In this interview with GLORIA NWAFOR, the Director-General of the Nigeria Employers’ Consultative Association (NECA), Adewale-Smatt Oyerinde, discusses the urgent responsibility of the Federal Government to address the legislative challenges that continue to stifle business growth and job creation.
Is NECA worried about the creation of different levies and fees despite the tax reforms, which are due for implementation from January?
We need to address the challenges we face quickly. While organisations and government agencies create bottlenecks, the Presidential Enabling Business Environment Council (PEBEC) is making significant progress. However, the legislative environment remains a significant obstacle. Instead of promoting businesses, legislation seems to hinder growth and job creation. This is the current state of affairs, affecting various aspects of our economy. The government must take action to rein in agencies whose activities or actions contradict the Federal Government’s efforts.
What is NECA doing about the high interest and exchange rate environment that impacts business profitability?
At the macroeconomic level, we have witnessed some stability, but not where we anticipated. The stable naira, though not at our desired level, is a positive step. While N1,500 remains a bit high, we have achieved stability in both the parallel and official markets. Additionally, the gross foreign reserve is performing well.
We have also observed a level of understanding and coordination between the fiscal and monetary policy authorities, which is a significant improvement compared to the challenges we faced in the past. The signing of the tax reform acts is a positive development due to its long-term impact and potential benefits for organised businesses.
We are hopeful that foreign direct investment will increase if the challenges we have identified are addressed promptly. Foreign portfolio investment, while high, lacks the stability and job creation potential that foreign direct investment offers. Foreign portfolio investments are highly volatile and investors can withdraw their funds at any time.
As we continue to resolve these inherent contradictions, we hope that the macroeconomic stability we are witnessing will translate into positive microeconomic outcomes such as reduced inflation, lower funding costs, and a decrease in food inflation.
Addressing insecurity is crucial. Overall, we believe we are on the right path.
While businesses strive for sustainability, the role of government cannot be overstated. While businesses demonstrate resilience, we can observe a typical Nigerian spirit. In contrast to other countries that face challenges, Nigerian businesses have weathered the storm. They innovate through backwards integration or seek local alternatives. However, their survival is limited by the system’s constraints, which is a critical issue. As innovation continues, businesses adapt and recreate themselves. However, some businesses remain stagnant, relying on external support. This is the current reality, without prejudice to the government’s efforts.
What measures has NECA taken to protect businesses from regulatory overreach and maintain a conducive operating environment?
Let me share three recent developments in our efforts to address the contradictions within the system. Firstly, we discovered that certain agencies, such as the Financial Reporting Council, continue to impose levies and fees. In response, we have written to the Minister for Industry, Trade, and Investment, as well as the Executive Secretary of the Financial Reporting Council, Dr. Rabiu Olowo, to initiate constructive dialogue and resolve this matter. The President has graciously decided to suspend the levy, which is our current stance. Consequently, we are engaging the council, the Federal Ministry of Industry, Trade and Investment and PEBEC to ensure that these issues are resolved as per the President’s pronouncement. This initiative is in the best interest of the economy itself. Achieving the Renewed Hope Agenda hinges on the thriving of the private sector. If not, it becomes increasingly challenging to attain. Therefore, our engagement efforts are ongoing.
The second issue that has arisen in the past few weeks is the challenge posed by the Nigeria Customs Service’s B’Odogwu platform. This platform has created significant bottlenecks due to its frequent downtime, which has extended the timeline for issuing Form M and hindered the preparation of the Pre-Arrival Assessments Report (PAAR). Moreover, the epileptic nature of the online system has resulted in additional demurrage and extended clearance times for goods at ports. These costs are incurred by businesses, and with deadlines for delivery to other commitments, it becomes challenging to meet those obligations.
In response to these issues, we have already written to the Comptroller-General of the Nigeria Customs Service, whom we have previously engaged. There are ongoing efforts to resolve these problems. Additionally, we have raised the issue of the reintroduction of four per cent Free on Board (FOB), as it is not feasible to eliminate those who are trying to save. Ultimately, the burden of these additional costs will fall on the consumer, who is the same group of Nigerians that we are attempting to protect. Their disposable income and purchasing power have already been significantly compromised.
To address these concerns, we have requested that the four per cent FOB be evaluated at the level of the organised private sector. We have also highlighted the contradiction between the four per cent FOB and other agreements within ECOWAS, particularly the ECOWAS Trade Liberalisation Scheme (ETLS) that we are currently subscribed to. Our primary concern is the role of the four per cent FOB in the ECOWAS tariff scheme, especially when goods originate within ECOWAS.
These unresolved issues have prompted us to reach out to the Customs CG for assistance in resolving them as expeditiously as possible. At one point, we took the Customs to court, and we received a favourable judgment, even though they have appealed. It is amusing that businesses within the same country are taking government agencies to court because they perceive them as stifling their operations. So, what are we communicating to investors? We are saying that businesses are taking government agencies to court because it tends to be stifling their operations. This is unheard of and contradictory to what we want to achieve.
Lastly, let me share the legislative challenges we are facing. We have engaged constructively with the Senate and House Committees. NECA did have a case against those committees in court and the Supreme Court, but the Appeal Court affirmed that the private sector is not in contemplation when referring to the persons mentioned in the Constitution. Therefore, oversight functions can only be carried out on agencies where the government has appropriate funds. Additionally, we already have executive agencies that are superintending or supervising the private sector. So, why do we keep multiple levels of investigation of regulation? Investors see this and conclude that the environment is not conducive to them.
The engagement is ongoing constructively, and we trust that the Federal Government will review these contradictions, policies, and legislations that contradict or negate the achievement of the current administration’s eight-point agenda. These issues must be addressed for the nation’s well-being.
What measures have employers implemented to mitigate the impact of fuel subsidy removal on their employees?
We are doing what we can with what we have and will continue to do our best. Recently, we had conversations with our member companies that provide their employees with monthly products. Some employers are also offering two or three days of work-from-home options. Others are even working from home full-time just to reduce the financial stress of transportation. Meanwhile, many companies are implementing various measures to support their staff, such as pension contributions and cost-of-living adjustments, despite the current economic challenges. As businesses demonstrate resilience, it is expected that employees will also demonstrate some level of resilience, hoping that the economy will recover at the individual level as quickly as possible.
What is your advice to the government on how to tackle rising poverty?
We have read that the government aims to increase school feeding to 20 million students and has begun paying the backlog of wage awards to workers, among other interventions. However, we have recommended that the government should focus on macroeconomic gains that trickle down to the microeconomic level. There are wage goods, such as housing, food, and transportation. If the transportation system, particularly the new CNG vehicles, is available in every state, transportation costs will decrease. Additionally, addressing insecurity in the north and eliminating the various roadblocks across the country will reduce transportation costs. Also, the government addresses insecurity issues and food prices will drop. Then, we can focus on building affordable housing, even though it is already overcrowded, but it provides opportunities for low-cost housing for workers and employees. Once we address food, housing, and transportation challenges, we will have addressed poverty substantially.
