Due process has failed in Nigeria
– Omeregie, Registrar, CICM
By Christian Ochiama
Monday, January 7, 2008
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Omeregie
Photo: Sun News Publishing |
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Mr. Nosa Victor Omeregie qualifies as a self-made man. With
a mere GCE Ordinary Level as formal education foundation,
he went on to become a chartered accountant before branching
off into cost management, which he believes is “more
of a philosophy, an attitude, a mind set.”
Nosa, in addition to a fellowship of the Institute of Chartered
Accountants, holds a Masters degree in Transport Management
as well as a Certificate in Cost Reduction Strategy.
The course content of Cost Management as a discipline makes
it relevant in boosting the due process policy of government.
Nosa confirmed and added, “there is no person better
placed than a cost manager to promote and manage the due process
of government. That is why we are afraid that the due process
may have even failed if cost managers were not involved.”
The founding president of the institute said: “When
Mrs. Oby Ezekwesili was there as the head of the due process,
we were seeing more movement and action than we are seeing
now.”
Nosa, lamenting the paucity of continuity in government policy,
said: “One of the problems we’ve had in this country
is that the government comes up with laudable new policies,
but they leave the execution in the hands of traditionalists
who frustrate them. I am afraid due process will go the same
way of the past efforts because the right people were not
put there.”
He speaks on other related issues.
Introduction
I am Nosa Victor Omeregie. I am the Registrar, Chief Executive
of the Certified Institute of Cost Management of Nigeria (CICM).
We are currently undergoing a chartered process. It is an
institute that was founded in 2001 with the objective of developing
and integrating a multidisciplinary cost management practice
with cross-functional perspective. What we mean by that is
looking at how to harmonize and harness all the possibilities
and strategies of managing cost that exists in virtually all
disciplines because we believe that the issue of cost management
has become a very big issue globally, that all that could
be done to ensure that cost management is properly practised,
developed and harnessed to the benefit of the organization
and the nation at large should be given adequate priority.
So, that informed the setting up of the institute. Like I
said, one of the objectives is to develop the practice of
Cost Management in Nigeria. We are also to create a forum
for the interaction of practitioners within Nigeria and if
possible outside. And then, of course, also create a standard
that will determine the standard of cost management in Nigeria
– the training requirement, the practice guidelines,
so that Cost Management standards willnot only be realized
but also sustained. So, I am the registrar by the grace of
God. I am also the founding president. The institute was founded
on the concept I initiated in 1999 after interacting with
some individuals in the United States and we felt that it
was an idea that would benefit not only Nigeria but the whole
world. I am a fellow of the institute, I’m also a fellow
of the Institute of Chartered Accountants of Nigeria (ICAN).
I hold a Masters in Transport Management, I also hold a Certificate
in Cost Reduction Strategy from IATA Institute of Development
in Geneva, Switzerland. I am also currently doing a masters
degree in Business Administration with emphasis in Cost Management.
We are continually developing ourselves and also imparting
cost management knowledge in our people. Today, the strength
of our institute stands close to 6, 000 members cutting across
all disciplines, across all sectors and we have a vision of
injecting not fewer than 40, 000 cost managers into the Nigeria
Economy by the year 2020 as one of our major contributions
towards making Nigeria one of the 20 leading economies in
the world. We believe that, there is no way Nigeria could
achieve that dream without having adequate cost managers in
the economy. So, that is the challenge that we have. We are
putting everything in place to realize that. In a nutshell,
that is what we are. That is our vision.
Early life
I was born some 40 years plus ago. I am from Edo State. I
grew up in Benin City. I had my early school days in Benin
Baptist Primary School and then I went to Baptist High School.
I finished my secondary school in 1976. I took up appointment
with the National Electric Power Authority (NEPA) now PHCN.
I had a better part of my working life there. I retired there.
In between, I had an articleship with a chartered accounting
firm in the process of writing my professional examinations,
which I did from foundation. I didn’t have the opportunity
of going to the university from the early age. Not because
I didn’t have the brain but it was just that I didn’t
have the wherewithal to make it. Thank God, today I have made
up for that. I had to write my ICAN from foundation and I
qualified in 1991. Today, I’m a fellow of almost five
years now. I’m happily married with children by the
grace of God. I am also functioning effectively in the church
assisting my bishop.
About Cost Management
Cost Management has been given too many definitions. To be
precise, Hilton et al in their book, Cost Management for Strategic
Business Decision, they defined Cost Management as a philosophy,
an attitude and a set of techniques for creating more value
at a lower cost. Too many issues come up from there. The issue
of cost management being a mindset, when you talk about attitude,
it is not just keeping account records that is Cost Management.
Cost Management has to do with the mind. You must develop
a consciousness to manage cost and that has to be taught.
That has to be developed. And then, its set of techniques,
there are techniques you use in managing cost. And those also
have to be developed. While you’re developing the mind
set, develop the techniques alongside with it. The technique
will cut across all disciplines and that’s why we are
talking about multi-disciplinary perspective.
So, there are human resource techniques, there are engineering
techniques, there are accounting techniques, there are scientific
techniques.
There are different techniques that you can harmonize, harness
for the purpose of managing cost and that is what their definition
said. And the object is to achieve a lower cost but without
tampering with the quality. Of course, you will agree with
me that it is not difficult to achieve low price at a low
quality. If you go to the market, they ask you which one do
you want? Is it Taiwan? Give me a low quality thing and I
get it at a low price. It is also not difficult to get high
quality thing at a high price. But the most difficult thing
is to maintain high quality thing at a low cost. But that
is the challenge of cost management and that’s what
we are talking about and that’s what that definition
said. And it is not limited to that definition. It is a comprehensive
appreciation of cost, a vital element and finding a way to
deliberately manage the cost to ensure that your cost is commensurate
with the level of activity, the situation where you find companies’
costs continuing to rise whereas the level of activity is
not improving is not healthy. Just like in the country today,
we are now in the trillion budgets, does it mean that we have
really being doing more than we were doing? That is a pertinent
question. The situation where your cost continues to rise
when what you are doing with your money has not changed for
the better, is not a good omen for the economy, it is even
worse for any company. So, Cost Management must be saying
that look if you are incurring additional N10, then we must
see a commensurating improvement in the value your activity.
That is what cost management is all about. It is a practice.
It is a discipline, it is a culture that can be taken from
the macro to the micro. At the individual level you can practise
Cost Management. You can evaluate your activity from time
to time and find whether they are cost effective, are there
no value-adding activities within your activity, which you
can do away with so that you can enhance your value. So, basically
that is what Cost Management is all about.
Failure of cost managers
Well it is not. Two things must be well cleared, one, for
today, we don’t have enough cost mangers in the economy.
That you are an accountant does not make you a cost manager.
That’s what people think, that an accountant is a cost
manager. We are not talking about job of an accountant. It
does not give him all that is required to effectively manage
cost. So, the accountant cannot be regarded as a cost manager.
So, the cost managers we have today are inadequate and that
is why we are embarking on the training of 40,000 cost managers
by the year 2020 because we believe that as our economy is
growing, we need that number of cost managers. The number
of cost managers we have today are not being effectively utilized
where they are, and that is a faulty situation. Now, in a
situation where you have cost managers and they are not properly
positioned in the economy is unusual. We have them, we don’t
use what we have. For instance, you are ill, the doctor tells
you that you need a particular drug and you tell him you don’t
need the drug. I will give you an instance, there was a company
we had a report on an insider report that we need to visit
the organization because the way things were going, they required
cost management. We wrote and told them we were visiting.
The managing director minuted on the letter to the executive
director who happened to be a fellow of one of the accounting
bodies. Probably, he was guarding his empire, he didn’t
want some other persons to come around and he wrote back and
said please shelve your visit, the managing director will
not be available to receive you. That was indirectly telling
us not to come. Some people don’t understand what it
is when we talk about cost management. They think that when
you talk about cost management, you are preventing them from
spending money. So, when you talk about it and you have such
people in a group, they are scared. For now, cost managers
are not properly positioned. And that is why we are asking
organizations that have people that have been trained as cost
managers to give them a chance. It is either they create a
unit for cost managers to function or utilize the cost managers
in their performance in the organization where they are. So,
it is not that they are failures. If you have not given them
a chance, how will they work? But I have good news for you
that there are situations where even some organizations have
been repositioned because of the presence and the contributions
of cost managers. They have come back to tell us, I have made
the recommendation to my managing director even to the extent
that some people have restructured their organizations in
terms of space, the facility they use because they discovered
that they were wasting many facilities, mostly, they sell
some of the facilities they were not using because they were
wasting away based on the recommendation of a cost manager
who passed through our programme. So, they are there, we believe
that if you use them you will benefit. But it is not going
to be too long because when our bill is passed, we will be
in a better position to regulate their activities properly.
Because we have already developed standards for now, organizations
must comply with them. So, whether you like it or not, once
those standards become effective, we tell you what standards
that you must comply with to become cost management compliant.
So that as an investor, if you want to invest in company A,
B or C you want to find out from us as cost managers - can
this company stand the test of time or is it going the way
of Enron or Word.com or attempt going underground like a company
here-in Nigeria which was manufacturing profits when they
were not making profit that almost killed them. It is the
cost manager that would be able to know that. We know what
to look out for in our assessment to know whether a company
will be profitable or not. So, we are getting there.
Legal backing for the institute
No. Why you say legal backing, there is no way we could be
operating without a legal backing. The first legal backing
every institute gets is that you are duly registered with
the Corporate Affairs Commission (CAC). That is the first.
No institute in this country that has not gone through that.
From the Nigerian Institute of Management that was formed
in 1960, was incorporate in 1963 but only got chartered in
2003. Charter is the ultimate.
There are certain benefits you get as a chartered institute.
It makes you more or less a government property, so to say.
We have commenced that process since 2004. The bill is still
being processed. We will not tell you that it has been finalized.
But one thing is obvious, just like every other institute,
we hope to be chartered. There is no problem about that, we
are a legal institute.
Cost Management in the Public Sector
Of course, you know that today, we talk about due process.
There is no person better placed than a cost manager to promote
and mange the due process of government. That is why we are
afraid that the due process may have even failed. Because
when Mrs. Oby Ezekwesili was there at the head of due process,
we were seeing more movement and action than we are seeing
now. Of course, we worked with her for quite some time. We
were relating. She attended our programme serially, she represented
Mr. President then in our programmes. She is a merit award
recipient of our institute. She understood what we were talking
about. Unfortunately, before she left, we made a proposal,
giving the due process department the names of all our members
in the public sector.
The essence of doing that was to let them know that we have
the stock of people with the mind set to manage cost in the
public sector and that they should be positioned in those
due process departments, so that they can help manage the
due process.
Because one of the problem we have had in this country is
that the government comes up with new policies, laudable but
they leave the policies in the hands of traditionalists who
frustrate them. And I am afraid due process will go the same
way of the past efforts, because the right people were not
put here. So, cost manager has a role to play. When the bureau
for procurement bill was being presented to Mr. president,
I was there representing our institute. We made adequate contribution
to that bill. But when they were forming the committee, they
did not include us. Then Ezekwesili had gone. We don’t
know what the person there now is doing. Due process is just
a mere ceremony now as far as I am concerned. So, we have
a role to play there. In all the states, what we advocate
is locate a cost manager put him to function and you see the
difference.
Because the training the cost manager goes through is not
just only technical or the mind set because from the definition,
it is a philosophy, it is an attitude. If you don’t
develop the mindset, there is no change of orientation, then
there is no way you can achieve it. Because your decisions
are very fundamental in whatever you do. And what informs
your decisions, your state of mind. If your orientation is
not towards cost consciousness, when they put you there, you
know what to do but you won’t do it. And that’s
the problem we are having.
Are you giving up?
Let’s put it this way, government is a continuous thing.
No system should be built around an individual. Just like
now, a new president has come in. They should have records
of all organizations that have had transactions with government.
The same thing with the due process. Their records are there.
There is no way they would not have our records, our transactions.
So, they are there. We had put in a lot in the past. And we
don’t want to start wasting our time repeating ourselves.
When they need us, they call us. We are watching and waiting.
But an opportunity like this, if you hadn’t asked, I
wouldn’t have said it. That is how we feel. A situation
where you know those who have made input in the past to the
progress of a thing and you suddenly just keep than aside
could be discouraging.
Difference between a chartered accountant and cost
manager
The definition of a discipline or its function explains the
difference in that function. So, if you are going to look
at the difference between a chartered accountant and a cost
manager you would probably ask yourself who is a chartered
accountant? Who is a cost manager? What is the job of a chartered
accountant? What is the job of a cost manager? So, lets look
at it from these perspectives.
I am sure you can, if you’ve had anything to do with
an organization, you know who a chartered accountant is and
his functions, then the definition of accounting generally.
Basically, by training, an accountant is in charge of the
financial transaction of an organization, keeps records. He
reproduces the final accounts of the company, he does some
treasury management, that is your cash in and out, how to
use your surpluses and all that. And then, the auditor is
still part of the chartered accountant. You do the internal
control if you are within the organization. But if you’re
outside, you come in to authenticate what the internal chartered
accountant has done by certifying to the owner of the organization
that the financial statement as presented by the internal
chartered accountant presents a true time and fair view of
what it purports to be. That is what the chartered accountant
who is an auditor does. That’s basically the function.
Any other thing that comes in is an extension of function
by exposure. For instance, you said a chartered account can
manage taxation. It is an extension. It is not a principal
training of an accountant. That is why we have an Institute
of Taxation and there has been confrontation between the accounting
profession and the Institute of Taxation. There was a highly
celebrated court case. Truly, the chartered accountant has
some knowledge of taxation but this is not their principal
training. But now there is a person who is principally trained
for tax purpose. You cannot compare the skill of that person
with somebody who is doing taxation as a bye product or function.
A cost manager is a person who has acquired the necessary
skills to manage costs, so, as a bye-product or function,
he may be an accountant, may be an engineer could be anything.
But he has acquired the principal skill in managing cost and
developed the mindset alongside with it. That is his function.
In every discipline, there reside some techniques you can
use in managing cost. An engineer today will tell you that
he is a cost manager because an engineer has a fundamental
role to play in managing cost. There was a research carried
out in the USA a few years ago, it says 80 percent of the
cost of a product is committed at the design stage. In other
words, once you have designed a product, you have committed
80 percent fits cost. So, you cannot do anything, you must
produce the product to that cost level. It is just like God
created you a fat person. Once you are born, you are fat that
is your nature. As you are growing up, if a slim person, who
was born slim is using one yard of cloth to sew a dress, you
can’t use one yard for the same purpose. No mistakes,
there is no way you can economize because you are designed
from the beginning. So, here comes an engineer, some element
of his functions can contribute to managing cost. In the human
resources the same thing is applicable. The way you manage
human resources from recruitment to promotion, placement and
motivation can affect your cost. So, because of all these,
the cost manager stands out as somebody who has been highly
integrated in the skill and knowledge to manage cost. Therefore,
he is different from a chartered accountant. A chartered accountant
may have the knowledge but it is limited. If you take a look
at some of our documents, you will see some interactions,
we call it integration. We take all the possible skills and
techniques in managing costs from all disciplines and we integrate
them and make them into Cost Management to be taught. And
that is why a cost manager has engineering knowledge of cost
management and so on. As I speak with you, if I am managing
cost, I don’t look at only the accounting aspect because
I am basically an accountant. I look at the engineering, human
resources, legal and every other perspective in managing cost.
That makes the difference.
Cost management in the university
Now, it is being studied in the post-graduate level. You see,
when we came in, it hasn’t much popularity as it has
now. Today, we’ve had graduates of cost management at
masters degree level from a Nigerian university. And plans
are already on to run first degree in Cost Management in a
Nigerian university. We have also set up a college of Cost
Management that will take off early in the year. We are building
up facilities. We will be taking young school leavers who
would probably be waiting for JAMB. It is not necessary. We
encourage them to come in here do 18 months, 24 months diploma
programme in Cost Management and some allied courses and you
go to 200 level B.Sc in Cost Management. Again, if you choose
not to go to the university, you can continue and do a full
diploma programme for 48 months. And with that, you become
a member of the institute or you go and do your post graduate
programme in cost management in the university. So, we are
developing the academic perspective of the programme now beyond
the professional perspective. We believe very soon, many more
universities will buy into this. As we speak, Ladoke Akintola
University of Technology is running a master’s degree
in Business Administration with options in Cost Management.
It is a leading university and we commend them for the innovation.
We are looking at the possibility of expanding the scope to
other universities.
Cost management and the private sector
Initially, some of them did not really understand what we
were talking about. But now some of them have come to terms
with reality. Because, according to a prominent author, when
a company becomes cost conscious and decides to operate lean,
that is trying to do more with little and there is global
competition, the company must learn how to be proactive in
the management of cost. And a company that fails to manage
its cost will find its profit margin squeezed and their existence
threatened. Some companies are finding out that their profit
margins are being squeezed because of cost pressure and they
are coming to us. So, we have many organizations that have
identified with us, some send their staff to come and attend
our programme. We are gradually getting them involved. However,
it is not yet uhuru.
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