As the tenure of the present administration comes to an end today, stakeholders, industry players in different sectors and the masses are divided in their views on what government has achieved in the last four years in the areas of infrastructural development, economic growth/development and public goods for improved standard of living. While some experts rate the Federal Government low on infrastructural development, especially in the area of power supply, others called on the new administration of President Goodluck Jonathan to ensure adequate planning and policies implementation to fast-track development for long-term growth.
By Udeme Clement
The shake-up in the banking sector in the last four years took a new dimension with the directive by the Governor of Central Bank of Nigeria (CBN), Mr. Sanusi Lamido Sanusi, that managing directors and chief executive officers of all deposit banks in the country must serve a uniform tenure of 10 years in office.
The new codes of corporate governance stated a stipulated tenure of first five years, subject to renewal for yet another five years by the board of respective banks. Aside from uniform tenure, the apex bank also directed that top officials of CBN as well as Nigeria Deposit Insurance Corporation are barred from taking bank jobs until five years after leaving office.
Other issues in the industry include reduction in the number of banks, price stability, inflation rate control, the proposal to stop universal banking system, Islamic/non-interesting banking technique as well as cash withdrawal and deposits limits of N150,000 by individuals and N1million by corporate organisations.
N150bn bailout for manufacturing sector
The Manufacturers’ Association of Nigeria (MAN), in the last four years, received a boost of N150billion bailout package approved by the current management of CBN to resuscitate the real sector of the economy. The initiative, to most manufacturers, was a timely intervention by government to bring businesses in the industry back on full stream.
However, notwithstanding the bailout, the industry experienced a serious setback with over 55 per cent of manufacturers closing shop in 2009 economic year. The Executive Secretary, MAN, Ikeja branch, Mr. Segun Ajayi- Kadir, told Sunday Vanguard, that a greater number of the association’s members currently out of business are mostly textile manufacturers. He mentioned the influx of foreign textile materials into Nigerian market and lack of infrastructure for efficient production as serious economic woes for the textile industry, which brought about reduced production capacity and sudden collapse.
Kadir said the problem of textile industry in the country began over a decade ago, and regretted that the problem is lingering without pragmatic steps to restructure the sector for greater growth.
”We are all aware of the power crisis in the country. The manufacturers are the worst hit because they have to spend so much in generating their own power to carry out their operations. At the end of the day, the cost of production becomes very high and they find it extremely difficult to compete with their foreign counterparts. Some manufacturers spent huge sums to run their operations with limited access to funds.
As a result, they suffered cash crunch and crashed out of business. When an entrepreneur spends so much money to purchase raw materials, pay for labour and the basic infrastructure are not available to enable him produce at a reduced rate, the tendency for him to increase his margin may not be there. A situation like this may not pave the way for the business to yield profits in the long-run”, he said.
Approval of N21.5bn export grant for non-oil export sector
During the last tenure, Federal Government also took a bold stop to approve N21.5billion export grant to be injected into the non-oil export sector of Nigeria’s economy.
The former Chairman, Agriculture, Non-oil Export Trade Group, Lagos Chambers of Commerce, Industry, Mines and Agriculture (LACCIMA), Dr. Godwin Oyedele Oyediji, told Sunday Vanguard that the directive on the fund if properly carried out would stimulate rapid growth in the non-oil sector.
”Government should design a transparent framework for immediate and appropriate disbursement of the fund only to the target beneficiaries to ensure that the money does not get into wrong hands, and, at the end of the exercise, the real beneficiaries are frustrated with nothing to invest in the sector.
”Government must also realise that the intended purpose of releasing the grant could only be achieved if the right people get the money and put it back into the economy through investments in the export sub-sector. Export is a major economic activity that is capable of crediting Nigeria’s balance of payment accounts to generate more revenue for the entire economy, and reposition the economy strategically to enable government achieve its Vision 20:2020 without any set back”, he advised.
The new draft tax policy
Government also approved a new draft tax national policy designed to grow tax revenue to enhance more revenue from non-oil sub-sector and solve the inherent problems in the structures of the existing tax guidelines. The new policy include increased demand to grow internally-generated revenue, the mechanism to check multiple taxation, lack of accountability for tax revenue, lack of skilled manpower and inadequate funding of specific policy direction for tax matters.
Despite the new tax policy, a tax expert and former member of the Joint Tax Board, the body set up by government on taxation issues, James Olatunji Awoniyi, disclosed that government gets less that 40 per cent tax revenue, stressing that the new draft tax policy must address the fundamentals. ”I feel very sad about the tax system of this country. At present, the Federal Government realises less than 40 per cent tax revenue from a country like Nigeria with a population of over 140 million and enormous natural resources. People are not paying taxes the way they ought to due to prevailing corruption and lack of accountability in the system.
“The principles that make people pay taxes is negated by corruption and the manner in which public funds are mismanaged in the country, because the amount of money often declared as revenue from taxes is not commensurate with the infrastructure on ground. As such, most people would rather prefer to spend their money themselves instead of paying taxes, since they knew that the funds may not be properly utilised to provide public goods and social amenities in the society. Only corporate organisations and workers pay taxes because the money is usually removed from their salaries before it gets to them”, he explained.
The Petroleum Industry Bill (PIB)
The bill, which has been in the National Assembly since 2008, was designed to make NNPC function as a commercial venture in terms of going to the capital market to raise funds for its operations and to bear the costs of all its transactions. The initiative was to reduce corruption within the corporation, but, up till now, the bill has not been passed by the National Assembly not to talk of being signed into law.
The Vice-Chairman, Senate Committee on Downstream Petroleum, Senator Abubakar Umar Gada, explained that the Senate was taking its time to examine and deliberate exhaustively on the bill to ensure that a thorough job was done before passing it into law. ”The bill, when passed into law would make the energy sector viable for greater productivity”, he asserted. The bill needs immediate passage to prevent the country’s downstream sector from sudden collapse, as Nigeria ‘s economy loses $287million on monthly basis for non-passage of the PIB into law.
The power sector reforms
Apparently, the Federal Government failed on its promise to deliver the target of 6,000mega watts (Mw) of electricity generation by December 2009, despite the huge amount invested in the sector. The current generating capacity stands at 3800Mw.
Accordingly, the sector witnessed a slight increase in the level of outputs from the previous 3,500Mw to about 3,800 Mw, which is grossly insufficient for a population of over 140million people.
The 2009 economic year also brought more investments into the sector through the release of N59billion, which the late President Umar Yar’Adua approved in the last quarter of 2008 for the sector through the then Minister of Finance, Dr. Shamsuddeen Usman. The initiative was to enhance execution of major projects in the sector, yet the year ended without tangible achievement.
Sunday Vanguard gathered that the N59 billion was the balance of the appropriation for power sector budget of 2008, from the total of N115 billion previously released. Yar’Adua, while giving the approval, stated categorically that the money would not solve all the problems associated with power generation in the country as the sector needed more funding, but he assured Nigerians that the money would enhance development in the short run expectation to achieve 6,000Mw capacity, that was not realisable at the end of 2009.
The gas master plan/gas pricing policy
Thus, the Gas Master Plan, which the Federal Government approved in 2008, to ensure availability of gas supply for generation, transmission and distribution of electricity to meet demands for both domestic and industrial consumption in the country, could not bring about the realisation of 6,000Mw target. Experts are of the opinion that the gas master plan as well as the gas pricing policy must be properly implemented to boost development in the sector.
The initiative should favour domestic users in order to make the domestic gas affordable to the consumers, and to bring economic gains to the industry and the economy at large.
Prior to the approval of the gas pricing policy, there was no real pricing formular in the gas sub-sector, and that made everything to work in contradiction without a synergy in the system. The new policy is designed to boost industrial development in the country by ensuring competitive gas prices for all gas consumers, such that Nigeria’s gas could be supplied at the lowest commercially sustainable prices to the strategic domestic sector, which provides electricity for domestic and industrial consumption.
Approval of N10 billion bailout for the aviation industry
The Federal Government also approved N10billion worth of incentives to tackle the economic woes in the industry which led to many airlines suspending operations.
The Assistant Secretary General, Airline Operators of Nigeria (AON), Mohammed Tukur, in a chat with Sunday Business, commended the effort of government, even as he stressed that N10billion would not solve all the problems facing the sector. He said, AN10billion would not solve all the problems facing the sector, but the initiative by government to give a bailout was a welcome development. It means government has shown sincere interest in its effort to assist the industry to thrive.
In stead of giving the money to Airline Operators, let the entire package be paid into a bank where the beneficiaries could access at least with five per cent interest. In this way, Airline Operators would be able to bear their cost of operations. Accessing the fund through a commercial bank would reduce financial misappropriation and government should also put a monitoring team in place to ensure prudent management of the money.