Oyerinde: Supporting organised businesses is win-win for government
Adewale Oyerinde is the Director-General of the Nigeria Employers’ Consultative Association (NECA). In this interview with GLORIA NWAFOR, he talks about the challenges facing the business environment in the country, NECA’s position on the naira redesign policy, the petrol subsidy regime and how the Federal Government can address problems associated with as well as tackle oil theft, among other sundry issues.
Considering the harsh operating environment in the country, can you highlight some of the challenges organised businesses are facing?
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. It must also have a hospitable regulatory framework to further the businesses. Among all these, we appear to be challenged on all fronts, especially in the manufacturing and the real sector.
We have to import inputs and unavailability of foreign exchange remains a major challenge. The challenges of fiscal and monetary policies are also there. We talk of power and energy cost; these are the part of the disruptions. An investor that wants to invest will look for an environment that is stable but once there are uncertainties, it becomes a challenge.
In developed economies, the Organised Private Sector (OPS) has a big stake in moving the economy forward. In an emerging economy like Nigeria’s, looking at the business environment, the role of the regulators and National Assembly on oversight functions as well as the recent increase in excise duty, what are the implications for the economy?
For a business to survive, it needs a peaceful and friendly regulatory environment. The National Development Plan (NDP) 2021 to 2025 proposes that government would have created about 30 million jobs. For every 10 jobs, the private sector creates eight. But the situations we have now are issues of regulatory challenges.
The National Assembly constitutes itself as a clog in the wheel of a productive sector. There are regulatory challenges from the National Assembly too. We hear House Committees consistently summoning Chief Executive Officers (CEOs) of businesses for one investigative activity or the other. We believe that is distractive and creates some level of instability. It also calls for separation of power because you cannot make laws and at same time supervise implementation of those laws.
On Sections 88 and 89 of the 1999 constitution, which the legislators purportedly say guarantees them to carry out oversight functions, our strong view is that the sections give them the right to oversight on companies and agencies where government appropriate funds and not on private organisations. We have communicated it strongly to the House that you have the right to carry out oversight functions but not on private businesses.
On the excise duty, even as revenue challenges is a major issue for government, we should not over tax businesses out of existence. If you increase tax, you definitely will increase the cost of production, which in turn is transferred to the consumer. Our take is that government should not just come out with a policy but also let us see the whole gamut of that one policy and the impact on the citizens.
Rather than over tax businesses, government should widen the tax net, because the consequence of the excise increase is far reaching. With over 50 different taxes, levies and fees paid across 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.
Many leaders have described the issue of oil theft and subsidy as organised crimes. In your perspective, how do you think the issue of oil theft can be addressed?
The Federal Government should constitute a judicial enquiry to unearth the secrecy of the subsidy regime. It should 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 oil theft. The issue of oil theft and fuel subsidy wasn’t like this before. Back in our national lives, naira was stronger than the dollar but now 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; 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 dollar to increase.
In addressing it, what are the things we are spending dollars on? We are import dependent. There is a backward integration programme that is being promoted by the Federal Ministry of Industry, Trade and Investment and the Central Bank of Nigeria (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 that 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.
Do you think the removal of subsidy will solve the problem of petroleum product scarcity in the country?
If the refineries are working, we probably would not import, rather we would export. Our position is that subsidy is not sustainable. On the report that subsidy might run to N11 trillion, no country arguably subsidise anything to the tune of N11 trillion. 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 when complemented with Dangote Refinery, we probably will not have any business with subsidy.
There have mixed reactions to the naira redesign policy of the CBN. What is the position of NECA on the issue?
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 Ministers, 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 quarter of cash was out of the banking sector, it was a call 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 eNaira.
However, the priorities for businesses are challenges bothering on insecurity, foreign exchange 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 do 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.
How can the government deepen engagements with the Organised Private Sector of Nigeria (OPSN) to revive businesses that were affected by floods in some states?
The floods opened our eyes to dangers of realities that we face today. 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 and people are migrating to urban areas, which will have consequences for population and socio-economic issues.
Government should support as much as they can and help those that have been seriously affected to come back to their feet as well as help businesses to revive in whatever context.
We have advised government to deepen engagement with the OPSN so that funds given by government to businesses can be tracked. On so many interventions done by the CBN, you can imagine the level of default done by those that were given loans. If given to the OPSN, it can be tracked but it becomes difficult to track when given to those outside the structure.
It has been long Nigeria had an effective implementation of National Development Plan (NDP). How do you think the issue of National Development Plan can be addressed?
First for us is to redefine our priorities. The current NDP is quite ambitious with the commitment of the private sector to contribute over N2 trillion and generate 30 million jobs before 2025. We shouldn’t build structures and create big visions that our realities cannot meet and achieve. From the OPS perspective, we picked three priorities – our plan is to 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 context of the regulators, National Assembly, fiscal and monetary policy? How will it help to generate those 30 million jobs? If we don’t deal with the existing contradictions nothing will change.
With the high cost of living due to rising inflation, should organisations begin to pay their employees cost of living allowance?
We can say confidently that many organisations are doing the cost of living allowance. Many are giving their staff quarterly products to cushion the effect of cost of living. In other climes, they hedge wage against inflation through a mechanism that automatically hedges wage against inflation. As inflation is increasing, the mechanism balances the wage so that inflation does not erode the whole value of your wage. A lot of companies are coming up with different schemes.
In view of the economic situation, a company doubled the salaries of its workers in October, some reduced to four days working week to reduce the pressure and amount spent on transportation. These are coming up to reduce the pressure on the employees due to no fault of the employer.
How can the country tackle its unemployment crisis?
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. For us to deal with it, let us look at the private sector. How can we help the private sector to grow? By creating conducive environment for that sector to grow, you would have solved a lot of the crisis that we have. By the time you tackle unemployment, you have taken a lot of youths out of the street and you have reduced their propensity to join crime. It is a win-win for government if it supports organised businesses.