Oyerinde: Incoming Govt Must Address Challenge of Low Revenue Generation

The Director General of the Nigerian Employers’ Consultative Association, Mr. Adewale-Smatt Oyerinde, in this interview bares his mind on burning national issues. Dike Onwuamaeze brings the excerpts

What will the incoming government put in place to turn around the economy of this country? 

Thank you for the opportunity to engage once again. As you have rightly said the presidential election has come and gone. The institutional umpire, which is the Independent National Electoral Commission (INEC), has already announced the president-elect. While we will allow the politicians to deal with the issues arising from the elections and also allowing the court to play its role, we will expect the incoming government to focus on three fundamental issues. First of these fundamentals is the fiscal and monetary policies. We cannot over emphasise this because it is the foundation on which so many things are built. If we do not get it right at that level, then it becomes difficult for us to get it right in any other area. It is just like building a structure on a very fault foundation. I feel that the challenge we have had over the years, especially in these past eight years, has been a deliberate or unconscious misalignment within the context of fiscal and monetary policy. Secondly, we will have to deal with issues concerning revenue for the government. We call Nigeria the giant of Africa and one off the biggest exporter of crude in the OPEC. But progressively we have realised that our ability and capacity to meet even our OPEC quota has been compromised by so many things like oil theft and others, which have consequences for the economy of Nigeria as a whole. The third fundamental is that the incoming government must put round pegs in round holes.  They must be those that understand the issues surrounding their ministries or agencies. The incoming president will have to play the role of a statesman by looking beyond politics and ethnicity and every other issue that has bugged us down as a country to actually pick individuals that can make definitive difference in the context of turning the economy around and turning it around as quickly as possible.

How will the fiscal and monetary authorities work together to turnaround this economy and enable it to move forward? 

You cannot operate monetary policies successfully without a deliberate alignment with the fiscal policies. They are meant to work together. You cannot operate any of them independently. The challenge we have had in the recent past is when the fiscal and monetary policy authorities are working at cross purposes. Let me give you an instance, when the Naira issue came up the minister of finance said that the ministry was not consulted and was not aware, and this is supposed to be an institution that should be controlling the fundamental part of the country’s economy. It gave a wrong signal to investors that our monetary and fiscal authorities are working at cross purposes, which will create problems for all of us. The CBN from our perspective is not a sovereign. It is the only the president of the country that is sovereign whose authority and words are final. The spirit of the Act that set up the CBN does not view the central bank in the context we are interpreting it as a sovereign. No economy survives without a serious alignment between the fiscal and monetary policies. They must complement each other. So we believe strongly on the need for alignment between the fiscal and monetary authorities.

What will you advise that the fiscal and monetary authorities should look at to work together? 

It boils down to the role of the president who appoints both the CBN’s governor and the Minister of Finance. It is not sufficient for either the fiscal or monetary authority to run policies that are not targeted at achieving the overarching objectives of the president. The president is the one that is elected to fix the economy and he is the person that shares his vision about where he wants to take the economy to. Now the fiscal and the monetary authorities are to help him to achieve these objectives. In that line it rest on the president to ensure that he understands where he is taking the economy. He must have a firm perspective of what he wants to do concerning the economy. Then the actions of the CBN and the Ministry of Finance and all the agencies and departments under the ministry should be to complement each other so that the president’s vision can be achieved. We should know that whatever the CBN or the Ministry of Finance does, the buck still stops on the president’s desk.  

To some analysts the time frame for the execution of the Naira redesign exercise was too short. What would have been the best solution to resolve the controversies that are trailing the Naira redesign? 

There are drivers of cashless policy, and one of them is the banking online infrastructure, including the POS, the ATMs and money agents. For you to implement this policy at the national scale you must take a stock and do an audit to ascertain if the current online infrastructure in the country is sufficient to carry the weight of all Nigerians coming on that platform at the same time. The second part is the issue of sensitisation. Once you realise that your sensitisation is not deep or sufficient then you should know that you should come up with innovative ways to deepen the sensitisation. Like I have said it was a laudable policy and a direction that I think we should be going, but we should not put the cart before the horse.

What are the errors you observed in the implementation of the Naira redesigned exercise? 

One, we did not do the audit to gauge whether the current infrastructure we have is sufficient enough to carry the burden of online payments and transfers. Economic theories are built on the assumption of production and consumption and once the consumer is not in a position to buy in order to consume you have short circled the whole process, which will cause disruption that can be expressed in any way up to the country’s GDP. These are fundamental issues we felt that the CBN should address and address quickly to avoid putting the institution of the central bank on the public glare.

What is your message to the federal government and the CBN about the Supreme Court judgment? 

The government has a zero option and we urge the government to speedily implement the court’s decision.  

Is there a need for either the federal government or the CBN to speak to Nigerians on this matter? 

I do not think so. They just have to obey the judgment by implementing it.  

Do you foresee some small businesses going into extinction by the current cashless mode of the economy? 

Some have already gone into extinction. A business that is already on life blood now has the pipe that is supplying it blood squeezed and you expect magic that it will still be alive. The volume of cash transactions in the informal sector is high and a lot of businesses have crashed in the MSMEs sector due to this policy.

How can we achieve inclusive participation in the economy? 

You mentioned a word that is quite interesting which is inclusiveness. We feel that it is wrong to exclude the people you are planning to include. The inclusiveness that is meant to be achieved with the new Naira design ended up excluding so many individuals. And inclusiveness should start with input from stakeholders at the policy formulation point in order to build national consensus.

What blueprint do you expect from the government on issues that bother on education and power supply? 

It will surprise you that the two major foreign exchange leakages in Nigeria are education and health. These two items are the highest consumers of foreign exchange, not even the manufacturing sector. So, one of the things I think we should do is to call a summit to rethink our educational system. We need to carry out curriculum review. Is the curriculum actually preparing them for the workplace that is currently changing rapidly? If it is not, then we are wasting the time of these students. So, we need a true summit of all stakeholders in the educational summit to know what exactly is wrong.  Let us deal with the issue of low educational standard in this country to reduce the propensity of Nigerian students to study abroad. Energy crisis is one thing organised businesses are facing. We cannot develop without adequate power. Power is very fundamental to our national development and industrialisation but government must take a dispassionate and holistic view about the whole challenges that surrounds the power sector. It is not one challenge. It is a multidimensional challenge.  

Are you calling for a review of the privatisation exercise in the power sector? 

Two things have happened. We know that there were management changes in some DISCOs like Benin, Abuja, and Kano DISCOs. My concern about those management changes is whether the challenges that they had were management challenges or whether they were fundament challenges. We need empirical evidence to identify what went wrong before we can provide adequate solutions. Otherwise solutions will be based on perceptions or emotions depending on where one’s interest lies.

The federal government has again postponed the takeoff of the revitalised Port Harcourt refinery? 

There was a video of the incoming president during campaign where he said that he must remove subsidy. But it is ironic, and difficult to explain to a child, that the product that I’m subsidising on his behalf is not available. With four refineries and as a major producer of crude oil with a population of over 200 million people we cannot get 100 people that can manage our refineries successfully. Meanwhile we have an individual that has successfully built a refinery and is about starting operation. It is shameful for us as a nation to be waiting for an individual’s refinery as our saving grace. It is shameful and it is part of those contradictions that I have mentioned that the things that are blessings to many nations are curses to us. One of the positive outcomes of the Russia/Ukraine conflict is increase in crude oil prices and while many OPEC’s countries are cashing in on it, Nigeria is making the money and losing it through fuel subsidy.  I think we are the only OPEC country that is importing fuel, which is shameful.

How can Nigeria enhance productivity to boost employment? 

One of NECA’s efforts to mitigate this issue is the Industrial Training Fund (ITF)/NECA Skill Development Project. It is a project that targets skill development. We feel that beyond people going to school and getting degrees, we should focus more on skill development. We think that government should give more attention to technical and vocational trainings. It is the direction that we think we should go even as we continue to struggle with our formal educational system. That is the path that will help us to deal maximally with the issue of unemployment. We are actually sitting on the keg of the gun powder with a large population of youths out there without employment. Government should give more support to projects like the ITF/NECA Technical Skill Development as a pathway to remove the youths from the unemployment. Those that will be trained would either become employers of labour or because those skills they would have learnt are the skills that the industries needed it will become easier for them to secure job placements.  As employers we are concerned and we doing everything within our limit to continue to contribute our quota to reducing the challenges of unemployment.