Olakunle Olafioye
State governors in Nigeria have no excuse not to pay the newly approved minimum wage. This is the view of a former President of the Chartered Institute of Bankers of Nigeria, Okechukwu Unegbu.
Unegbu, who is also the Managing Director, Maxifund Investments and Securities Plc, and former MD of defunct Citizens Bank International, in the this interview, identified what state governments need to do to be able to pay the new minimum wage. He also spoke on other major economic issues affecting the country.
We are witnessing a situation whereby some state governors are not even showing readiness to pay the newly approved national minimum wage as we approach the deadline for the commencement of the payment. What is your take on this?
Let’s look at the implication first. The minimum wage is N30,000. The inflation is on the upward swing, which means it consumes part of the minimum wage. Before the closure of the land borders, a bag of rice sold between N13, 000 and N15, 000. Now, the price has risen to between N20, 000 and N25, 000. So, the N30, 000 has been consumed to some extent. The state governments are deceiving us. A state governor in Nigeria will go out with a convoy of about 20 vehicles that is blatant wealth. They don’t need all that because they are only funding their leisure, making themselves so comfortable to the hurt of their people. In other words, a governor sets up the office of the First Lady, so many aides that are contributing practically nothing to the revenue of that state. Look at it, most of the governors are saying they have to pay themselves after spending eight years during which they stole their states blind. These people are not sincere; they are only deceiving us. Any state governor that cannot pay the minimum wage, which does not even represent a living wage because the minimum wage is a wage that even annoys the person who receives it because before you receive it , it’s already out of your pocket. So, I do not see why any state government will claim they cannot pay the minimum wage. If any state says it cannot pay the minimum wage, the state assembly should think of a way of impeaching the person. There is money to pay the minimum wage in every state, except the governors are only trying to convert it to their own private use that is why they will tell you they cannot pay.
There is a school of thought, which believes that the idea of national minimum wage is unreasonable because it is believed that since states do not get equal revenue and since cost of living varies from one state to another, individual states should determine what will be their minimum wage. What is your view on this?
The state governors must look into their spending pattern. Now, who accounts for the security votes they collect? Those security votes can do a lot in the society and I believe security votes should not be paid to the state governors because if the entire environment is secured, nobody will collect private security vote. That is a way of encouraging serious corruption and, therefore, I do not agree with those who say the states are not the same. I agree that not all pockets are equal, but I believe that if my pocket is smaller compared to your own, I should be able to do things that would help me to minimize costs. So, we need to really look inwards on how to cut costs and make things work better. The governors should go and do their homework. Lagos can afford paying more than N30, 000 and it is already leading the way by paying more than that. So many of the states can actually make N30, 000 their minimum wage, but they are only making noise because they want to continue getting the money they are not entitled to. I know there are so many things that can be done in these states that will enable the governors to meet up. Before I contested Imo State governorship in 2015, I did my homework in the area where I knew I don’t need to waste resources, you cut off those areas and make sure your people are much happier than they are at the moment. Let them look inwards into their internally generated revenue.
The Federal Government has proposed the issuance of visas to Africans visiting Nigeria on arrival beginning from next year. What does this portend for the nation’s economy?
When we talk about visitors coming into a country, you have to look at the visitors records: their standing in the society, whether they have committed crimes in the past or not. Then you have to consider their skills and how this is likely to benefit the country. But then there is a need to look at the local environment. What is the rate of employment in the country? If the employment rate is too bad, where you have people suffering because of lack of jobs, there will be no need to further stifle the market with people who will be coming to do the work meant for the local people. The issue of visas on arrival requires adequate provisions and preparations. If you are going into a country and you plan to stay for more than a week or two, you must prepare to go back or ask for permanent visas. This can only work in a country where there is proper data management. But in our country with porous borders, with poor data management, when they come in, it will be very difficult to know where they are. This is likely to further worsen the security in the country. Personally, I don’t think it is a good policy at this time when the labour market is very dicey, when we have very high rate of unemployment. I think this is not the right time to issue visas to visitors on arrival.
What alternatives would you suggest to the government to explore?
The government, first of all, needs to look at our demography. Do you know that in Nigeria of today, somebody from the East cannot even secure job in the North and vice versa. In that case, the government needs to first address this issue. Moreover, the government must look at the skills of those who are planning to come into the country. Are they coming into the country with skills that will benefit the country? But I know that Nigerians are highly skilled people. The government needs to encourage proper mobility in the country. If there is proper labour mobility in the country, this can be done if the government put in place a policy that will enhance it. In this case, we will be able to discover, where there is skill gap. That skill gap can be filled by allowing foreigners with skills visas on entry. But as long as we don’t have this in place, the policy of visas on entry will be counterproductive for Nigeria.
The nation’s land borders have been shut since August, what is your assessment of this decision so far?
Government has the right to close the land borders once it gets to a stage where smuggling can no longer be curtailed. But having done that, it is also still counterproductive. When you are in an organization, you must know when the members of the organization require training. If smuggling continues in an environment that is properly organized it means that the members of that organizations; either Immigration or Customs are not doing their job in which case the government should look into that. If you want to close the land borders you must have made adequate provision to ensure that those goods, which you intend to close the borders against are available. If they are not available and you close the borders it means you want to cripple yourself. It is even shocking to realize that inflation has skyrocketed because of the closure of the borders. This is wrong because it will inflict more suffering on the people. If the government has noticed it, it means there is need to change the policy. And also, to close your land borders, you have already restricted the movement we are talking about. And they are telling us that it does not affect the trade agreement with members of ECOWAS. This is mere politics because it will definitely affect trade agreement and free movement of labour which is part of ECOWAS protocols. I don’t see how border closure has been beneficial to us. Moreover, when we close the border and prevent people from moving out freely, we are restricting movement of labour and you are also increasing unemployment rate. Some people are lauding the initiative, saying the government has done well, we cannot just be saying this without carrying out proper research on whether the closure of the border has yielded positive or negative results. But at least I have heard the Minister of Finance saying that the closure of the borders had led to the increase in inflation rate, which is negative for us. So, why must we close the border when our people continue to suffer it as inflation keeps skyrocketing? That is counterproductive.
What do you make of the claim by the Customs boss who said that the closure of the border has continued to impact positively on the revenue of the service?
How did he arrive at that? You and I know that the budget in this country is in serious deficit, if what he claims is true, why are we borrowing? If it is true that he has such revenue coming in, what is the impact on the country’s revenue? We are operating a negative revenue budget. That is not true, he is only playing to the gallery because of those people who put him in that job. His claims are not true. In fact, he is only indicting himself because to start saying that now, it means he has failed all along to protect our borders.
The issue of cashless policy is being threatened by several charges being imposed on customers. There are charges on POS, stamp duty and others. How do you react to this?
Let me start with the stamp duty. There is a case that has been decided by Court of Appeal on the collection of stamp duty by the banks. This case was decided by the Court of Appeal in April 2016. The problem we have is that we do not challenge some of these things. Banks are doing a lot of disservice to their customers, but because most customers see these charges as insignificant, they do not bother to challenge the banks. A bank with one million customers charging N50 on each customer, which they claim they remit to the Central Bank, but nobody is challenging this. Well the new Finance Bill is trying to challenge the issue of N50 that is why they have to raise the bar to about N10, 000. All that is happening now is contrary to the idea behind cashless policy. This is because most people will no longer want to take their money to the bank. If I take cash to where I want to buy something I will not be charged extra but if you use your phone to pay via USSD you will be charged extra. I think the government should know the unintended consequences of their action. The immediate consequence is that most people will go about carrying their money in their pockets, and armed robbers will now begin to go after people on the suspicion that they are with cash. This is counterproductive to the earlier policy. So, if you will charge me extra for anything I use my phone or ATM to buy, then the best for me is to go to the bank and line up for my money and keep it in my pockets. The customers should challenge the activity of the banks in court through Bank Customers Association of Nigeria. The issue of stamp duty is even worse because the Court of Appeal has ruled that the collection of stamp duty is illegal