead and cannot be saved or salvaged by the court.
In Madumere v Onuoha (1999) 8 NWLR (Pt. 615) Pg 422, the Court of Appeal held that:
“the effect of repealing a statute is to obliterate it completely from the records of the Parliament as if it had never been passed. Such a law is to be regarded legally as a law that never existed…This means in effect that when a statute is repealed, it ceases to be an existing law under the Constitution of the Federal Republic of Nigeria.”
For the purpose of reviving your memory, the provision giving the Governor the power to appoint the Chairman and members of the Rivers State House of Assembly Service Commission under the repealed 2006 Law provides in its opening paragraph:
“3. Section 2(2) of the Principal Law is amended by repealing section 2 and substituting the following section…” (emphasis mine).
Further, Section 6(1)(a) of the Interpretation Act provides:
“(1) The repeal of an enactment shall not revive anything not in force or existing at the time when the repeal takes effect.”
Please note that Section 318(4) of the 1999 Constitution provides that “The Interpretation Act shall apply for the purposes of interpreting the provisions of this Constitution.”
It follows from the above that the House cannot repeal Sections 2 and 3 of the Rivers State House of Assembly Service Commission (Amendment) Law No 3, 2006 to revive the already repealed provisions of the 1999 Law.
Conclusion
In conclusion, the Rivers State House of Assembly lacks the powers, legal or otherwise, to remove the power of appointment of the Chairman and members of the Rivers State House of Assembly Service Commission from the Governor and vest that power on themselves. The provision in the Rivers State House of Assembly Service Commission (Amendment) Law, 2024 seeking to vest that power on the House is in clear contravention of the 1999 Constitution, and therefore, a nullity in the eyes of the Law. See the case of MacFoy v UAC (1961) 3 All ER 1169 where the court held that you cannot put something on nothing and expect it to stand.
In that case, Lord Denning stated: “If an act is void, then it is in law a nullity. It is not only bad, but incurably bad. There is no need for an order of court to set it aside. It is automatically null and void without more ado, though it is sometimes more convenient to have the court declare it to be so. And every proceeding which is founded on it is also bad and incurably bad. You cannot put something on nothing and expect it to stay there. It will collapse.”
Rt Hon Ehie is Chief of Staff, Government House, Port Harcourt.
By: Edison Ehie
For The Record
We ’ll Not Take Rivers People’s Trust And Confidence For Granted – Fubara
Being a text of the 2024 Budget speech presented to the Rivers State House of Assembly by Governor Siminalayi Fubara at Government House, Port Harcourt on Wednesday, December 13, 2023. Excerpts.
Mr Speaker, Honourable Members, distinguished guests, ladies, and gentlemen.
It is my pleasure to be before this hallowed chamber today to present our state’s budget estimates of Revenues and Expenditures for the fiscal year 2024.
Before I proceed with my presentation, I wish to, again, thank God for the special opportunity to serve our people as their elected Governor.
We thank our dear President, His Excellency Bola Ahmed Tinubu GCFR for his special interest in the peace and progress of Rivers State and the bold steps he has taken to revamp the nation’s economy and sustainable development across the country.
We are also grateful to the good people of Rivers State and the progressive members of the State House of Assembly for your continuing support and prayer for the success of our administration.
We assure you that we will never take your trust and confidence for granted. We will remain faithful to our oath of office and do the best we can to advance the aspirations of our people for good governance, peace, security, and inclusive development.
Our spirit is high; our determination is forever strong as we remain focused on delivering on our mandate in an honest, accountable, just, and fair manner to all parts of the State and all segments of society.
Under our watch, no part of the State will be neglected in our development agenda; no one will be left behind in the distribution of resources and opportunities.
We reaffirm our commitment to working closely with the State House of Assembly to fulfil all our promises and take Rivers State to greater heights of peace, progress, and prosperity.
Mr Speaker, recall that we launched the construction of the Port Harcourt Dual Carriage Ring Road as a flagship project to accelerate the socio-economic development of our State. Julius Berger has since mobilised to the site and work on this multi-billion-naira project has begun.
In line with our consolidation mantra, we have in the last six months, completed many of the uncompleted projects we inherited from the immediate past administration, including roads, hospitals, and schools, while those not yet completed, have reached advanced stages of completion.
Some of the completed roads include Oyigbo – Okoloma Road, Alode – Onne Road, Botem-Gbene-Ue-Hiro Road, Mgbodahia internal roads, Ogbo-Uhugbogo-Udiemude Road, Omoku-Aligwu-Krigene road, Eneka internal roads, Ogbakiri internal roads, and Omagwa internal roads.
Other roads, which construction is proceeding very well include Ahoada-Omoku dualization, Emohua-Tema junction dualization, Umuakali – Eberi road, Alode-Ebubu-Eteo junction road, Egbu-Ehuda internal roads, Elelenwo internal roads, Rumuepirikom internal roads, phase 2, Bori city internal roads, the Ngo section of the Ogoni-Andoni-Opobo unity road, and the Opobo ring road and electrification projects.
On education, we have delivered Government Comprehensive Secondary School, Borokiri, Government Secondary School, Eneka, Government Secondary School, Emohua, Government Secondary School, Okehi, Comprehensive Secondary School, Alesa – Eleme, Government Secondary School, Ataba, and the 10,000 capacity University of Port Harcourt Auditorium. The hostel and auditorium projects at the Yenagoa campus of the Nigerian Law School are also almost completed.
Our commitment to healthcare delivery remains strong. Already, we have delivered the Professor Kelsey Harrison Hospital, the Dental, Maxillofacial, Ear Nose Throat and Ophthalmology Hospital, and several primary healthcare centres across the state.
To accelerate the delivery of affordable housing, we have signed a Memorandum of Understanding with TAF Global Africa and turned the sod for the phased development of 20,000 units of houses in the State.
This is another signature project of our administration, which is targeted at creating new model cities within Obio/Akpor and Ikwerre Local Government Areas of the State with enormous socio-economic benefits to the State and our people.
On sports development, we have opened the Real Madrid Football Academy for full academic and football training activities with the admission of the first batch of students. We have also rehabilitated the indoor basket hall and pitch at Niger Street, Port Harcourt.
We are poised to stimulate industrialization by creating an enabling business environment to attract investors to invest in the different sectors of the State’s economy.
To this end, plans are underway to organise the first Rivers State Investment Summit in decades to work out an investment and industrialization road map for the State.
We have also approved three bills: the Rivers State Investment Promotion Agency Bill, the Rivers State Youth Entrepreneurship Development Trust Fund Bill, the Rivers State Electricity Bill, and the Rivers State New Towns Development Bill, which are critical to accelerating investments, job creation, energy security, economic empowerment, and the socio-economic advancement of the State when passed into law.
Furthermore, we have concluded arrangements to launch the N4,000,000,000.00 seed fund in partnership with the Bank of Industry to support small and medium-scale enterprises across the State at a single-digit interest rate.
We have also entered into a memorandum of understanding with an investor to build a modern spare parts market in the State.
We appreciate the relevance and importance of the civil service to the development of the State through effective implementation of government policies and programmes.
Consequently, our commitment is to strengthen and motivate the civil service for optimal and responsible performance through regular promotions, payment of salaries, pensions and gratuities, and the provision of a good working environment.
Accordingly, we are happy to report that we are up to date in the payment of salaries and pensions to our civil servants and concluded the promotion exercise for our mainstream civil servants and other staff, except those without functional governing boards, such as the secondary school teachers and health to legally conduct the exercise, will be done as soon as we constitute the governing boards.
We have restored water and installed new lifts at the State’s Secretariat complex to improve sanitation and ease access to the higher floors of the complex.
Since we came on board, we have spent over 6 billion naira to pay the gratuities backlog to retired civil servants. Again, our commitment is to ensure that we clear all arrears of gratuities owed to civils by previous administrations.
Also, the recruitment exercise of 10,000 workers into the State’s civil service is almost completed and successful candidates will receive their engagement letters as soon as the report from the State’s Civil Service Commission is ratified by the State Executive Council.
Finally, we have worked with security agencies, local governments, and community leaders to keep our State peaceful, safe, and secure. This is an achievement we will continue to further improve and sustain throughout the Yuletide and beyond.
Mr Speaker, I have highlighted some of our achievements in policies and projects as a relatively young administration implementing a budget and programmes we inherited from the immediate past administration.
As a government, we are satisfied with the modest mileage we have gained in implementing our blueprint despite the prevailing economic hardship and the political challenges and distractions we faced since the inception of our government.
Nevertheless, we can assure our people that the tempo of governance and delivery of services in our priority areas of investments and economic growth, infrastructure delivery and job creation, education, healthcare and human capital development, agriculture, and food security will gain traction and accelerate with speed and vigour in the new year.
2023 BUDGET PERFORMANCE REVIEW
Mr Speaker, a total revenue of 755,666,987.238 was projected for the 2023 fiscal year. This sum included a supplementary estimate of 200,000,000,000.00, which we accessed for the exclusive purpose of funding the construction of the Port Harcourt Ring Road project.
35. The breakdown of the 2023 budget was as follows:
(i) Recurrent Expenditure: N175,249,692,201.00
(ii) Capital Expenditure: N380,417,395,037.00
(iii) Supplementary capital estimates: N200,000,000,000.00
Total: N755,666,987.238.00
As of October 2023, the total actual receipts from all sources, was approximately 66% performance on the revenue side.
There were encouraging improvements in internally generated revenue receipts as against the projections for the year, while the performance of recurrent expenditure was 100%.
THE 2024 BUDGET ASSUMPTIONS
38. Mr Speaker, Honourable Members, the 2024 budget, christened Budget of Promise is based on the following assumptions:
(i) oil price benchmark of $70 per barrel;
(ii) oil production rate of 1.5 million barrels per day; and
(iii) exchange rate of #750/US as projected by the Federal Government. THE 2024 BUDGET SIZE
The total projected revenue for Rivers State for the 2024 Fiscal Year is N800, 392,485,433.01 billion. This is constituted as follows:
(i) Recurrent Expenditure: = 361,598,242,570.85
(ii) Capital Expenditure = 410,266,485,090.64
(iii) Total: = 800,392,485,433.01
FINANCING THE 2024 BUDGET
The financial sources of the 2024 budget are as follows:
Internally Generated Revenue – 231,057,836,945.00
Statutory Allocation – 68, 458,610.00
Mineral funds – 145, 526,581,463.00
Value Added Tax – 55, 650,000,000.00
Refunds Escrow, Paris/ECA – 1, 200,000,000.00
Refunds from bank charges – 1, 500,000,000.00
Excess Crude Account – 1, 700,000,000.00
Exchange rate gain – 1, 200,000,000.00
9. Forex equalization – 3, 000,000,000.00
10. Other FAAC – 5, 000,000,000.00
11. Asset sales – 20, 000,000,000.00
Capital receipts – 9, 879,557,210.00
Proposed internal/external grants – 24, 570,000,000.00
14. International Credits – 2, 000,000,000.00
Bonds – 237, 000,000,000.00
Internal loans – 235, 000,000,000.00
Prior year Balance – 6, 934,784,872.01
TOTAL = 800, 392,485,433.01
RECURRENT EXPENDITURE
The Recurrent Expenditure is projected to be spent as follows:
Personnel Emolument – 99, 588,939,939.39
New Recruitments – 28, 924,562,980.61
Overhead costs – 18, 871,623,339.00
Grants, contributions & subsidies – 7,908,000,000.00
Counterpart pension scheme – 15,000,000,000.00
Gratuities/Death Benefits – 77,850,000,000.00
Monthly pensions – 30,240,000,000.00
Domestic loans interest – 32,420,734,367.60
Foreign loan interest – 536,709,798.04
Domestic loan, principal repayment- 26,018,966,086.70
Foreign loan, principal repayment – 5,081,731,374.51
FAAC Deductions- 12,865,723,913.00
COT/Charges/ General Admin – 5,000,000,000.00
CAPITAL EXPENDITURE
The capital allocation of 410,266,485,090.64 represents about 51 per cent of the total budget projections for the fiscal year 2024.
SECTORAL ALLOCATION OF THE CAPITAL BUDGET
The sectoral allocation of the capital budget is as follows:
Governance – 161,742,835,256.27
Information & Communication – 2,234,273,168.00
Public Administration – 13,852,493,641.59
Finance and Planning – 7,779,818,293.13
Agriculture – 20,311,574,254.53
Infrastructure – 128,003,540,952.66
Commerce and Investment – 1,787,418,534,40
Culture and Tourism – 1,381,187..049.31
Education – 40,426,441,994.74
10. Health – 30,555.506,748.20
Social Development – 10,155,787,127.27
Environment & Sustainable Development – 8,449,614,889.89
Judiciary – N 5,646,617,642.76
The 2024 Budget Policy and Objectives
Hon. Speaker, the overall policy objectives of the 2024 budget are to promote economic development in the State through inclusive growth, the provision of critical infrastructure to support economic, business, and social activities, and the creation of an enabling environment for private sector-led industrialization, job creation and poverty reduction.
We will strive to address the challenges of socio-economic inequalities by ensuring improved access to quality and affordable education, healthcare, water, electricity, housing, social investments, gender empowerment and social inclusion.
This accounts for the reasonably high allocations in the 2024 capital budget to infrastructure, education, healthcare, social development, environment, sustainable development and agriculture.
With these funds, we will build more road networks to interconnect the State, rehabilitate, equip, train and staff all dilapidated primary and secondary schools, build technical and vocational education centres, and allocate more funds to our tertiary schools to improve the quality of teaching, learning and research.
We will also rehabilitate, equip and staff dilapidated primary healthcare facilities, restore, equip, and staff all our general hospitals, complete, equip and staff all five zonal hospitals, implement socially beneficial healthcare schemes, and introduce social investment schemes to fight poverty, social exclusion, and gender discrimination.
Given the importance of the judiciary in the advancement of the rule of law, economic growth, and social accountability, we have also improved the allocation for the funding of the judiciary, law, and justice sectors in this budget to achieve effective and speedy dispensation of justice in the State.
We will ensure that accessed local and international credits are used only for capital projects that would benefit economic growth, give attention to the completion of ongoing projects before embarking on new ones, and grow the economy through targeted investments in areas of comparative economic advantage, including commercial agriculture, electricity generation, renewable energy, oil and gas, housing, and sports development.
We will also provide our young people with the skills and tools they need to succeed in the 21st-century economy and to ensure that education and healthcare are accessible to all regardless of background and means.
Conclusion
Mr Speaker, Honourable Members, thank you again for your patriotism and dedication to the service and advancement of the State.
The budget we have put forward reflects our commitment to responsible financial management and our dedication to the progress of our State and the well-being of our people.
Our priorities are clear: to secure our State, foster sustainable economic growth, create opportunities for all, invest in the future, and ensure our collective prosperity.
As we all know, the security and well-being of the people are the reason we are in government. The budgeting process is fundamental to the realisation of this fundamental objective of state policy.
We recognize the challenges we face as a State and the pointless efforts to frustrate and sabotage our government even before we get started. As you know desperate situations call for desperate measures. I assure you of our determination to weather the raging storm strategically and responsibly.
Mr Speaker, I, therefore, commend this budget to the House of Assembly for your consideration and speedy passage.
Thank you for your kind attention. God bless you all; God bless Rivers State.
For The Record
‘Big Tech Firms Are Threat To Journalism In Nigeria’
Being a paper titled, ‘Nigerian Media Sustainability and Existential Threat by Big
Tech’, presented by Azubuike Ishiekwene at the 19th All Nigeria Editors Conference
holding at Ibom Icon Hotels & Resorts, Uyo, Akwa Ibom State from November 14 -18, 2023.
Protocol
“Every morning a lion wakes up, it knows it must run faster than the slowest gazelle, or it will starve to death…It doesn’t matter whether you are a lion or a gazelle, you better be running”
Quote first attributed to Dan Montano in The Economist, but was popularised by Thomas Friedman in The World is Flat.
Overview
If you asked me if big technology (or big tech) companies were a threat to journalism, say, 20 years ago, my answer would have been an emphatic yes. After all, these companies do our job without our job description. They also disrupt the media space while taking little responsibility for content.
Before I go too far, perhaps I should explain that there is a slight difference in form, but not always in substance, between big tech and big search engines.
While big tech could sometimes be a dominant player in information technology hardware, like Samsung, or in e-commerce, like Amazon, search engines are software monsters although both core hardware and software providers in this field have the capacity as we have seen, for forward or backward linkages. In this paper, I will focus more on search engines, at least a few in the big league that have significantly disrupted our work, for good or ill.
I am sure you know them – Google, Facebook, X (formerly Twitter), Yahoo, YouTube, Baidu and so on. Please, do not add MySpace to this list; it died before they could write our obituary.
By the topic assigned to me, it appears that I am obliged to follow the lead that big tech – that is, one or a combination of the companies I mentioned – could eventually send traditional media into its final resting place.
However, the caveat in this topic, “sustainability” suggests that the Guild still hopes that conventional journalism would survive. But what is sustainability? One of the most practical definitions I have seen is, “sustainability consists of fulfilling the needs of the current generation without compromising the needs of future generations.”
As to whether big tech poses an existential threat to the survival of the Nigerian media and the way out, if indeed such a threat exists, we shall see soon enough.
How media earns
Traditional media’s two basic sources of revenue are advertising and circulation or subscription sales. On the face of it, the fear of a journalistic doomsday appears justified in light of catastrophic declines in revenues from these two major sources of media income.
The relationship between big tech and traditional news media is already complex enough. But I can assure you that the impact of big tech on the media as we know it is just beginning. The Reuters Institute has already predicted this year to be the breakthrough year for artificial intelligence and its application for journalism.
The institute rightly said the arrival of ChatGPT has transformed the debate over whether AI is here to stay or not. In its journal, Journalism, Media, and Technology Trends and Predictions 2023, the Institute said about ChatGPT, “Its speed and capabilities are awe-inspiring and frightening at the same time. While the underlying models have been around for some time, ChatGPT has turned these into an accessible prototype that gives a real sense of where AI may be heading. It can tell jokes (but has been trained not to tell racist or sexist ones), come up with plots for a film or book, write computer code.”
In case you missed it, AI even mocked our industry in the report by summarising the challenges facing local news media in 50 words!
The above was published in the report.
More news outlets, including News24 of South Africa, are training their systems with the voices of their popular anchors with astonishing accuracy.
Big Tech: Archenemies, Frenemies, or Friends?
Big tech may be playing more actively in our industry than us, taking an increasing share of our money and maybe our jobs without being responsible – both in proprietorship and accountability – for the information it disseminates. It has exploited its unmatched reach, ability to use algorithms to tailor content to suit consumers, and real-time engagement advantage to retain consumers. But as they say, there are two sides to a coin.
Positive Impact:
1. Increased Exposure:
• Big tech platforms provide news media companies with a vast audience. Articles and videos can be shared and spread rapidly on these platforms, leading to increased visibility and traffic for news outlets.
2. New Revenue Streams:
• Some tech platforms have revenue-sharing agreements with news media companies. For example, YouTube shares ad revenue with news organisations that post videos on its platform, once you reach a certain threshold.
3. Better Analytics:
• Tech platforms provide news media companies with sophisticated analytic tools that allow them to better understand their audiences and tailor content to user preferences.
4. Engagement Opportunities:
• Social media platforms allow news outlets to interact with their audience in a way that was not possible before. They can receive immediate feedback, address concerns, and build communities around their content.
Negative Impact:
1. Ad Revenue Competition:
• Big tech companies have diverted advertising revenues away from traditional media outlets. They offer targeted advertising based on vast amounts of data, which is often more appealing to advertisers. I was scandalised during the recent general elections in Nigeria that folks who had built their careers in the mainstream and whom we were banking on left us high and dry, with the excuse that their principals wanted minimum use of legacy media platforms! But I understood, even if I did so with a heavy heart! Why? A BBC online report www.bbc.co.uk/bitesize/guides/zd9bd6f/revision/7 said, “Politicians are investing heavily in the use of websites, blogs, podcasts and social networking websites like Facebook and Twitter as a way of reaching voters.”
“During the 2019 election campaign,” the BBC report continued, “the Conservatives spent one million pounds on Facebook alone, at a point, running 2,500 adverts.”
Let’s look at some more numbers: Google earned about $3billion from sales to China-based advertisers in 2018; Google UK earned £3.34billion in 18 months ending December 2021 as total revenue in the UK market; in 2022 Google’s share of UK digital advert market was 38 percent of all adverts valued at £5.72billion.
If the UK media is complaining, I will advise they should not do so as loudly as us. Why? I’m sure most of you already know that on revenue from traffic, for example, while you can get as much as $2 in CPM from traffic from the UK or the US, the best you can hope to get from local traffic, that is, traffic from Nigeria regardless of the size, is probably 80cents per 1000! Sure, this example is related to revenue from traffic; but the ratio, even for advertising is not significantly different.
2. Spread of Misinformation:
• The ease of sharing on social media platforms can contribute to the spread of misinformation. This not only misleads the public but also undermines trust in news media.
3. Algorithmic Control:
• The algorithms used by tech platforms control what content is seen and what is buried. This can lead to a loss of control for news media over how and to whom their content is distributed. In an article by Kanchan Srivastava, published on February 27, 2023, entitled, “Surviving the algorithm: News publishers walk the tightrope as Google ‘updates’ hit hard,” the author quoted a respondent as saying, “Google has released major algo updates in 2022, which impacted search traffic across publishers.” Publishers did not find two major updates last year by the big tech funny at all.
4. Dependency:
• News media companies may become dependent on these platforms for traffic and revenue, which can be risky given the changing algorithms and policies.
5. Potential for Censorship:
• Big tech companies have the power to censor or prioritise certain types of news content based on their own policies or external pressures, which can impact the democratic discourse.
6. Data Privacy Concerns:
• There are concerns about how big tech companies handle user data, and these concerns extend to the partnerships between tech platforms and news media companies.
7. Dilution of Brand Identity:
• Being lumped together with a multitude of other content producers on a single platform can dilute a news outlet’s brand identity.
8. Room for redress
• Complaints about discriminatory business or editorial practices from Nigeria and a number of other developing countries are hardly treated with seriousness
All About Algorithm, the Devil?
Not all the challenges summarised by our AI friend in 50 words were brought upon the traditional media by big tech. Nor are we here solely because of Google’s malicious fiddling with its algo. We in the traditional media space share in the blame for what took our industry from distress to life support.
I will tweak HBS Professor Clayton Christensen a bit by saying for a long time, we were innovating our products in response to technological shifts, with very little attention to our business models, or if you will pardon my drift, what E. Jerome McCarthy described in his book, Basic Marketing: A Managerial Approach, as the 7Ps of marketing – Product, Promotion, Price, Place, People, Process and Physical Evidence.
Nothing depicts this more tellingly than media organisations’ need to reconsider obsolete editorial culture and imbibe new ones, especially in the areas of collaboration, audience-centered production, and creating an audience community.
To be able to compete favourably, media houses may have to take another look at the redundancy levels in-house. Reuters Institute predicted that more newspapers would stop daily print production due to rising print costs and the weakening of distribution networks. It also predicted a further spate of venerable titles switching to an online-only model. They are happening before our own eyes.
Let me be local. In LEADERSHIP the average production costs of our major consumables – newsprint, plates, ink, energy – have risen, with the most significant rise being in energy cost, which increased by 40 percent in one year, while our advert rates have remained largely constant.
Survival in the media industry used to depend on rivalry in the media; now it depends on collaboration. Recent collaborative works on the Pandora Papers, BureauLocal, and the #CoronaVirusFacts have shown that media organisations can work with colleagues across boundaries to share resources for the common good.
In 2020, Aliaa El-Shabassy, a teaching assistant at Cairo University, listed six reader needs outlined by the BBC for media organisations that want to stay ahead and compete with tech platforms. Why should other media companies listen to the BBC’s advice? Well, its global reach in 2020 was 468.2m people a week!
El-Shabassy wrote, “During Corona’s peak when audiences needed a trustworthy source to rely on, BBC News scored the highest reach among other international media organisations. Moreover, according to the annual Global Audience Measure, a total of 151 million users per week are accessing BBC’s news and entertainment content digitally.”
Six reader needs that any Media Practitioner must be aware of, according to the BBC are:
Update me – which means in the era of information overload, your audience should know in a new light what they already know about.
Give me perspective – it is a newsroom’s own goal to believe that perspective can only be shaped by the newsroom. Your audience can provide perspective.
Educate me – everyone wants to learn about an exciting new thing. Once you provide diverse content with curiosity value, your audience will be eager to find more from you.
Ishiekwene is Senior Vice Chairman/Editor-In-Chief, LEADERSHIP Media Group.
Keep me on trend – audiences want to be kept trending. Perhaps that was why the BBC reached a record number of people during COVID-19.
Amuse me – one of the reasons tech platforms prioritise user-generated content (remember Facebook’s pivot to video) over professionally produced content is that they have better entertainment value to attract adverts. The simple truth is that if you make your audience smile, they will most likely come back. It doesn’t always have to be serious! The more entertaining yet informative your content is, the more your institution is likely to grow.
Inspire me – inspiring stories attract younger audiences more than others and younger audiences source content through tech platforms more. Do the math!
Big Stick for Big Tech
Yet, big tech can’t get off lightly. In 2021, and despite heavy criticism, the Australian government pioneered a new media bargaining code that compels tech platforms to negotiate payment to local news media outlets for using their content.
Initially criticised as a form of subsidy from big tech to big media, significantly because of the role played by media mogul Rupert Murdoch, the law has been hugely successful. Both big and small media outlets have benefitted from the law while the country’s journalism practice has also been revitalised, leading to the creation of new journalism jobs.
In an article published in 2022 by Brookings, Dr Courtney Radsch, Fellow, Institute for Technology, Law and Policy, UCLA, wrote that Australia’s big tech regulatory efforts were developed around three thrusts: taxation, competition/antitrust, and intellectual property.
The bargaining code therefore allows publishers to collectively bargain without violating antitrust laws; requires tech platforms to negotiate with publishers for the use of news snippets; also requires them to pay licensing fees to publishers; and taxes digital advertising and uses the revenue to subsidise news outlets.
The EU, US and India have since adopted their own media bargaining code and the idea of compelling big tech to pay for news they don’t produce but use and sell is gaining momentum, has been gaining global support since Australia took the bull by the horns.
I’m aware that the newspaper the publishers’ association in Nigeria set up a committee in July to examine the possibility of collective bargaining with big tech.
Staying in business
Understanding that consumers hold all – or most – of the aces, is the first step towards sustainability. For perspective, a paper entitled, “The Newspaper: Emerging Trends, Opportunities, and Strategies for Survival and Sustainability,” by Frank Aigbogun presented at a retreat for NPAN on July 18, 2023, said between 2010 and 2015, audience time spent spend on online media consumption soared to 150%. In that time, audience time spent on television decreased to -8%; radio, -15%; magazine, -23%; and newspaper, -31%.
The reality of digital media is that evolution has brought about new competition and fresh opportunities. Solutions journalism, citizens journalism, and a deeper interface between journalism and technology are the order of the day. There was a time when we consumed music via turntables, stereos with records, and then cassettes and then compact discs. Album sales are no longer used to measure the success of a body of work.
Now it is streaming, the playground of big tech companies such as Apple Music, Spotify, Amazon Music, TIDAL, Pandora, etc. If technology did not pose an existential threat to the music industry, I do not think big tech would end journalism.
Reuters Institute said, “Better data connections have opened up possibilities beyond just text and pictures and smartphone adoption has accelerated the use of visual journalism, vertical video, and podcasts.”
Good content should not be free. What technology is doing, therefore, is to offer traditional media the opportunity to reach more people and make a profit.
Through the use of content and tech-led innovation, a growing list of brands are expanding into broadcast and streaming TV to grow and engage their audiences, and bring in new revenue streams. This involves the use of new formats, new technology, and new products to broaden and retain the audience base.
In addition, feedback tools, such as engagement matrices, are being used to “galvanise the industry on loyalty” (according to FT, which now uses the RFV – Recency, Frequency, and Volume of reading its digital content).
Traditional media organisations in Nigeria also need to rethink their business models, from content to distribution and personnel costs. One of the ways some media organisations are going about change in business model is by targeting niche markets, while others invest in research, education and learning.
Other ideas you may find useful in turning an existential threat to an opportunity for sustainable growth, are:
Diversify: Think about Julius Berger now into massive production and export of cashew nuts! Think about games, films, books, special events & publications, etc
Preserve your candle: Don’t give content free and still not collect and deploy customer data. Know your audiences and cultivate them
Re-purpose content
Review your systems and processes regularly and take tough decisions
Be ethical
Invest in talent
Conclusion
Let me return to the first sentence of this presentation. Yes, big tech poses a threat because of the opaque relationship it has with traditional media. However, is this threat going to pull the plug on journalism? I’ll say no. I’ll be the first to admit that the prevailing mood in the media industry is one of uncertainty.
To be certain, nothing will bring back the days when advertisement and circulation were enough to successfully run a media organisation. Also, because the media is a kind of cultural sector that does not necessarily respond to the principles of demand and supply, media organisations that fail to swim with the tide will continue to struggle or pack up altogether. If we invest in what feels relevant and useful to consumers, then we have nothing to worry about because technology will help us know exactly how to adapt and reach our target audience.
What we should worry about instead is how to retain the ethics of our practice in the face of robotic and artificial media which might just overpower the audiences we share.
-
Politics4 days ago
How Social Media Threatened My 40-Year-Old Marriage -Lai Mohammed
-
News4 days ago
We May Shut Down Universities Indefinitely, Non- Teaching Staff Threaten
-
Sports2 days ago
Immediate Relegation Awaits Man City, If…
-
Politics2 days ago
FEC Approves 10% Appointments For Youths
-
Politics8 hours ago
Tinubu Congratulates Senegal President-Elect Over Electoral Victory
-
Business3 hours ago
NASS Engages Agric Minister On Food Crisis
-
Oil & Energy4 days ago
Africa’s Energy Leap From Fossil Fuels To Renewable Powerhouse
-
Sports4 days ago
All African Games: Nigeria Finishes Second On Medal Table