Director-General of the Nigeria Employers’ Consultative Association (NECA), Adewale-Smatt Oyerinde in this interview with GLORIA NWAFOR, speaks on how government’s unfavourable policies are pushing more businesses into extinction.
In recent time, the Nigerian economy is confronted with many issues. With the notion that the private sector drives the economy, what do you think the incoming administration needs to put in place to turn around the economy?
The presidential election has come and gone and the Independent National Electoral Commission (INEC) has announced the president-elect, while we allow the politicians to deal with the issues arising from the election and also allow the court to play its role.
From our perspective, we’ll focus on three fundamentals that the new government should deal with
First is the fundamental of fiscal and monetary policies. We cannot over-emphasise it because it is the foundation on which so many factors lie. If we don’t get it right at that level, it becomes difficult for us to get it right in every other way.
It is like building a structure on a very faulty foundation. We feel the challenges we have had over the last eight years been either a conscious or unconscious misalignment within the context of fiscal and monetary policies. We have a ban on forex on 42 items. The idea was to conserve forex and help the naira to stabilise. But after banning those items for receiving forex for a while, nothing happened and the naira continued to nosedive.
Also, we banned forex on dairy products and still after, the naira did not appreciate. We closed the borders, hoping that smuggling will be a thing of the past, but smuggling persists.
The latest is the naira redesign, which we said is a good policy, but the implementation is fraught with errors, which has led to a situation that many Nigerians have complained about. For us, fiscal and monetary policies have to be dealt with.
Secondly, we have to deal with issues concerning revenue.
Nigeria is the largest exporter of oil in the Organisation of Petroleum Exporting Countries (OPEC), but progressively, our capacity to meet even the OPEC quota has been compromised by so many factors, including oil theft which has so many consequences for the economy and the country as a whole.
The third fundamental which government has to deal with from the context of our engagement is making sure that the incoming administration puts round pegs in round holes. Whoever are those that will be ministers and heads of agencies must be those who understand the issues.
The incoming president will have to play the role of a statesman, looking beyond politics, ethnicity and every other issue that has bucked us down as Nigerians. He must pick individuals who can make a definitive difference in the context of turning the economy around as quickly as possible.
What is the implication for businesses when the fiscal and monetary policies are running at cross-purposes?
It is not sufficient for these authorities to run programmes or policies that are targeted at achieving the objectives of the president. The fiscal and monetary authorities are to help him achieve those objectives.
In that line, it rests on the president to ensure he understands where he is taking the economy or he has a firm perspective on where he is taking the economy. The actions of the Central Bank of Nigeria (CBN) governor, the Minister of Finance and all the relevant agencies must work together to ensure the president’s mission can be achieved. However, whatever they do stops on the desk of the president.
It was unfortunate that the Supreme Court was dragged into an issue that many experts have called a simple monetary policy matter that should have been implemented differently and that Nigerians would have gladly supported if rightfully implemented.
Businesses are running into huge losses because they could not muster enough patronage, which invariably is killing them and affecting those that want to consume the products, which can cause disruptions.
This whole economic brouhaha that I’ve talked about is based on two things; production and consumption. Disruptions can be experienced in any way to the extent of affecting the value of the Gross Domestic Product (GDP). If you have a projection of three to five per cent GDP growth, the moment you breach the production and consumption cycle, as it affects the people and businesses, it also affects the liability at the national level, which is the GDP.
As the government tries to implement the cashless policy, most small businesses still depend on cash for transactions. Do you foresee some of these businesses going into extinction?
Some have already gone into extinction. A business that is already on lifeblood, you now squeeze the pipe that is giving it blood and you now expect absolute magic.
In the informal sector, the volume of cash that is transacted daily could only be imagined. Go to Mile 12 Market and other markets in Lagos and see.
It is because those at the top do not feel all these things, which is wrong. A lot of businesses have crashed in the Micro, Small and Medium Enterprises (MSMEs) sector due to the policy, which we feel is laudable but the implementation is below par.
How can Nigeria achieve an economically sound path of inclusiveness reforms while focusing on reducing the administrative burden on businesses?
You mentioned an interesting word, inclusiveness. We feel it is wrong in whatever policy for you to exclude the people you are planning to include. Because of the inclusiveness you want to achieve with the new naira redesign or cashless policy, you ended up excluding so many individuals from that policy.
All the knee-jerk responses that the CBN said its officers are sensitising Nigerians about in the rural areas is an afterthought. If you are creating a policy that you feel will fundamentally take the economy to a point, you must get the concurrence of those that are meant to implement those policies.
If you want me to implement it and the policy to impact me, then the reasonable thing to do is to get me at the policy formulation stage. Let me know the intention of the policy. This is important because they are part of the planning. At the point of implementation, you already have their buy-in and also put them in the analysis, whether it achieves its aim or not.
At that point, you have built inclusiveness and a national consensus. That has been what is lacking. You cannot force the policy on us in the 21the century. Rather you carry us along.
What do you think should be the blueprint the incoming government should set on critical issues that have to do with education and power?
No nation can grow beyond the level of awareness that the citizens have of education. It is unfortunate that in the last 30 years, the budget for education has been nothing to write home about.
The country needs a summit of all stakeholders in the education sector. Let us rethink our education sector. One of the key issues is our curriculum review. It is the same curriculum we have all through from primary to tertiary level, what are they meant to achieve? A student who has reached the secondary level is already a potential employee or employer.
If the student is a potential employee, what he/she was taught through the stages of education, has it prepared him/her for the workplace? Now that the workplace is rapidly changing, is the curriculum preparing him/her for the workplace? If it is not, we are wasting the time of that student, because after spending all the years on a course of study, and going through the workplace and you realise things have changed.
It is worrisome. The Federal Government is still unable to fund education maximally and we have the Senate approving universities almost on daily basis. We have commercialised education. We can’t input the context of studying overseas with ours due to their high cost of study. Let us deal with the issue of educational standards in this country.
That way, as much as we can reduce the propensity of Nigerian students going abroad to study, we will deal with leakages in the context of forex and build the capacity of our graduates so they can also meet the needs of the industry.
The energy crisis is one of the challenges organised businesses are facing differently. A lot of opinions have been shared on the state of power. We have issues bothering energy theft and vandalism. Issues bothering on generation, distribution, administration, privatisation and purchasing power of the average Nigerian to even buy power are all part of the contradictions inherent in the power sector that must be addressed. We have to deal with the issues.
Unbundle them and bundle them again, you will still achieve the same result. Government must take a dispassionate view and holistic view of the whole challenges that surround the power sector. Issues in the power sector are a multi-dimensional.
The government has promised that the Port Harcourt Refinery will be ready in June. Are you hoping it will reduce the scarcity of fuel in the country?
Ironically, the product the country is subsidising is not available; we are still queuing to get it. We can’t get people that will manage the refineries successfully. Meanwhile, we have an individual that just built and is about to start operations.
It is shameful for us as a nation to wait for the refinery of an individual, saying it will be the saving grace for us. It is shameful. It is part of those contradictions that I mentioned that the things that are blessings to many nations we are making a curse. In the Russian/Ukraine war, while many nations were cashing out due to the increase in crude oil prices, we are making the money and licking it away through fuel subsidies.
Anytime there is an increase in the global price of crude oil, the value of your importation increases.
The money we are supposed to be making is like a windfall from an increase in global crude oil prices. We are making it but losing it to pay for the subsidy. We know that fixing the refineries is not rocket science and we believe strongly that between now and June, the Port Harcourt refinery can be brought on board so that the issue of fuel scarcity can be a thing of the past.
Nigeria is the only country in OPEC that is importing fuel, which is shameful. We need the transition team of the next administration to get the government to make the refineries work.