Oye: Govt Must Urgently Fix Nigeria’s Economy

Vice President of the Nigerian Association of Chambers of Commerce and Industry Mines and Agriculture, Mr. Dele Oye is calling on the federal government to stop the nation’s current economic drift by quickly implementing the 2016 budget, among several other measures. He spoke to Cruse Osagie

Federal government plans to generate revenue from non-oil sectors. How achievable is that?
‎First of all, I commend the government for finally coming out to take that challenge. The only problem is that, like everything we do, you have to invest first before you can bear the fruits. When we had substantial oil revenue, we did not put adequate investment in the non-oil sectors, so it has become very difficult to turn the potential there to cash. Had there been major investments, the revenue yield from oil would not have been able to match that of the non-oil sectors.

The idea is good, but we will need to tighten our belts further, because it will take more than a year’s investment before we can start yielding any meaningful result. If we are talking about solid mineral investment, it is a business that needs about ten years, before you can even take anything out; and this is in terms of financing and very few countries have banks that have that kind of risk appetite. Australia and Canada are one of these few countries, so it is a big problem really and there is no local bank in Nigeria that can give you loan for up to ten years. So what this means is that we need what is called a calculated investment towards that before it can turn into cash.
The idea is good but I hope the government will keep faith, and I also hope when the oil prices come up again we do not lose focus. Rather the essence of the crude oil profits, which we will be deriving from the current benchmark, should go into these real investments, so that whenever the oil goes up or down again, we are not so affected because we will have other alternatives.

This is probably one of the means we can use to generate the cash to finance these long term investments. The government has to have a deliberate policy on solid minerals investment, and they can even create a law that says we have put the benchmark of oil prices at $38 per barrel or $40 per barrel, and anything outside the benchmark will be used for capital investments in different sectors, so that when the prices rise again, it will stop the government from running to the supreme court to say that we must share all the money.
So, we must make arrangement for the rainy day by channelling the cash for investment into solid minerals development. I think that is the way to go and I am quite happy that the oil price is coming up slowly. But, surely, I think from every kobo we invest in that sector, we can change everything.

What is the impact of the financial challenge on the private sector?
I can start, first, as a lawyer. We have had lot of problems facing the big time investors, foreign investors; before the election, they left the country and none of them have returned.
First of all, the budget is a major index to determine government policies; we are in April and the budget is still not in place. It is based on the government budget the private sector make their own budgets. Also, there is clear fiscal policy from the government. So, nobody will take you serious and no serious investment will happen until you resolve those issues. They are still watching and I can give you a good example. In Abuja, Julius Berger abandoned the airport road since and immediately they saw that there is provision for them in the budget, they have resumed to site. A lot of people have had to sack their staff because they are not sure of what government’s policy is going to be. Government should put its house together in solving the quarrel between the national assembly and the executives because there are lots of other sectors depending on them for payment of salaries; the government cannot even do anything until that budget is passed. So, this quarrel about Calabar-Lagos railway project is not even necessary; if any mistake has been made, they should forget about apportioning blames and focus on development. It is even more outstanding to see that it is the same party that is in control in both the executive and the legislation. They should save us these quarrels and focus on real development, because people are suffering.

Governments increase in taxes and levies to fund projects. How will this play out?
Well, like they say, if a tree is not strong and another tree falls on it, both of them will collapse. If you are not running a viable business, you will not be able to pay tax on profits, you do not pay tax on liabilities. Recently, the present Comptroller General of Customs complained that because of the small import we are currently experiencing, it is affecting their own revenue target. If you go to the Federal Inland Revenue Service, you will know that they are making aggressive effort to collect taxes. But from where? Is it the dead companies that are going to pay the tax, or the workers that you they have fired, who were not even paid their contributory pension, since there was no salary? What I am trying to say is that you can only make more money from taxation if you have an efficient policy in place and, secondly, a thriving economy. But a dead economy where things are on the stand still and people are waiting for the government to resolve their quarrels and have focus, there is nothing more tax can do because you can only tax on profits but not on losses, and most private sectors, like I told you are, laying off staff and losing money. In fact we heard recently that about 3500 people in the oil sectors are being threatened to be laid off; the federal government is still trying to see that it does not happen. But you cannot keep paying salaries, when you have no work for the people.

What I am trying to say is that government must really come up with credible policies that will support businesses, because if the businesses are doing well, they will make more revenues, but if we are still struggling and even the fiscal policies are still not set for this year and it is almost half of the year, so what kind of policy are you running. I am not blaming government, because like every new government, you have your own learning curve. But they have a duty to resolve some issues urgently, they must be focused; the situation now is that everybody is actually slowing down and I can tell you, without being pessimistic, that the tax revenue for this year will be one of the worst. No matter how efficiently you are going to collect, you can only collect from a thriving business; look at the stock exchange, everything is looking down, there is no sector you can say, today, is standing on two legs, unless you are into smuggling and even then, it will not be easy. These are things that fuel all sorts of problems we have, such as the issue of insurgency, because when you are idle and hungry, you are a waiting time bomb for any agent of the devil to be used. The federal government needs to create an enabling environment so that people can have alternative things to do, because if they have nothing to do, they will be queuing up for people to use them.
Advise for Nigerians on areas to invest in the economy

That is a very difficult question because even me, as a lawyer, I am actually experiencing the slowdown in my work, because everything is still tied down to the financial resources available to the people. Let me give you an example. I just finished a conference, which I chaired, on power and petroleum. This year alone, the National Electricity Regulation Commission (NERC) is supposed to issue three tariffs increasing electricity bill. The first increment proposed was in February and it is still a subject of litigation. What I am trying to say is that people cannot even pay the current tariff. Things are so bad for people that we do not know where the hope is coming from.
I do not know the sector to advise anyone to go into. Government needs to cautiously do things that will put money in people’s hands. Take for example, if government pays the contractors they are owing and they, in turn, pay their people, that makes money go round, and all the people dependent on them will get money to spend. This is the only way money goes round. The government must find a way of putting money in people’s hands by making sure that they pay salaries promptly, pay people that have retired so that they can face their own individual lives. Government is still a major player in the economy and the government must focus on that role.

Another thing I must mention, and which has also continued to contribute to the hardship, is the Treasury Single Account (TSA). In as much as the TSA is doing a lot of good, what it is creating is that the money you locked down since is not available to banks for lending, and what this means is that the public sector funding which the private sector could have also accessed indirectly through the banks, is not available for the economy, and this makes it difficult even for bankers. Our government puts some money abroad in private banks, so why will you now deprive your own banks in Nigeria of having that kind of money. In as much the government wants to create a control, they must have an efficient way to say every government agency apart from the TSA, must have three or four accounts for their operations which they can domicile in the commercial banks, so that the huge chunk of money can be used. The money locked down in CBN is not yielding interest for anybody; it is not supporting any part of the economy. So a lot of projects that the banks are already financing are suffering. The government itself can do certain things through its own fiscal policies to start opening up the economy and putting money in public and private sectors by saying that every agency of the government must have about five accounts and stating the rules for operating it; at least all that money will come back to the banks and the banks will have more money to finance projects. And when projects are financed, more employment opportunities are created.

The government can also target different sectors that they want to support. I will give you an example on how to finance mining and those kind of fundamental issues which ordinarily banks in Nigeria cannot finance because they have a one year accounting cycle. The longest loan you can get in Nigeria is 18 months and when you are charged with high interest rates, you will find out that what you get is barely 70 per cent of what you have applied for and 30 per cent is the 28 per cent interest on it. And unless you are selling drugs you cannot make profit. This is why you see people doing buying and selling in Nigeria, because that is the only business you can turn around in six months. But if you want to go into production, you will need to do market survey, locate your industry, and source your raw materials. All these take about three to four years to put together, and when the entire banking finance available to you is just 18 months, how can you survive if you are using short-term money to pursue long-term investments? All these factors are creating hardship and the government can change all of these. The money the government is locking down under TSA should be made available under certain conditions so that we can change the fundamentals of banking in Nigeria, because locking it down does not help any one of us. If the CBN locks down the money for as long as it needs to, it is not creating any form of production, it is not helping the economy. In fact there was one time in Nigeria when the banks were virtually financing everything in the public sector because they had the money. So why are they not playing that role today?

Instead of this government going abroad to borrow, help can come from home. If these banks are actually bigger and better, they can finance parts of our budget. It is for the government to believe in its own institutions. The people the government are going to meet abroad, like the Chinese development bank, were financed by the Chinese government; they do not go abroad to borrow money. So why can’t we take part of this our excess crude and put it into institutions in Nigeria so that they can be strong enough, and in our own rainy days like this, we can run to them for shelter. If you look at the Chinese story, everything they do is financed by the Chinese development bank. They have said that they are going to give us a $6 billion loan, but no kobo is going to come in as cash, it is going to come in as goods manufactured by Chinese companies; that money will advance their economy to create value for themselves, they will have production value, they will have workers value in terms of wages, and at the end of the day it reflates their economy. You are getting the projects here, but they are actually getting paid for it. If today we fix our benchmark at $38 per barrel and say that every dollar that comes in outside this benchmark goes into our Nigeria Export Import Bank (NEXIM), into our Bank of Industry (BOI), for them to focus on financing solid minerals, agriculture or any of our priorities. Then we also put in place a very strong management in these institutions, a management that will not necessarily bow to political directives, then we can even invite international financial institutions to buy shares in these banks. Then we can see our own BOI financing things in China. For example, NEXIM can be able to finance a Nigerian businessman who wants to set up a factory in China. This is how the Chinese have done their work, this is how the Chinese have done everything they have done, they have built their banks to develop their country.

Recently, I heard the federal government is planning to hire 10,000 policemen and they are happy that they are creating employment. What kind of employment is that? I am not saying that the police do not contribute to the economy, but I would have preferred if the government says that there are five companies entering Nigeria with plans to employ 10,000 people, because the kind of production those five companies will do will employ another 50,000 people who will be supporting that industry. I know peace and security will create an enabling environment and I like it, but the kind of effect and impact we will get from a private sector driven investment, the impact will be much more.

Your take on the call for the devaluation of the naira?
My take on this is that it is good to have one rate so that you do not create a window where people who have access to political power get dollars at the official rate and go and round trip. Secondly, the issue of devaluation is a case of chicken and egg. If we were a big and producing country and we do a lot of production for export, if we devalue, we will get immediate benefits in the sense that your goods will be cheaper at the international markets and this creates a lot of demand for your goods. But, in Nigeria, we are a net importer. So, even if we devalue, what you are supposed to gain as a nation does not accrue to us. In fact, you create misery for people. For example, take the airline industry where many of your costs are dependent on foreign exchange. What it creates is people increasing the prices of their goods and services and the benefits that you are supposed to get from devaluation come with inflation. So I support the federal government’s move not to devalue, but we can reflate our economy. Still, the beginning and the end of the story is how the banks are faring, because the banks are the major engine of growth anywhere in the world. Anything you are doing and you do not involve the banks, you are just like a subsistence farmer producing for yourself and your family. If you want to sell to China, Germany and other countries, you need financial support, and if government can make that sector very stable, it will do so much. But when you keep locking down the money that is supposed to be made available to the sector in the vaults of the CBN . . .
Let me give you a practical example. What is happening to the MDAs presently is that if someone is owing the federal government $5 million, the MDAs say pay $3 million to our TSA and bring the remaining in cash. What I am trying to say is that the crooks they are trying to catch for that $2 million cannot be trailed. A crook is a crook, no matter what policy you put in place, they will find another way to counter it. People are already beating the TSA. So it is better you let them pay all the money into the account and know how they applied it. We have smart people. We have people who have resolved so many things and I do not see why we should still be doing banking in Nigeria like it is the government against the banks. The Nigerian government has to see the survival of the banking industry itself as part of its responsibility, because once you shake the banks, you shake everything; every industry is tied to it, every serious business is tied to it. Take for example the last power sector review. Almost all the Nigerian banks involved took to foreign finance; not one of them was able to pay that money directly because they are not strong enough. We need to invest in these banks; we need to put resources at their disposal.
Your thoughts about the Panama papers

Tax avoidance is not illegal; it is tax evasion that is illegal. For a private business, you have the right to minimise your tax, but what is illegal is when you try, in that process, not to declare your assets for the purpose of taxation. A good example is what is happening in England with the Prime Minister, who said his investment has this, but every kobo he makes out of it, he paid his taxes. So it could be a legitimate way of doing business or to minimise your tax, so that you can have more money to invest back in the business.

But where it is completely illegal is if you are in public service. But for us a private person, it is also has tax liability issues, but for a public person, under our Code of Conduct act and certain sections of the constitution which says you must declare your assets and failure to declare, it leads to infringement to that law which can render you to be investigated by Code of Conduct Bureau, if you deny the allegations. But when you admit the allegation under that law, you can go into something like a plea bargain process where you decide either to forfeit or you reach agreement with the agent of the Code of Conduct Bureau.

So, for the purpose of this thing, it is generally not an individual act, depending on whether you are a private or public person. If you are a private person, it has tax implications. If you are a public person, under the law, you cannot even have a foreign bank account because you will be contradicting certain sections of the Code of Conduct Bureau.

So that is why it is good for people to open up, so that we can actually know if some people are using it to conduct some other big businesses. And this is why people are curious, and it is making people resign in different countries. It is not because they have created the law; it is because that you have that kind of money locked up and you are telling us to tighten our belts as a public officer.
So it is not generally illegal, but depends on which side you are.

You turned 50 today (last Thursday). What are the most important things you have had to deal with in the past 50 years?
I am always very shy to talk about myself. I have headed some organisations; I have had to advocate new models in various fora; But what I would say generally is that I always see hope first of all, because the day we stop hoping, then we are as good as dead. But I think, to some extent, we deserve this trouble now as a country, because when we had the oil, we were doing whatever we liked. I remember a governor saying it is his right to buy a private jet because his state can afford it. I have not heard such boasting again recently. What I am trying to say is, like every vagabond child, we filtered away all we had. This is the time to be focused to solve this hardship, first of all to make us stronger and even united as a country, so that when w have another opportunity tomorrow we would have learnt a lot from this hardship by putting structures in place.

Secondly as a person, I have always believed in God and God has been kind to me. It has not been an easy journey. I have trials and tribulations down the line; I have gone through everything a man should go through, but one thing that has kept me is that once you have peace in your heart and you have a smile on your face, you can actually affect your environment, instead of going around squeezing your face. Anytime you see me I am always laughing. For me, everything is a joke. What I mean by that is that I do not think there is anything that will make a man not to smile. No matter how much is at stake, I always learn to smile and it actually calms people down when they see me because when you squeeze your face, you do not know how you have affected that person. The person probably just needs a smile to continue his own journey.

You also have to share whatever you have to people who are not so privileged, I have also tried in my own little way, although it is not easy, because we are all affected by the change mantra to share with the community and people around me.

And, again, I have also kept faith with my staff. I have staff that I have done over 20 years with, because they see me as their government, their institution, their career. So that is why I have a duty as an employer to say when the month ends I pay promptly. because they also have dependants.

God has also blessed me with aged parents who I take care of. They are both over 90 and it is in the bible that you have to take care of them so that your days will be long. It is the only commandment that comes with a promise, and I also encourage ‎people that no matter what situation you find yourself, you must always remember your parents and be there for them.

I think, generally, God has been kind to me and I also think I have not achieved my optimum. But wherever I find myself, I try to change things for the better. No matter what capacity I have served in any organisation I must shake it, and I mean shake it positively, so that when you leave, people will know that someone passed through there.

I have also done many first things. I do not want to praise myself. But what I am trying to say is that God has used me to do so many things positively to affect the different organisations I have served and worked with. I think people just believed in me even when I had my worst moments and those kinds of people are one of the reasons I wake up every day and I can see hope. So, not everybody is bad. There are genuine people. I have wonderful friends, colleagues, family and I am also very happy and proud of this country.