By Udeme Clement
Mr. Ikpong Umoh is the Chairman, Toiletries & Cosmetics Manufacturers Group of the Manufacturers Association of Nigeria (T&C Group of MAN) and Chief Executive Officer of Stellarchem Nigeria Limited. In this interview, Umoh speaks on the position of the National Bureau of Statistics, NBS, that Nigeria is out of economic recession, among other issues.
What is your take on the claim by the NBS that Nigeria is out of recession?
I read the report in newspapers. And I think it is propaganda because the claim is at variance with the economic realities on ground in Nigeria. If government is saying the economy is out of recession, they must answer some questions. Does this imply that the interest rate is going to be single digit? Does this imply that banks will give Small and Medium Enterprises (SMEs) loan at lower interest rate? When is the exchange rate going to be N1 to the dollar? Does this mean the forex crisis in the country is over?
What the NBS is saying is that the economy recorded 0.55percent growth in Gross Domestic Product (GDP) in the second quarter of 2017
If the economy is out of recession, why are the people still in depression? Why are the prices of food items sky-rocketing to the extent that you can see hopelessness and frustration on the faces of the masses? Why is agitation for restructuring getting louder, showing dissatisfaction with the management of the economy and distribution of resources?
Are you saying the figures from the NBS are not reliable?
Yes. We cannot depend on such statistics from the NBS because they appear very deceitful and must be critically examined. This is imperative because, in the past, we had such statistics of growth that did not reflect the true picture of the economy, and, before we knew it, the economy went into recession. The assertion from NBS does not reflect the economic realities on ground in any way, rather it is at variance with the state of the economy. At present, Nigeria ranks 169 out of 190 countries on the Ease of Doing Business Initiative. Also, over 226 manufacturing companies closed shop due to the recession. How many of such industries have been revamped? The regulatory environment for SMEs is still very unfriendly. Insecurity and crime rate are rising.
Even President Muhammadu Buhari has come out to say that Nigerians must not celebrate the statement that the economy is out of recession yet, stressing that the impact is not felt by the masses. The reality is that the recession is worsening by the day. For example, the price of yam, which used to be the food for the common man, is very high, people can no longer afford it. The same thing goes for garri and other food items.
You said about 226 industries folded up due to economic recession. What are the implications?
This shows that the manufacturing sector, which ought to be the engine room of the economy, is in comatose. The Manufacturers Association of Nigeria, MAN, determined this from its current survey that about 226 companies have either closed shop or downsized between 2015 and 2016. You can see why the figures from the NBS are at variance with the economic realities on ground.
In fact, about 4.85million jobs were lost within the same period. Nigeria is one of the poorest and most unequalled countries in the world, with over 80million or 64percent of the population living below poverty line. Poverty and hunger remain high in rural areas, remote communities and among female-headed households, cutting across the six geo-political zones, with prevalence ranging from approximately 46.9percent in the South-West to 74.3percent in North-West and North-East.
The new Executive Order sounds good but appears to have missed the focus on SMEs, as it concentrates 90percent on the convenience of foreign investors. The Presidential Enabling Business Environment Council (PEBEC) needs to do wider consultations and involve genuine SMEs in its activities. For our economy to recover fast and in a sustainable way, we need an Executive Order that will take a cue from the World Bank Group to favour local SMEs 100 per cent. Toiletries and cosmetics companies in Nigeria have the capacity to produce sufficient finished cosmetics products for local consumption and for export, as they did in the 90s. But we need government protection by prohibiting importation of cosmetic products into Nigeria, notwithstanding the bilateral agreements it may have entered into. The Ease of Business Ranking as put together by the World Bank Group has SME as its focus; this is not for the fun of it, because SMEs have the potentials to grow a country’s GDP out of recession in a more sustainable way than Foreign Direct Investments (FDIs).
According to the World Bank data, the percentage contribution of SMEs to GDP in high income countries is between 50-55percent in UAE, Singapore, Quatar, Denmark, Germany, France and many of the EU countries. In middle income countries like China, India, Brazil, Malaysia, Angola, Thailand and Ghana, SMEs contribute between 35-40 per cent of the GDP. In low income countries like Cambodia, Kenya and sub Saharan African countries, SMEs contribution to GDP is 15percent. The recent UN report says Nigeria’s population will be 200 million by 2019 and over 400 million by 2050, becoming one of the top five populous countries in the world, so SMEs must thrive to create more jobs for the citizens.
How has this affected Nigeria’s economic growth rate?
Nigeria’s loss in Global Competitiveness is a source of worry. In a recent report, Nigeria, the giant of Africa, dropped three notches from 124th in 2015-2016 to 127th in 2016-2017. On the other hand, some countries in Sub-Saharan Africa like Mauritius (ranking 45th) and South Africa (47th) remain the region’s most competitive economies, climbing two places and one place, respectively. Rwanda (52nd) comes third in the region. Closely related to Global Competitiveness is the Ease of Doing Business (EODB). Based on the latest ranking released by the World Bank, Nigeria is ranked 169 among 190 countries. Some analysts see this ranking as an improvement on the previous position of 170 out of 189. When compared with countries in the sub-region like Ghana (108), Mali (141) and Togo (154), there is nothing to cheer about Nigeria.
Barely three months after signing the EODB into law, nothing has changed for all to see that we are moving forward. It was acknowledged that Nigeria’s low ranking of 14th out of the15 Economic Community of West African States (ECOWAS) economies and 182nd out of 190 economies worldwide in the ‘Trade Across Borders’ indicator must be changed. To this end, some reforms were introduced to achieve 24-hour cargo clearing, just like a shift system, in order to achieve around the clock operation, scheduling and coordinating Mandatory Joint Examinations and Sign-off Form to ensure that there is only one point of contact between importers at the port.
Recently, the Financial Business Group honoured you with award of excellence for your enormous contributions to the manufacturing sector. How do you describe this recognition?
I feel humbled and thank God for His grace. But, ultimately, I am appealing to government to resuscitate the real sector, in order to create jobs for the citizens. The alarming unemployment rate, if not tackled, will create another crisis in the country.