‘We need homegrown solutions to harness informal economy’s benefits’
Mrs. Toki Mabogunje is the President of the Lagos Chamber of Commerce and Industry (LCCI) and also a member of the Governing Council of World Chamber Federation (WCF). In this interview with FEMI ADEKOYA, she talks about lingering challenges of over-regulation, inflation, entrepreneurship and ease of doing business can be addressed in order to make 2020 better than previous years.
Going by recent activities in the local and international economy in terms of electricity tariff review, increase in VAT, the US-Iran crisis and considering Nigeria’s exposure to this international crisis and commodities. What are your thoughts?
I think globally, there is a slow-down and the world itself is not looking very buoyant and I think it is at times like this that I to thank God that we have the kind of digital technology that allows us to leapfrog a lot of problems. I think this is a time that is going to encourage even more creativity from us and one of the things I think Nigerians do not lack is creativity when it comes to entrepreneurship. I think a lot of the challenges of business people would even be to maintain a semblance of profitability while trying to stay afloat. There are some decisions that were taken by the federal government especially towards the end of 2019 which looked a bit draconian to the rest of us, but the government had explained that it had to with security, but there were sectors of our economy that were smiling to the bank. For instance, the farmers do not want the land borders to be reopened; so, I think things are going to be tough, there is no doubt and I think that as entrepreneurs, we need to be even more creative about what we do.
I am a promoter of the use of technology. The prayer is that we maintain some level of GDP growth, it is going to be very small, but it should not become negative and we have to keep our eyes on that. We are asking the government itself to watch its debt portfolio, we should not overborrow in this whole process. There are some countries such as China that are aggressive now in providing aids and credits to us African countries and we do not want another yoke around our necks. There is also a bit of hesitation around our continent, around the Africa Continental Free Trade Area (AfCFTA) agreement which is actually meant to be the agreement that is going to release our potentials to trade with one another and I think we need to look at that one with even more depth and understanding to see how we can make it work for us.
How come Nigeria has so many entrepreneurs, yet the unemployment and poverty rates remain very high?
The issue of unemployment and poverty are not necessarily connected, I would like to treat them separately and in all my 20 years of being an entrepreneur, one of the problems I have always had with our economy and I think is a problem many under-developed countries have, particularly Africa. You see the formal economy was designed and created by the West, so the way we tend to engage in commerce is so different and because it is so different, a lot of what we do that has been termed the informal economy, but even the World Bank now is beginning to admit that what is going on in the informal economy is much more than what is going on in the formal economy. In today’s parlance young people begin to talk about side gigs, but really these are the jobs or the efforts of the businesses that they are carrying on outside or beyond their formal engagements. I think that we need to own who we are and how we work and how we do businesses. One of the things that have happened in Asia is that they know who they are and they are also not trying to copy the West or anyone else and so, they have been able to take who they are and make it work for them and become a lot more profitable in a way that makes sense to the rest of us.
I think in Africa, we need to begin to recognise how much business we are doing informally and find a way of capturing that and one of the things that validated my thoughts was under one of the Lagos Government’s regime I think it was Babatunde Fashola, where tax collection was actually taken to the market place. By recognising how much was moving in the informal market, the government realised there was Internal Generated Revenue (IGR) that could be gathered from that market and you know it was when they sort of adjusted the factors for making calculations around economies that Nigeria went from second to first and so on and I think those indices need to be captured slightly differently to be able to capture what is going on in Africa. By doing this, I think we would find that there are more people gainfully employed than we think. I cannot make a comment about actually how many that are unemployed because we do not have the data and one of my biggest issues with us here on this side of the world is this issue of statistics and data. In today’s world that big data has become such a big thing, it allows you to plan and this puts us at a very precarious situation. I think we need to push more and more because the world is changing and the large corporate and government can no longer be the main employers of the world. They are pushing for many of us to become employers of labour and I think we need to engage even more in that sort of thinking and say how can we adjust our educational curriculum to increase the entrepreneurship aspect of it and the whole issue around vocational training. We have thrown away vocational training many years ago for the degree certificates and we have now found out that degree certificate is not the answer to all problems, we need more and more people skilled for vocations.
How do we address issues off regulations and regulators stifling investments through policies that negate ease of doing business? We have seen some of these issues in the tech space.
Yes, I totally agree with you and I think it is a lack of education and awareness. Somehow, they cannot draw the dotted lines from their immediate action and the resultant effect of it and so that causes an effect and it is difficult for them to think through. I think more time needs to be spent around educating regulatory authorities, educating law enforcement agencies about the ultimate results of some of those actions they are taking and even if the thinking was good saying that they are trying to protect the government and the country, that is not the way to go about it. The Chamber itself started in 2018 what we called regulatory conversations. We are having more and more conversations with a lot of our regulatory agencies to let them know that some of these actions they are taking are anti-investment and they scare away investors rather than attracting them. We saw that within those environments of those day long conferences or workshops, we could see the light of understanding coming to their eyes and it has convinced us to do more of that because sometimes, these people do not understand that the action taken has an anti-investment effect at the end of the day.
In the last few engagements that you have had, have you seen any attitudinal change in the way regulations are being enforced, because that issue still remains one of the biggest complaints by businesses in the country?
What I have found is that a combination of some of the advocacy work that has been done by people such as LCCI, CBI, integrity associations and that of PEBEC has created a certain amount of enlightenment among the leaders of the agencies and I have also found out that if you now complain to those agencies, unlike before when you do not get response at all, they now actually feel that they need to respond in one way or the other, so what we need to push for is a trickle-down effect of that. It should not just be the Comptroller of Customs who understands, but the average Customs official at the desk who needs to understand and that is what we really need to push for. I know that when we engaged with Dr. Oduwole last year, she said that they have started recognising that a lot of the work of PEBEC was at the national level and not much is happening at the sub-national level. Now, they are moving their work to sub-national level. Everybody within any particular agency needs to understand exactly what their work is all about and how to create that conducive environment so that we can get the investments that we seek.
Do you think continuous borrowing is the way to address the parlous state of infrastructure considering our debt profile?
So, for this kind of problem, you will need a combination of efforts really because we allowed our issues to get really bad. Even if you run a business there are some borrowings, but it is how much borrowing you do that is the issue. We should put a cap on how much borrowing we do. Where we need to put effort is on Public Private Partnerships (PPP). For example, I like the idea of what is being done with Dangote and with few others over road development where they are partnering with government there for every kilometre of road they actually put in place, they are going to have tax palliatives and other sort of incentives. We need to do a lot more of that. We need to do a lot more of PPPs and when I look at the United Kingdom and some of the things that are going on in the country, there are lots of PPPs going on. The government needs to understand that it takes a back seat in these things; the government is a policy developer; policymaker and they need to create that space for private sector to make things happen. I think we need a lot more private sector engagement.
Consumer spending is expected to drop further this year because a lot of things seem to be competing for the disposable income, inflation is expected to go higher, costs are rising and incomes are static. How do you think consumers can manage this situation?
The pressure is so high and as a chamber of commerce, we will continue to draw government’s attention to this. We recognise that the government is in a very difficult place and I for example can remember when President Obama came into office as President of America and he promised that by the end of his term, America will not be importing fuel and that was the first sign that this oil that we have is on its way out and many more countries have discovered oil because technology has been improved while many more of those countries that were actually oil dependent no longer want to be oil dependent. The environment itself is being polluted by fossil fuels giving us this climate change issues, so we actually had a lot of notice that things were going to change and we continued to be a mono economy in all of this.
I think Nigerians have shown themselves to be resilient as people and they are even beginning to look elastic, because you start to wonder how are people managing. I think my statement to Nigerians generally is that Rome was not built in a day, that for the kind of country that we all aspire to have there is a lot of sacrifice and there is a lot of efforts and work that goes into it.
The Chamber of Commerce will do its own part of the job by trying to keep government focused on what is important, but we must as a people remain united and understand that our strength is in our numbers and diversity and those things can be made for good and not allow division to come between us because it weakens us as a nation. It is going to be tough but if we continue to stick it through, we have seen some interesting indices despite everything and if it was not Nigeria, some other country must have done much worse being who we are and what we have at our disposal, we are managing to scale through, but I am afraid of us taking that for granted, we should not take it for granted and it does not mean things are better, we are out of recession no, we need to keep working at it.
How has been your experience since you assumed office as president of the Chamber and in making advocacy cases on behalf of your members to the government?
As you know, people tend to spend a bit of time in governance before they actually become president, so I have been a vice president and a deputy president here. I have had a bit of experience around representing our members and advocacy. The tenure of my presidency just started which is less than a month old, so we are just beginning to kick off with this new year. I would say that it has been extremely interesting. There have been quite a few things that have happened in this very short period that affect our business community and we have already begun to advocate all that; the increase in electricity tariff for example and other issues, so it looks like it is going to be interesting. For my tenure, I will continue to keep my eye on the vision of the Lagos Chamber and part of that vision is to do as much as possible to engage government to ensure a conducive business environment so that Nigerian businesses can thrive and be successful, so that is what I am focused on and whatever amount of advocacy would be required to do that is exactly what we will be doing.
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