By Morenike Taire
Dr Chinyere Almona assumed office as the Director General of the Lagos Chamber of Commerce and Industry (LCCI) on July 1, 2021.
She holds a Doctorate Degree in Business Administration from Business School Netherlands and has about 30 years experience in diverse areas.
Almona had previously led the Africa Corporate Governance Programme of the International Finance Corporation (IFC), which provided a wide range of corporate governance reforms across 13 African countries.
Before joining IFC, she was a Director at PricewaterhouseCoopers.
In this media chat with Yinka Kolawole, she spoke on germane and current economic issues.
What’s your view on Nigeria’s current huge debt profile and FG’s continuous quest for borrowing to fund the national budget?
The total public debt incurred by Nigeria stood at N33trillion as at March 2021 with a debt to GDP ratio of 21.13 per cent.
The Federal Government spent N2.02tn on debt servicing in the first half of 2021.
This figure represents 90.58 per cent of the total revenue of N2.23tn generated by the FG within the period, a development which experts said signified a dangerous trend for the economy.
An overview of FGN 2022 Budget Call Circular showed that as of June 2021, the Federal Government’s retained revenue was N2.23tn, which is 67.58 per cent of prorata target of N3.3tn for the review period.
This means that the Federal Government failed to realise N1.07tn of its revenue target in the first half of the year.
There is a twin-crisis of low revenue and high debt servicing which the managers of the economy must deal with.
The current administration has been accused of serial borrowing from different countries such as China to build infrastructure.
Is it possible to build competitive infrastructure with borrowing?
Borrowing is not necessarily bad but it is only wise to use debts to fund critical infrastructure that in turn support businesses.
Debts should be tied to capital projects that can support the ease of doing business in Nigeria.
Loans should be tied to projects that can boost revenue. This will improve our debt to revenue ratio from the current 91 percent downwards.
Debts should not be used to fund recurrent expenditure while capital projects suffer from lack of funds.
What’s your position on the current debacle on VAT administration and its effects on the private sector?
The decision on who collects VAT rests on the judiciary. And with the recent judgement on stay of execution of the earlier judgement, a status quo is expected by all parties pending when the appeal is resolved at the Court of Appeal.
What it means is that the states cannot collect VAT now until when the FIRS suit at the Court of Appeal is resolved.
We have advised that the sharing formula for the states and LGAs be reviewed such that states with more generation of VAT receive more.
This will encourage states to become more serious about the business environment in their states and how companies are supported to thrive.
Despite stopping the sale of dollars to Bureau De Change, the Naira has continued a free fall.
What is the way out of the rapid devaluation?
Any exchange market responds to the forces of demand and supply. The forex market is not an exemption.
We had envisaged that the banks will not be able to meet the demands for forex and this will force manufacturers to source forex from the parallel market with rates hitting the skies.
We have also advised that raw materials that are not available locally but are a critical component of production should be supported till when we can build enough capacity to produce them locally.
For instance, some of the items of the forty-one items excluded from CBN forex funding are critical ingredients of production for some manufacturers, and presently, they import such items at a rate above N560 per dollar rate.
One of the challenges of Nigerian businesses is lack of support from the nation’s financial institutions.
For instance, while over N266 billion was said to have been made by 10 banks on account maintenance and e-banking, in 2020, this cannot be said to have rubbed off positively on the nation’s businesses during the period.
How can the nation’s financial institutions be made to really play that financial intermediatiary role?
With Cash Reserve Ratio at 27.5 percent and the Liquidity Ratio at 30 per cent, the CBN has tried to push the banks to play the financial intermediary role in the economy.
However, due to the harsh business environment, many banks see lending to SMEs and most private companies as extremely risky and which gives room to a high lending rate going to almost 25per cent.
With this high rate of lending, most companies are not able to take loans from banks. We advise on more concessionary loans from the government to the SMEs through the banking sector.
This is different from the Social Investment Programme that looks like grants without a repayment plan.
Government can continue with the special intervention funds through the banks to support targeted sectors of the private sector.
How will the rising wave of insecurity in the country affect Nigeria’s participation in AfCFTA?
The rising wave of insecurity is already a critical factor driving up inflation rate in Nigeria. The implication is that, if unchecked, products from Nigeria may not be able to compete well on price in the international markets.
The cost of production in Nigeria is comparably higher that most African nations that will also supply products to the same large continental market.
What is the LCCI’s view on the e-currency CBN is about to introduce?
It is imperative that digital platforms need to be well supported and regulated to reduce cybercrimes.
Since innovative digital solutions will continue to dominate the way business is done across the globe, Nigeria cannot afford to lag behind in the scheme of things.
It is however important that strict regulation according to best practices are put in place.