“Where government generates most of its income from taxes, the attitude of government will be to encourage enterprises and SMEs at every level.”
Full participation of Nigeria in the African Continental Free Trade Agreement (AfCFTA) has been a major issue where manufacturers have vehemently warned that it would turn Nigeria into a dumping ground. Adeleke Odude is the President, Business Club Ikeja (BCI) and Chief Executive Officer (CEO), Lektol Insurance Broker Ltd.
In this interview, he points out the disadvantages of Nigeria signing the agreement at this present time. He points out that banks are not doing enough to encourage small enterprises and also speaks on currency swap between Nigeria and China, among others.
Turning business around
The first thing I am looking at as the President is to first renovate our infrastructure. We will make sure the building is renovated and painted. A hall infrastructure are to be put in place, one of which we want to inspect would be at the back of the building. We want to put in a new hut that will serve as a restaurant to compliment the gym we have there and the parking space. Members will want to improve on the infrastructure and make it stand the test of time.
At the same time, we are also looking at activities that will generate the interest of members; either to our members who have been lukewarm because there are not much activities on ground. We want to make sure we inject new ideas; new activities that will make them want to feel like coming to the Business Club.
We are all aware of what the economic situation is presently and it has actually affected the capability and capacity of our members to the extent that most people are just frustrated and businessmen are merely surviving. As a result, time is not being given to club activities. But we want a situation where with the programmes we have, which are tailored at rejuvenating the economic activities of the country, all members would be carried along and involved.
We have already pencilled down programmes and activities to be carried out, and have agreed to invite the Managing Director of Nigeria Tourism Development Corporation (NTDC) to give us a talk on agriculture as a viable international venture because the Federal Government too is looking at agriculture.
We are doing everything to ensure that agriculture is developed to the level it would guarantee increased mass employment, particularly of graduates. This is particularly expedient as it is these graduates that are easily used by politicians as thugs and hatchet men.
If these people are gainfully employed, we are optimistic that crime rate will reduce, violence will reduce and the only way to do it from our own point of view is to make sure that we make our members more vibrant in their participations in the club where they would be making suggestions to government as to the way forward with regards to economic activities.
Chinese swap deal
We have been very conservative; that is, the government and the people of Nigeria. We believe our survival rests mainly on the western world. However, the Asians, the Chinese and the Japanese have demonstrated to the world that they have become a force to be reckoned with. It is about time we took examples from what they are doing.
There is no doubt about the fact that even most of the products you find in Europe, even in their own markets, are manufactured by the Asian countries and now rebranded in Europe. And the reason primarily is because labour is cheaper there and they have a lot of incentives for their manufactures, which we don’t have. The unfortunate aspect is that as a nation, as a people, we are only a consuming nation.
The other time the Minister for Agriculture disclosed that about 15 conglomerates come to Nigeria on a daily basis and all of them go back empty; that is, there is nothing taken from the country. There is nothing we are showing the outside world that we are doing, and we need to turn ourselves also to that side and learn one or two things from them. On the issue of limiting our foreign exchange to dollars and pounds sterling, it is a venture that is worth looking at.
As the adage says, ‘nothing ventured, nothing gained.’ So, we want a situation where the government, as an innovation, would explore the possibility, and if it fails, we will all see it, but I am optimistic that it will succeed. Whatever is going to shore up the value of our naira is what we should be looking at.
This is because the moment our naira begins to appreciate, the economy will become healthy and attractive. I can say categorically that we witnessed the days when even the naira was a stronger currency than the dollar. Today, we are having the dollar exchanging for as much as N360, whereas some years back naira was stronger than the dollar and we can still go back to that era.
The Asians, particularly the Chinese, regardless of their population running into billions, feed their people. Hardly do they import food. We import virtually everything; we import rice, we import sugar, we import groundnut oil. I happened to be on a flight, a local flight to Abuja, and the snacks we were served, salted peanuts, when I checked, was made in Ghana.
I told the gentleman seated beside me that we have degenerated to a level where we cannot even produce peanut with honey and sugar and make it look presentable, and well packaged. Rather, we have resorted to importing it from Ghana for consumption. And as the adage says, when you import anything, you are empowering the country where the goods are coming from and depriving your own people.
A lot of our factories are now centres for worship. We have reached the stage where most of our factories are now being used as worship centres, and the manufacturers are complaining that their capacity in terms of production keeps reducing. What keeps the turnover to be a bit reasonable is the increase in price, not actually increase in capacity, and that is the challenge we have as a nation.
That is why from our own end as business professionals, we want to explore every opportunity to bring back life into our businesses. There would be a centre of attraction to the outside world.
The tourism aspect of our economy has been completely ignored. Last month, I was on a trip to Morocco, on vacation, and sincerely, one of the income generating sectors is the desert, which is mainly for tourism, and these are things we have completely ignored and bungled.
African Continental Free Trade Area (AfCFTA)
Actually, that agreement would further make Nigeria a dumping ground to some countries and that is the reason manufacturers are reluctant about it because we have manufacturers who are members of our club. The last time the Director General of Manufacturers Association of Nigeria (MAN) came to give us a talk, these are part of the issues that were raised.
We should be attracting investors to come here to invest and expand, not for us to open our doors; we are blessed with the population that is unimaginable. Even, in Africa there are some countries that you need to put about 15 to 20 of them together, to be able to catch up with the population of Nigeria.
So, we have the ready market here. Gradually, when companies from South Africa, like MTN, Shoprite and Spar came in, the kind of money they make from this economy is by far more than what they are making in their own countries. This is why Spar, Shoprite started opening different branches in different places because the market population is there.
And it is about time we continued to protect our own manufacturers. We already have our challenges, which are the things that are making our cost of production to be extremely on the high side. So, what we should address are those challenges, the first of which is the power supply, then the infrastructure that do not exist. By the time we encourage production, we will have enough for our market to use, and that will save us the foreign exchange we use to import all these goods.
What they are looking at with the agreement is a situation where they want to turn Nigeria into another dumping ground to bring in their own goods, whereas we are supposed to be protecting our own industries. With this, Nigeria will no doubt become an exporting country, and not an import-oriented country.
Banks’ support for business enterprise
Candidly speaking, the banks have failed us. They (banks) keep declaring billions of naira as profit quarterly, yearly and the impact is not felt. The impact is not felt because there is no economy that will grow on an interest rate of between 25 and 30 per cent. If you look at other advanced countries such as Europe and America, they keep their interest rate at single digit. So, a situation where we have interest rate of between 25 and 30 per cent is not in the interest of everybody because the economy cannot grow. And the reason is because the banks are more interested in short term fund for individuals who have stolen money and keep them. So, with that, they cannot give out funds at reasonable interest rate. We are supposed to go to a situation where the unemployed, the youths will have easy access to loan with a reasonable interest rate. As I said, we cannot build an economy on such interest rate as we have now and that is the reason even the real estate is failing. We are supposed to be looking at how to empower the SMEs. For instance, you will find out that AMCON published the names of loan defaulters recently. It was discovered that those who are owing banks are just 2.5 per cent of the total population. Meaning that banks will rather deal with the 2.5 per cent rather than spreading the money so that everybody can benefit, knowing fully well that those 2.5 per cent will default.
They failed to realise that it is when they spread the funds that more individuals, businesses will be able to pay taxes. It is because we are dependent on oil and what comes out of oil? That is the reason government does not bother if individuals are empowered. But in a situation where government generates most of its income from taxes, the attitude of government will be to encourage enterprises and SMEs at every level. When everybody is busy with one thing or the other, more people will pay taxes and this will increase government revenue. This will create employment and crime rate will reduce. But as it is, we are sitting on gun powder that can explode anytime.
Looking at the economy since the beginning of the year, I would first and foremost say from the perspective of the exchange rate between naira and dollar that there is a reasonable level of stability, but apart from that, the government itself is a major spender.
Again, where we have a situation where the budget was not signed until almost in the first half of the year cannot be in the best interest of the economy and the people of Nigeria.
These are routine that are supposed to be normal. We all know that budget is from January to December; and every input into the budget will have to come in before the end of the year, and the National Assembly can be mandated to meet and approve the budget.
In a situation where capital budget are been funded from the first quarter to the third quarter makes the economy to be unmanageable rather than rejuvenated.
These are areas government must look into, no matter what it takes. Even, companies are compelled to submit their performance in terms of their audited accounts to the stakeholders, both the shareholders, the same way the government has the duty to the citizens.
There is no reason why our budget cannot be passed, say maximum in the second month of the year, whereby we would have 10 months to implement whatever is obtained therein. These are things that are affecting the economy and a situation where the legislative arm and the executive, keep blackmailing themselves as it is actually happening now does not augur well for the economy. A serious government should know this.
What we should be looking at is what will benefit the citizens, not the legislative or the executive. Both the legislatives and the executives are there to serve the people, not to use the people to achieve their own selfish interest, and that is precisely what we are experiencing now as a nation.
It is only in Nigeria that the political bodies, groups and parties do not have ideologies and guidelines that they are following.
This is the reason it is so easy in America. In the American system of government, we don’t see a republican becoming a democrat, in the British system of government, you don’t see a conservative overnight becoming a labour person or vice versa, but here we have people who are in People’s Democratic Party (PDP), who ran to All Progressives Congress (APC) because they are not meeting or achieving their personal objectives. We are supposed to rise above this as a nation, it shows recklessness and carelessness as a people and the outside world is looking at us and laughing at us.
Economy between now and 2019
Personally, I am worried particularly when the President sometime ago sent the substantial supplementary budget to the legislature for approval, so that almost one quarter of the budget would be given to the Independent National Electoral Commission (INEC) to hold elections. It is a subject of concern in the sense that, we all witnessed what happened in United Kingdom (UK), the government changed, there was no expenditure from the government to, the same thing in America, we witnessed the election that brought Donald Trump in, it was sponsored mainly by individuals who contributed to his campaign.
A situation where a quarter of the budget is going to finance an election, is already telling us that 2019 is going to be a depressed economic year because the money we are talking about that they want to spend will end up in the pockets of individuals.
We are all aware of the revelations that came out, how substantial sum of the money was given to individuals unaccounted for, in the last election in 2015.
What we are going to have, if we are not careful is a repetition of that and as David Cameron said in one of his comments, when he was Prime Minister of Britain, that the kind of money that left the economy of Nigeria over the years, if something like that was spent on Britain, the country could have been better off.