•Says govt undermining private sector’s capacity to create jobs
By Victor Ahiuma-Young
Director-General, D-G, of Nigeria Employers’ Consultative Association, NECA, Wale-Smatt Oyerinde, in this interview, speaks on why the nation’s economy is struggling, distractions by the National Assembly, NASS, through frivolous oversight functions, crude oil theft and fuel subsidy and so on.
Businesses thrive based on some fundamental issues and must have critical inputs within the context of raw materials, finance and a stable environment for business growth, as well as a hospitable regulatory framework to further the businesses.
Among all these, we seem to be challenged on all fronts, especially in the manufacturing and the real sector.
We have to import inputs and the unavailability of Foreign Exchange, FOREX, remains a major challenge, because you cannot get the quantum you need to import sufficiently from the official market, thereby making you to pay through difficult means through the black market.
The challenges of fiscal and monetary policies are also there. We talk of power and energy costs; these are the parts of the disruptions. An investor that wants to invest will look for an environment that is stable, where such an investor can sufficiently predict, but once there are uncertainties, it becomes a challenge.
There are also regulatory challenges from the National Assembly too. We have House Committees consistently summoning Chief Executive Officers, CEOs, of businesses from one investigative activity or the other. We believe that is distractive and creates some level of instability.
It also calls for question the taunted separation of powers because you cannot make laws and at the same time supervise the implementation of those laws. We hope very soon things will change.
NASS oversight functions
For a business to survive, it needs a peaceful and friendly regulatory environment.
The National Development Plan, NDP, from 2021 to 2025 proposes that about 30 million jobs would have been created by the government. For every 10 jobs, the private sector creates eight.
But the situation now is issue of regulatory challenges. The members of the National Assembly constitute themselves as clog in the wheel of a productive sector.
We have committees of Interior and Finance summoning business owners and Managing Directors to Abuja for one investigative section or the other.
Section 88 and 89 that the legislators purportedly say guarantees them to carry out oversight functions; our view is that the sections give them the right to oversight on companies and agencies where the government appropriates funds and not on private organisations.
The executive arm of government has the right to carry out oversight functions and ensure compliance. But, when the National Assembly makes the law and delves into the compliance issues, it creates confusion in the OPS and also becomes a big distraction for us and makes the business environment more choking.
On excise duty, even as revenue challenges are a major issue for the government, we should not now over-tax businesses out of existence. If you increase tax, you definitely will increase the cost of production, which in turn will be transferred to the consumer.
Our take is that government should not just come out with a policy but let us see the whole gamut of that one policy and the impact on the citizens, rather than over-tax businesses, the government should widen the tax net.
The consequences of the excise increase are far reaching. With over 50 different taxes, levies and fees paid across the board, no business can survive and remain competitive.
If we make doing business in Nigeria unattractive, businesses will relocate to neighbouring countries, do their production and bring it back to the country.
National Development Plan
First for us is to redefine our priorities; identifying our limitations will help determine our priorities with the outcome dragging some other sectors along to the realm of development.
The current National Development Plan, NDP, is quite ambitious with the commitment of the private sector to contribute over N2 trillion and generate 30 million jobs before 2025.
We should not build structures and create big visions that in reality we cannot meet and achieve. From the OPS perspective, we picked three priorities; our plan is we deal with the issue of power, job creation and insecurity. Then all plans and regulations will be feeding into achieving those priorities.
You want the private sector to help generate 30 million jobs and what is the state of the private sector? How are we in the contest of the regulators, National Assembly, and fiscal and monetary policies? How will it help them to generate those 30 million jobs? If we don’t deal with the existing contradictions nothing will change.
Crude oil theft
The government should immediately constitute a judicial inquiry to unearth the secrecy of the subsidy regime. It should also unbundle the “unbundled” NNPC, because to a large extent, it is just a change of name and logo, as well as take a very decisive action and step against issue of oil theft. The issues of oil theft and fuel subsidy were not like this before.
In those days, Naira was stronger than the dollar but now it is changing for over N800. It is just for us to trace exactly where we have missed it. Let us deliberately reverse that trend. N1 may not be $1 but let us progressively act, and let the system be productive.
It is a function of demand and supply. If too much Naira is trading fewer dollars, it makes the value of the dollar to increase. In addressing it, what are the things we are spending dollars on, imported goods because we are import dependent.
There is a backward integration programme that is being promoted by the Federal Ministry of Industry, Trade and Investment and by the CBN. For instance, we give three years moratorium to those importers and in that period we stop importation for us to grow our products.
Those policies are there but we realise implementation becomes haphazard, thereby making illegal importation attractive and killing the local industries. Most of our problems are not rocket science, we just need genuine efforts to deal with issues. This country, we believe is redeemable.
If the refineries are working we probably would not import, we will be thinking of exporting. Dealing with the issue of local consumption, we generate subsidy because we import for local consumption.
Our position is that subsidy is not sustainable. On the report that subsidy may hit N11 trillion, no country arguably subsidises anything to the tune of N11 trillion. For the budget deficient, we are to borrow N9 trillion to fund it.
For next year, it will eat close to N6 trillion by the time this government leaves office in June. The general consensus for all of us is that subsidy is not sustainable.
Let us deal with the issue of local refineries. We have done turnaround maintenance. Let the government be bold enough to come up with what we have done with the turnaround maintenance.
It is a crime on this nation to continually drag us on this path. Let the refineries be working and complemented with Dangote Refinery, we probably will not have any business with subsidy.
To generate jobs, you must have businesses that are sustainable and thriving, as well as a large pool of entrepreneurs that are working and also employable, while the government through the civil service does its own part.
For us, to deal with it, let us look at the private sector, and how can we help the private sector to grow, and create a conducive environment for that sector to grow, you would have solved a lot of the crises that we have.
By the time you tackle unemployment, you have taken a lot of youths out of the streets and you have reduced their propensity to join crime. It is a win-win for the government if it supports organised businesses.
The CBN Act gives it some level of independence. The CBN is the custodian of monetary policy while the Finance Ministry is the custodian of fiscal policy and both are supposed to complement each other. Two days after the comment of the minister the market started reacting.
The comments of those principals are very sensitive that their conversations were a show of shame. When the CBN Governor mentioned that three quarters of cash is out of the banking sector, it is a concern for worry as it renders the sector almost irrelevant.
Mopping up all the cash back into the banking sector will help the CBN within the context of the e-Naira. However, the priorities for businesses are we have challenges bordering on insecurity, forex and regulatory challenges.
Let us deal with issues that are germane to businesses. While redesigning has its own economic advantage on a large scale, the point is how we get the nation back to a productive state, get businesses running and Gross Domestic Product, GDP, growing. These are issues the organised businesses are concerned with.
Cost of living allowance
We can say confidently that many business organisations are paying the cost of living allowance. Many are giving their staff quarterly products to cushion the effect of cost of living crisis.
In other climes, they align wages against inflation through mechanisms that automatically align wages against inflation. As inflation is increasing the mechanism balances the wage so that inflation does not erode the whole value of your wages.
A lot of companies are coming up with different schemes. Because of the economic situation, a company doubled the October salaries of its workers; some reduced to four days working week to reduce the pressure and amount spent on transportation. These are aimed at reducing the pressure on the employees due to no fault of theirs.
Effects of flood
The flood opened our eyes to the dangers of realities that we face. The government needs to be more stringent within the context of town planning.
Businesses have been terribly affected, families have been displaced, jobs have been lost, farmlands have been destroyed amid a looming food crisis, and people are migrating to the urban areas, which will have consequences for the population and social economic issues.
Government should support as much as they can, help those that have been seriously affected to come back to their feet and also help businesses to revive in whatever context.
We have advised the government to deepen engagement with the Organised Private Sector (OPS) so that one can track how well funds given by the government to businesses can be tracked.
On so many interventions done by the CBN, you can imagine the level of default done by those loans.
If given to the OPS. It can be tracked but it becomes difficult to track those given outside the structure and difficult for the OPS to track them.