By Bimbola Oyesola
Nigeria’s businesses have never had it so bad as the present situation in the country. From insecurity, poor infrastructure, unfavourable government policies, Dr. Timothy Olawale, the director-general of the Nigeria Employers’ Consultative Association (NECA) lamented to Daily Sun in this interview that businesses are bleeding.
The recent one, he noted is the new policy on tax by the Federal Inland Revenue Service (FIRS) asking businessess to pay double their expected annual return.
He also speaks on how the Central Bank of Nigeria’s policy on forex has continued to cripple business operations in the country.
The NECA DG, among other things, also warned that government should stop making Nigeria indebted to foreign lenders through the unabated borrowing without due consideration for future generations. Olawale also noted that insecurity affects businesses, and warned the Federal Government against incessant external borrowing.
Challenges running businesses in Nigeria
The challenges have always been there, but the issue that is very critical now is taxation. There is a new policy called ‘practice direction.’ This is a situation where the Federal Inland Revenue Service (FIRS) asks you to pay N10 million and you know that your tax liability should not be more than N1 million. What the tax practice says is that while you challenge this, you should pay 50 per cent in advance, then you can get a federal high court ruling, which we feel is not fair. What the government does is to slam you any amount, knowing that you will pay 50 per cent of it. If you are unlucky, you won’t be able to sort it out. I think this is an ambush way to make businesses pay what they don’t earn.
Secondly, we discovered that many times the issue of withholding tax credit by companies is also crippling businesses now. There are huge monies, running into billions of naira, that are in the coffers of the FIRS and the government is not living up to its expectations by making those refunds.
You know the government has problems as regards its financial obligations. To state it clearly, the government is broke, but it is not a license for government to be indebted to businesses. Of course, access to forex is a standing issue. CBN’s policy of not giving forex for any other thing except for production is affecting businesses as there is raw materials backward integration that has not been taken care of.
While businesses are investing in backward integration and investing to produce their local raw materials, there are instances that make it impossible. For instance, pharmaceutical companies cannot get their materials locally. A situation where we use our forex to subsidize petroleum is untenable and wasting money on refineries that are not producing, and importation of fuel is also not acceptable. A situation, where the government is not paying attention to the cost of governance with all the several sources we can make savings from is not tenable. I read a news report, where SERAP was asking for the reduction in the allowances of legislators; how I wish this comes to pass because it is contributing to cost of governance.
Advantage of reduction in allowances of legislators to the situation of Nigeria
We all know that there are fundamental things we can do with money in this country. As it were, we are running a budget deficit. In other words, you are owing to service all these things, which are recurrent. The country is borrowing money to service people’s interest and that is why we are shouting that the government should stop making Nigeria indebted to foreign lenders.
Indebtedness is killing this country, and it is becoming unmanageable. Let us hope we are not mortgaging the future of our children and the future generations because they will not forgive us.
How loans impact infrastructural development in Nigeria
The first observation is, when you borrow, you should borrow for productive means and it is gladdening to note that there is some money that we have spent on production. Some in the construction of railway lines and roads.
The question again is, what values are we getting for those expenditures? It has been said that we overvalue projects and, if this is true, it is corruption. Secondly, most of the projects are delayed and you start to wonder what the causes are, because they borrow to service the projects. Take Lagos-Ibadan expressway, for instance, that road has been under construction since the time of ex-President Olusegun Obasanjo and it was inherited by the government of the former President Goodluck Jonathan. This government came into power in 2015 and borrowed heavily to continue it. This is 2021 and the end is not in sight and one will be wondering what happened to the money allocated for the project so far. The people in government are not feeling the pinch because it is the masses that are feeling the brunt.
How increase in prices of commodities and cost of production affect NECA members
We have said it repeatedly that the cost of doing business in Nigeria is high and the more you do not provide an enabling environment for people to work, with huge tax, the more we will continue to kill businesses. Naturally, businesses will pass the cost to the customers and once they pass it to them it means those who will bear the brunt are the people on the street.
This will affect cost of living because basic goods that they should enjoy would be out of reach for them. Another one is the increase in the price of goods and services and this is driving many people out of business. I am not talking of NECA members here. There are micro, medium-scale businesses whose capital for doing business has been eroded. The little money in their hands is no longer sufficient to stock their shops and, by the time they sell the items and go back to the market, the goods they sold for small amounts of money would have become more expensive and this is the reality the people are facing out there.
Businesses are becoming insolvent and people are also losing their jobs and this should be a cause for concern for us all, especially now that we are talking of idle hands that are tools for banditry.
Insecurity’s impact on businesses in the country
Insecurity does not affect businesses alone, but the entire Nigerians and the polity. We saw where an emir was kidnapped with his family and that was not a business person. So, if the leaders in the society can be kidnapped and a DPO with police escort could be kidnapped, who are we? So, our safety is in the hands of God. Nobody is sure of anything; people are just hoping for a better future and its getting bad every day.
How businesses in the northern part of Nigeria are coping
Most businesses in those areas have closed down. Last year, when we had a briefing with newsmen, we sounded an alarm about gradual de-industrialization of the North. As at now, no employee wants to be posted there and, even if you are posted there, it comes with a great cost because you can’t go there with your family. So, that is the experience of businesses and, of course, there is massive unemployment in the area.
Oil and gas operations in Nigeria and government waiting for Dangote refinery
As long as this will solve the problem of importation of refined products, any investment is welcome. Towards the end of Obasanjo’s government, he took a wise decision of privatization, but some people are benifiting by using it to make money to say they are turning around refineries through maintenance. He sold them and that was when Dangote came into it. It would have been a perfect solution now as it would have encouraged refurbishment and encouraged those who were licensed to go into refining products. But the late President Umaru Musa Yar’Adua came in and, because of complaints, the policy was reversed.
Those refineries are scrap metals now. The man has gone ahead to do massive investment in constructing his own refinery, which is also positive. It’s left to be seen if it will impact positively with regard to cost of petroleum product because, as far as I know, there will be monopoly, there would be no competitor. While solving a problem, you should anticipate what it will cost and start working on it.
There are others that were given license to construct refineries, what are the inhibitors or obstacles preventing them so that there will be competition and healthy rivalry with Dangote Refinery? This takes us to modular refineries: they keep bombing refineries that they claim are illegal.
These people have local technology to refine fuel and they are selling it, why don’t we license them to get optimal benefit of taxation from it and get them to buy crude through legal means and it will be good for the economy? This will solve the problem of refining. There are combinations of actions to be taken by government in solving the bigger problems, but they are not doing this. We have advisers that are earning money and are not doing anything.