By Bimbola Oyesola
For Mr. Larry Ephraim Ettah, President of Nigeria Employers Consultative Association (NECA) and the Group Managing Director/Chief Executive Officer of UAC of Nigeria Plc (UACN), the present economic quagmire Nigeria is enmeshed in may simply be a blessing in disguise provided the leadership and the citizens can take up the opportunities.
He believes that with the scarcity of dollars, which would make lots of imported goods out of the reach of many, Nigerians would be made to look inward and this would in turn boost local production.
But the success of this strategy, he notes, is hinged more on the government’s will and efforts to fix and improve power as well as infrastructure and other essentials for businesses to thrive.
The NECA boss also explains reasons why foreigners are no longer bringing in foreign exchange into the country, the Central Bank of Nigeria’s (CBN)’s role in the current economic crisis as well as sundry economic issues and ways to bring Nigeria out of the current recession.
Ways out of recession
To get out of recession, Nigeria has two choices – to spend itself out of recession or tax itself out of recession. Our recession is structural and what we need to do is to try and encourage growth because recession itself actually means negative growth. Therefore, to get out of recession, it technically means you need to be positive and then do what will encourage growth in this country. I mean significant growth and what will make that happen is power. Why, for instance, do we have the situation we found ourselves in today?
You recognise that power generation in this country has dropped significantly in the last two quarters. And if we are in a position to have more power generated, that would mean a significant amount of opportunity, which would encourage a lot of entrepreneurs to start businesses. It also means that businesses that are actually there will be able to have lower cost of doing business where they can grow and be able to employ many more people. So we have to invest a lot more in terms of ensuring that we step up and upgrade our power generation. Its a shame that a country like South Africa is talking of 40,000 megawatts in power and we are still talking about 3,000 megawatts. But the minimum we should be thinking in the next two years should be in the average of 15,000, 20,000 megawatts and what it also means is that there must be a lot of spending around that space; so power is very critical.
The other thing is also certain policies, which this government inherited but I think we inherited a mess and we turned it into a disaster because of some wrong policies and choices we took. Now, if we are now talking of deregulating the foreign exchange market, imagine if we have done this as far back as 15 months ago, or possibly even one year ago; the things we are asking about now, the foreign capital inflow, should have come. But why is this capital inflow not coming in? I will give you an example. Today, the government revenue monthly is about $1 billion. However, our requirement as a country in terms of import, is $3 billion. Actually, there is a gap of $2 billion. Now, if we didn’t have the disruption in the Niger Delta, perhaps we would have had more oil being pumped, and then maybe added 800,000 barrels a day (bpd) into our revenue and may be that would have given us $1.7 billion. But if you have a situation where your monthly demand for dollar is still $3 billion, then you still have a gap. It also means that you have a very huge import demand, which has to be financed with dollars. What we need to also do is to find out how to diversify the economy in such a way that some of those things we were importing, like rice, tomato puree, the drinks, the fashion accessories, clothes and all of those things can be produced locally to reduce that demand so that we are in a position where we are generating $2 billion that covers our demand. Remember, oil prices are no longer going to go up to $100 per barrel, which we used to enjoy.
We must also have it in mind that in the next two to three years, oil prices will remain low; the days of $70, $80, $90 per barrel are gone. So we will have to be living in a restructured environment, in which case we will have to be looking at how to diversify our economy, how to have more of the goods we are importing being produced locally. I think it’s a good opportunity; though there won’t be a lot of choices, this is also an opportunity that we should not allow to go. It’s a good crisis to happen because it would make more Nigerians to look inward to see how we will encourage local production of most of these goods. However, that would happen if we have power and infrastructure to support diversification.
The other one is the fact that the CBN has not been very helpful. I must say that the signal out of the CBN has been very confusing. At one time we have ban of the Bureau de Change, later nine banks were banned and before then we had a ban on 41 items; all those things have a way of confusing investors. It’s very important that the signal from the CBN remain consistent because investors want to see consistency. They are lethargic when they have inconsistencies in policies. So it’s very clear that we need to have a lot more coherence coming from the monitoring authority. For instance, at one time, they are reducing MPR and at the other time, they are increasing MPR. All these things are untactful. So why are foreigners not bringing money? They are waiting to see whether we are consistent and if we don’t get those things right, we are simply just paying lip service to the issue. I think it’s important that the leadership at CBN recognises that and it jerks its credibility as it does currently. The sooner they begin to address that credibility deficit in terms of ensuring policy consistency, the faster they will address all the issues.
Impact on average Nigerian
We need to create employment. When we’re talking about creating employment, government must not be looking at itself as the only one tprovide jobs. Government has to create the environment for employment to be generated. How many people can the government employ? Government has to create the enabling environment that allows industry to thrive. This must be an environment that allows industry to create employment. So it’s very critical that such environment is created and it is created too when you have monetary policy stability, when you have fiscal growth, when you have infrastructural facilities in the country. That environment is also created when there is improvement in security in the environment itself in which case people have more confidence to transact business. So those are the things we should be looking for. I hope the question would be, what happens now going forward?
Government has to recognise that we are in recession. Perhaps both the 2016 Budget and spending and the 2017 Budget exercise would have to address those kinds of indices of growth that I’ve just spoken of. I would also add a point about the mortality rate. I know lots of figures have been bandied by different bodies because NACCIMA has given its own statistics and so has MAN but one thing I would just like to say is that, whether we agree with the numbers or not, the signals are clear and the evidence before our eyes shows that unemployment is increasing, and from what we heard in the last release from Nigerian Bureau of Statistics (NBS), unemployment has actually increased by 1.1 million in one quarter and I think that is a significant increase. It just goes to show that there are lots of works to be done because even among those who are employed, some are underemployed. So there are a lot of work to be done. But that work cannot be done by government alone becuase it has a duty to create an environment that encourages private sector to become the engine of growth.
We believe it’s okay for regulators to regulate. But we are averse to a situation I call over regulation, in which case you are trying not to look at the spirit of a regulation, which was really to encourage businesses to survive, but seeing regulation purely from revenue generation perspective. I think we are in a difficult situation where some MDAs and parastatals of government think their reason for existence is how much revenue they can collect rather than their reason being to encourage businesses to grow so that employment can be created. That is why you see a situation where each establishment is trying to outdo the other in terms of how much money they can generate and that sometimes puts in very punitive fines and levies on companies, which are counter productive. I think it is very important that as a business management organisation, we point these issues out that the first part to get businesses which are growing is for us to get the economy out of the woods. If we are thinking we are going to levy and tax ourselves out of recession, it’s not going to work. That approach is rather killing those businesses. We are not saying regulators shouldn’t work but regulators should work with clear consideration and clarity of purpose that it’s role is actually to ensure that we have a level playing field in which business thrives and Nigeria itself is a competitive environment in which businesses can grow.
Issue of migration of young Nigerians from the country and the continent is a function of frustrations in relation to their environment. Just as one finds out that capital does not have a heart, capital only has interest, human beings also have interest, they would be looking for opportunities where they can eke out a living for themselves. I think what we have to do first and as much as possible, is to ensure that this environment is conducive so that those in this country have a patriotic sense to remain in this country and seize the opportunities here.
We also have a responsibility to inform those people that such dangerous journey they take risking their lives may not be the best choices. Because some of the places they go to are also not the best places for them to make a living. But then we need to put safeguard, we need to have an environment that is encouraging, an environment that seems to be accommodating, an environment where people see a vision and have a shared vision of possibility. We crave for such a Nigeria. That would be a Nigeria of growth, that would be a Nigeria of opportunity, a Nigeria of security, Nigeria where wealth can be created and protected.
That’s where people can be encouraged to stay. What impact would that have? Well, of course, it would certainly mean that some of our young, virile, potentially very good contributors to our economic growth are leaving the shores of Nigeria and our loss may be somebody else’s gain. But we will have to, as Nigerians, discourage people, not just those who are here, from going out but also encourage those who are out there to come back to Nigeria to contribute their quota to the development of their fatherland.