NECA: We Want Definitive Timelines for Releasing N75bn FG Promised Industrialists

The Director General of the Nigeria Employers’ Consultative Assembly (NECA) Mr. Adewale-Smatt Oyerinde, in a recent interview spoke on Nigerian conflict prone industrial relation system and the need for the federal government to create a sustainable industrial and business environment to spur Nigeria’s economic recovery. Dike Onwuamaeze presents the excerpts

The dreaded industrial unrest that would have crippled the economy was averted earlier this month. What is the NECA’s reaction to the suspension of strike by the organised labour movements? We commend the suspension of the strike, because if you will recollect, we have consistently advocated that the strike will not serve any significant positive purpose from the perspective of the organised private sector. Rather it would have probably dug us deeper into the hole considering the current state of the economy. We have advocated for social dialogue as a way to go and we are glad that social dialogue triumphed in the context of all these conversations. So, it is good news that the strike has been called off and we hope that the government and labour unions will live up to their obligations and commitments in the MOU that has been signed. It is good news and the first step in in resolving many issues that are still underlying in our industrial relation system.

What is your comment on the removal of VAT on diesel? That is also commendable.   

What exactly do you mean when NECA said that the federal government sidelined the orginised businesses in rolling out palliative measures to cushion the effects of its reform policies? It is very important that we get the context very well. Now there is what we call bi-partite and then tri-partite in negotiation and engagement and both of them are legal and valid in the context of that engagement. It is expected that the conversation in that bipartite meeting will be issues that concern the two parties that are engaged in it. When it comes to tripartite engagement the conversation is expanded to bring in more parties because if I’m not there, you cannot decide on my behalf. However, when the MOU came out of the bipartite meeting of labour and government we started seeing recommendations for the private sector. And that is a concern. It wasn’t the content that was the issue but the process that led to it. And I think it is very important that we start getting processes right because you cannot build a very beautiful house on a very faulty foundation. It will not work and that has been the trend over time. If it is going to be a conversation that will involve employers’ interest, then employers should be called to be part of that conversation. Organised labour is not an affiliate of the employers and they cannot speak expressly for the organised businesses. In the context of our priorities the removal of VAT of 7.5 per cent on diesel would not have been in our first three priorities.  

What will be your top priorities? We have mentioned the issue of multiple taxations, which are being addressed. The President in his August 3 broadcast said that N75 billion will be earmarked for 75 big manufacturing enterprises and another billions of Naira for the MSMEs. One of our priorities is definitive timelines of when these funds will be released. Our third priority is how we would address the issues surrounding availability of foreign exchange (FX), which is becoming a big challenge in buying inputs and is progressively making a mess of our business projections. You cannot plan when FX continues to escalate. We believe strongly that the President has made a pronouncement in August, and we strongly believe that it will be implemented. Nevertheless, we want a definitive timeline.

But the removal of VAT is just for six months? We are not privy to the conversation between labour and government that led to the six months’ agreement. But what happens after six months? You don’t just fix one item. In making one policy recommendation or policy decision it will be helpful to take a look at other areas it could affect. If not you would have increased wages and the cost of doing business will continue to upscale and will lead to two things: a likely increase in unsold stocks and inventories and downsizing of the workforce. Now you have increased salaries but along that pipeline we are creating a major challenge of unemployment. So, we have to look at all these issues only when everybody is on the table where that conversation is going on.

How prepared are the organised private sector to receive the new national minimum wage? The beauty of the national minimum wage is that it is a process of negotiation that considers all the variables like inflation, the ability to pay, and current economic indices etc. It is what the social partners have agreed on that will be send to the government, which it will send to the National Assembly as an executive bill. Our appeal is that the process that led us to the minimum wage of N18,000, which was the same that led us to the minimum wage of N30,000 will be the process for the coming minimum wage. The fundamental part of it shall be a tripartite driven structure: employers, workers, governments and other stakeholders like the governors, the National Bureau of Statistics and so many other stakeholders.  

You alluded to the fact that social dialogue is always the way rather than strikes and demonstrations but there’s this issue of trust deficit on the part of the government that makes promises that it will not implement? You should know breaking of agreements and workers’ strikes are all symptoms of a dysfunctional industrial relation system. The industrial relation system creates a standard rule of engagement that before you come to the negotiation table, you must have received the mandate of the authority you are representing. Now it is a symptom of dysfunctional system to enter an agreement when you do not have the mandate of your principal. It is also a sign of a system that lacks the basic education and understanding of how the process runs. We have shared our perspective with the Ministry of Labour that we need to deal with the core of our industrial relation so that we will understand what our roles and responsibilities are.  

What are you recommending to make Nigeria’s industrial space more harmonious and without strikes every now and then? Just three measures and they all flow from where the problem is starting from. The first one: there is an industrial administration policy that the ministry is working on for all social partners to sign on to it. Part of the component of that policy would be respect for labour administrative institutions. We have the Industry Arbitration Panel (IAP). We have the National Industrial Court (NIC) so that those who have any grievance will go to these specialised courts that are created for us. The IAP and the NIC are courts to facilitate peaceful industrial relation system. So, first thing is for us to emphasise that these institutions that have been created to guide, adjudicate and arbitrate on issues in our labour space must be absolutely respected by all partners. Number two is capacity building. There is paucity of knowledge and understanding of our roles and responsibilities. And we must be deliberate at all levels in training and retraining our members and leadership. We must we must leverage deliberately on the support and the capacity that the ILO has given us. Capacity development is not negotiable. We have the Michael Imodu Institute of National Labour Studies. If we understand our rules, our responsibilities and our limitations, the chances of one going overboard will be less. The third one is that all of us must uphold our commitments. Because if we understand the law and the process, the regulations and we are all educated then the propensity for us to breach our commitment will be less.  

You mentioned earlier that access to FX supply is a major constraint to the productive sector of the economy. How will it be resolved? Supply of FX is among the main challenges that we are having. Our source of FX as a nation is so constrained by oil theft that Nigeria cannot produce the quota the OPEC has allotted to it. The second is our high propensity for imported goods that is putting pressure on FX. The third issue is our constrained local productivity. The long term solution is to ramp up local production and let the manufacturing sector that is currently operating at less than 55 per cent of its installed capacity rise to 80 per cent capacity utilisation.  Two other areas that are putting pressure on FX apart from the importation of petrol are education and medical tourism. In the context of our national development the real sector needs FX. Medical tourism and education also need FX. So, the federal government must identify its priority among these competing needs. If national development is its priority then it will channel its FX to the productive sector because it is critical to Nigeria’s long term sustainability as a nation. Then those going abroad for medical tourism or education will give the government very valid reason why they will have FX.  Creating an environment that is conducive for investors is another big issue because they will likely assess the regulatory environment and ask: is the judiciary environment conducive? Is the judiciary independent?  The third part is the legislative environment whether it is conducive for business. Currently, we have issues with the National Assembly in the Supreme Court because they keep harassing businesses to come to one investigative hearing or the other even when the Appeal Court has said that the National Assembly does not have the power to do so. But they are still doing it. So, what signal are we communicating to the investors? The executive arm of the government is going round the world seeking investments while another arm of the government is raising the red flag and saying “please do not come here because we are here.” These inherent contradictions are part of the things that are stifling the supply of FX. Government should ramp up the supply side of FX and focus on local production as the way to go.  

What then should be done to make Nigeria great again? We are a great nation. However, the missing link for us is discipline: on the part of the government it is fiscal indiscipline where we have borrowed ourselves to stupor. There is also pervading indiscipline on the workers’ side, on the employers’ side and the average Nigerian on the road. Indiscipline is everywhere. Everybody wants to cut corners and beat the system. Oil theft also boils down to indiscipline and corruption. There are so many policies in the government’s white papers but we do not have the discipline to implement them.