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‘Why government needs to do more to reduce cost of production, governance’

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Olusegun Osunkeye


Chief Olusegun Osunkeye, an octogenarian, is a former Chairman of Nestlé Nigeria Plc and the Babalaje of Egbaland. In this interview with FEMI ADEKOYA, he talks about issues bordering on corporate governance in the private sector, especially the revised Companies and Allied Matters Act (CAMA), government’s economic policies and rising cost of governance.

One of the overriding objectives of Economic Recovery and Growth Plan is to address the ease of doing business in Nigeria. To what extent is the objective being achieved? What are the gaps and the way forward?
We are a high cost country. By that, I mean the cost of producing an item or providing a service is relatively high, compared to other countries in the West African region, or Africa and beyond. Why is this so, one might ask. The reasons are many, starting with infrastructure, unstable electricity, and poor road network, inefficiencies and bureaucracy at the ports.

However, the government has been taking steps to reduce the cost of doing business. For example, the recent Companies and Allied Matters Act 2020, which received the President’s assent on August 7, is a welcome development. It will reduce the cost for start-up companies, which are small enterprises. Those engaging in start-ups are our youths, young graduates and so on; it should ease unemployment. The CAMA 2020, along with the recent revisions of the taxation acts, will also reduce the tax burden for small businesses and encourage the informal sector, which is huge in Nigeria. It will be beneficial for the country and help national planning. But more needs to be done in operational terms. By that, I mean the provision of stable electricity, portable water, and, of course, fixing of roads. It is daunting that most businesses have to own and maintain generators and boreholes to provide water, and, in some cases, provide access roads. Providing all these before producing a single unit of item, drive up the cost of production and renders us uncompetitive as a country. Whilst these infrastructure deficits are being fixed, it is very important to pay attention to the efficiency of the Naira spent, and the quality of the work done.

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The cost of governance in Nigeria has been frequently criticised as extremely high. What are the areas that government should look into?
It is true. Many have complained that the cost of governance is extremely high in Nigeria, and many have clamoured for a drastic reduction and made suggestions. To my mind, we should look at the three arms of government, in the first instance. The legislative arm is bloated as to number of legislators and the cost — salaries, constituency and other allowances are humongous. Even the several oversight committee are duplicated in two houses. Then (there are) the various perks and other benefits. All these can be drastically reduced if we have a single chamber, say, the House of Representatives only, and do away entirely with the Senate. Many countries have adopted this model.

Then we should take a look at the executive arm. Let us slim the various ministries and agencies, eliminate the recurring issue of ghost workers, and take advantage of digitisation. All payments and transfers must pass through the banking system and, since every person must have a Bank Verification Number, where the BVN appears more than once, the alarm is raised, and no payment (is made). Constitutional amendment may be required to prune down the number of ministries and ministers, as the present situation requires that every state must be represented in the appointment of ministers. The judiciary should be strengthened to operate optimally. It should be financially independent. The numbers of judges at various levels should be increased, and digitalisation entrenched with training and retraining. The pruning cost should also be replicated at the State level.

The Federal Government is set to provide jobs for 774,000 Nigerians across the federation. How would you advise the government, in terms of priority sectors for the employment?
The issue of youth unemployment has become a major problem over the years. The proposed employment of 774,000 Nigerians across the federation, that is, through the local government areas, is a laudable initiative. It is sad to read in the media that four of the applicants hold PhDs, while 200 hold master’s degrees for a job of N20,000 per month. This is a national calamity. To address your question specifically, the employment of 774,000 youths requires careful implementation and consistent policy execution, if the nation is to realise the immediate and long-term benefits.

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The Vice President, Prof Yemi Osinbajo, in a recent webinar, outlined that 774,000 persons would be engaged in agriculture and that they would also assist in infrastructure, building such roads. This is another good advice. He went further to say some of the persons, mostly youths, I suppose, would be attached to existing big farmers in various areas, and some attached to firms that are building roads, etc. Again, that is a good idea.

You are known for your adherence to the principles of corporate governance in Nigeria. Is corporate governance practised in its proper form?
Nigeria is a member of the comity of nations. The quest for excellence in corporate governance is a challenge that is being taken seriously in many countries around the world, including our country. Nigeria is a player in the global economy and, therefore, must endeavour to apply best practices and standards. Sound corporate governance helps assure business partners in investment decisions.

Nigeria has a good Code of Corporate Governance in place and the latest version, which was painstakingly put together, took effect in January 2018. It applies for now to the private sector only, but it is hoped that a Code of Governance for the public sector will come sooner rather than later. In this regard, the President has signed into law the new CAMA 2020 on August 7. It is an important Act that has brought us, more or less, up to date in the administration of corporate law. It has many innovative provisions not contained in the previous CAMA 2004. For instance, virtual meetings, in popular parlance, ‘Zooms,’ are now recognised. The same applies to electronic copies of documents and electronic signatures, thus bringing our corporate law into the digital age. The society for corporate governance in Nigeria has made comments and commended many innovative sections in CAMA 2020.

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With the controversy dogging CAMA 2020, which areas would you advise the Federal Government to revisit in the Act?
In the area of corporate governance, I would want that we give further thought. CAMA 2020 has lifted the threshold for describing small companies from (having) a turnover of N2m to N120m and (from having a) net asset value of N1m to N60m. The benefits accruing to SMEs will thus be available to a far greater number of businesses and enterprises.However, in the area of corporate governance, I do not see the overall benefits. CAMA 2020 does not require small companies to hold annual general meetings or appoint auditors or company secretaries. I do not view this as positive. No investor or potential partner will rely on an account that is not audited. The federal or state internal revenue service requires audited accounts to assess the taxes of a company. Banks and other financial institutions need to have reliable bases such as audited accounts, inter alia, in considering credit, etc.Under CAMA 2020, an SME does not have to hold annual general meetings, which is an event set aside to review the company’s performance in the previous period, consider how the future environment is likely to be and take appropriate corporate action. CAMA 2020 has many clauses to help the cost of doing business in Nigeria. We would want to see corporate governance tenets enhanced even for SMEs so that businesses are run profitably and, by extension, payment of income tax to government coffers (is fostered).

Some analysts have posited that implementation of national orientation and ethics in Nigeria should be reviewed for enhanced effectiveness. What is your take?
When those of us in my age bracket look back to our youthful age and what we were taught to imbibe as we were growing up two or three generations ago, compared to what we are seeing now, we shudder and marvel. Dishonesty, cheating, violence, wickedness, waste, lack of career plan and lack of consideration for the next fellow are all we see around us. It has not always been so from the beginning. As young ones, we were taught the virtues of honesty and hard work. I remember it being drummed into our ears that hard work never kills and that it is laziness/indolence that kills. It was an era of honour system. For instance, if you were going along the road and you saw mounds of yams, maize or oranges laid on the side of the road for sale, you would pick the layer you want and drop the appropriate sum there. The product may be worth pennies, half-pennies or farthings, as these were the types of denominations in those days.

The farmer would pick the proceeds of sale on his way back from the farm in the evening. It was therefore no surprise to me when I later sojourned in England, Switzerland and Malaysia, where there was a similar transaction model. I would go round the corner, pick my newspaper, drop the money and walk away. It evoked memories of what I was used to and learnt in Nigeria.

What would you regard as an equivalence of national orientation in Nigeria when you were young?
Back then, we were taught civics, which deals with how to behave and how to be a responsible citizen in your community, in secondary schools. In my case, I learnt it in Kings College, Lagos. Essentially, it was an aspect of ethics being taught to us at an early age. Actually, civics or, by extension, ethics — in a broad sense — should start before school, beginning from the home with stories. In the 1940s, we were educated with tales by the moonlight, such as that of the crafty tortoises, foxes, snails, etc. And the stories had moral lessons. Our parents or grandparents, who told us the tales, wanted us to imbibe, or conversely, not imbibe the attitudes of the central character. Now, most of these values and honour system seem to have disappeared. I believe this may be the need for the National Orientation Agency. It is strategic to character development for young ones. For enhanced efficiency and effectiveness, the agency should be revamped. This will make its presence felt.

The agency’s activities should be felt at the grassroots. The activities must cut across all socioeconomic cadres. The time has come for the agency to walk the talk and set an example of virtuous behaviour, which will permeate every layer of the society and eventually become a way of life and fabric of our community as a people. This will ultimately become our national image and perception in the comity of nations. Other nations will treat us with courtesy, dignity and respect which we deserve and should expect.

With your corporate background in agriculture, can you share from your experience how to ensure workers’ productivity?
Let me draw on my experience in my Nestlé years. I was put in charge of overseeing our 1,000-hectare farm situated in Kaduna State. We planted maize, sorghum and soya beans on about 900 hectares. I learnt a few lessons, such as land clearing, which took a long time over a year in our own case and required deploying heavy equipment. It is capital-intensive, so funding is critical. To get this huge farm, which is 16km left of Kaduna-Abuja Expressway, we had to create or widen roads, and build bridges to cross streams. This was to enable us transport workers and equipment from Kaduna town to and from the farm, and later evacuate harvested crops in 20-tonne trailers on a continuous shuttling basis.

To recruit and get enough farm hands, who were required to assemble at a pickup point, was a big challenge. Then we faced the challenge of productivity. We found that there was no work ethic to talk about. After collecting their wages, many workers simply did not show up for work anymore. We gathered from their colleagues that the work was tedious, and that they did not see why they should work that much to get only small money. This brings me (back) to my advice that the employers of youths should work on their mindset and work ethic, even as they have to be trained and put through on mechanised farming, not just the hoe and cutlass.

One more point: we found that the workers’ productivity was very low, given that they had to do physical work in the sun. So, we decided to give them at least one good meal a day, for which we killed a cow every day, and we provided good shelter against the harsh weather. The result vastly improved productivity. The workers were prepared to work longer hours, which we needed, especially during harvest season.

I suppose what goes for farming, personnel-wise, also applies to road construction, and similar activities that require physical exertion. Long-term commitment, provision of funds, teaching and training of the workers and their welfare, organisation of manpower and materials are a prerequisite for successful outcomes.

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What are your guiding principles of life?
Have a mentor; be a mentor. I strongly believe that it is more blessed to give than to receive. There is joy in giving. This applies as well to giving of your time and talent to serving your church, community or other spheres of activities. You are blessed in order to be a channel of blessing. You are blessed to serve. There is joy in serving. In human relations, William Shakespeare said, ‘Neither a borrower nor a lender be.’ It means, do not lend to a friend and do not borrow money from a friend. If you do so, you may lose both your money and your friend. In business and corporate relations, however, it is a different story. Borrow to the hilt, provided you know you can and will pay back.

The banks are there to lend (you) to grow your business. Once the banks can trust you on the strength of your transparency, honesty and integrity, they will be willing to lend to you. I have held an American Express card since 1975, and I have kept firmly to the terms and conditions of use of the card. I was in my flat in London around 1990 when a letter arrived through the post from American Express, inviting me to take an unsolicited loan of £25,000, and do whatever I liked with it, repayable in instalments over five years at a reasonable interest rate. I was surprised and pondered over what to do with this unsolicited loan. Around the same time, my bank, Barclays Bank, was canvassing for savings from their customers, offering interest rates which were well above the borrowing rate I would pay on borrowing. I, therefore, accepted the offer from American Express and put the entire loan in savings with Barclays Bank, thus creating a win-win situation for the three parties involved. I gained from the interest rate differentials.

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Your faith as a Christian must have also shaped your guiding principles. What are some of those ideologies?
I always pray for the Fruit of the (Holy) Spirit, which is love, joy, peace, patience, kindness, goodness, faithfulness, gentleness and self-control, to guide and rule my life. As you dress, so you will be addressed. First impressions matter and, more than likely, it reflects who you are. Do unto others as you would they do unto you. Politeness, courtesy, ‘thank you,’ ‘please,’ and ‘I am sorry’ — these little words matter. Have an attitude of gratitude to enhance your altitude in the journey of life. Apply the 80/20 rule, or Pareto Principle, to enhance the effectiveness of our service to God and humanity. We focus on the things that matter and do those things better by applying the 80/20 rule, which demonstrates that, in most things we do, 80 per cent of our results come from 20 per cent of our efforts. It also means that 20 per cent of our results come from 80 per cent of our efforts. Applying this principle helps a lot in time and activity management — and time is always in short supply, whilst competing demands for our time increase!

Time is a resource and we are enjoined to use resources wisely and effectively. We should look at the tasks we do so often, evaluate what the real purpose or usefulness is, find new ways to do them more efficiently or, in fact, eliminate them, to free more time to serve the Lord. It is a strategy of achieving more with less. In the secular world, work less (i.e. work smarter), while earning more! Use the 80/20 rule to improve your life. In the corporate scene, business without ethics means conducting business without any sense of right and wrong in order to make money by any means possible. This is clearly unacceptable.

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CAMAOlusegun Osunkeye
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