“The underlying philosophy of our Economic
Recovery and Growth Plan is optimizing the use of local content and empowering
local businesses”
“The role of government must be to
facilitate, enable and support the economic activities of the Nigerian
businesses ….”
President Muhammadu Buhari,
December 14, 2016
On December
14, 2016, like millions of Nigerians (I hope), I watched the Nigerian president
deliver his budget – speech and all – to the joint session of the Nigerian
national assembly, and long before the saliva could dry from his mouth economic
experts went to town analyzing the budget. I have always wondered how anyone
could do that simply from a budget speech; especially, given that the details
of the budget were not even known to members of the national assembly, at
least, as at that time. Anyways, I believe in different yolks for different
folks.
The two
statements in paragraph 14 of the president’s speech caught my attention, and
it was based on those that I decided to look for the details of the budget to
see if appropriate allocations were made to the right agencies responsible for
seeing this promise to fruition. – Ministries of Labor, Agriculture,
Mining/Natural Resources, Finance/CBN, Economic Development, Works/Power, Transportation,
Industry/Trade, Health and Justice. Analysis of the breakdown of allocations to
these ministries and departments will present a better picture of where this
administration is going economically and socially; especially, with regards to
pulling the nation out of recession and placing it on a steady and stable
growth footing. Until those details become available, we must review what role
each of these ministries/departments playing in realizing the president’s goals
above.
Optimizing use of Local Content
Here, local
content is not only limited to mineral resources and raw materials; it includes
localized information gathering and distribution, development and sharing of
technological expertise, local labor recruitment, training and retraining,
which requires establishment and refurbishing of training facilities. Now,
which are the ministries and departments key to this role? They will be the
ministries/departments of Agriculture, Mining and Natural Resources, Labor,
Education, Economic Development, and Justice. A database of resources – natural
and manufactured – that are obtainable in Nigeria for production and
manufacturing purposes should exist in the ministries/departments of
Agriculture, Mining, Natural Resources, and Economic Development, and be easily
accessible to Nigerians who may wish to use such resources in their
entrepreneurial ventures.
The ministry
of Labor, on its part, should have or collect data on all Nigerians of labor
age – 18-55 years; their academic and skills experience, and in collaboration
with the Ministries/departments of Education and Economic Planning, formulate a
training program not only geared towards enhancing the existing skills of this
labor-age group, but providing training opportunities for a change of skills
training, based on the prevailing economic situation. That way, the nation will
always have an abundance of skilled labor force for every economic sector, and
will not have to depend on supplies from foreign labor force like India and
China. Where does the Ministry of Justice come in? Without laws, there will be
societal chaos. Since the proposed data collected by the Ministries of Labor,
Natural resources, Agriculture, Education, etc. towards creation and
preservation of local content will include sensitive private information of
Nigerians and their resources, a law guiding its sharing, with whom, and for
what purpose is very important. So also is the safeguarding of any technology
developed or enhanced by Nigerians, and the application of such technologies to
avoid harm or injury to users that might result in legal disputes; and where
such disputes occur, there should be a legal framework to resolve them.
Empowering Local Businesses
This
involves a little bit of export promotion and import substitution policies, to
enable local businesses survive and grow.
It also means tax breaks and other financial incentives like extension
of generous credit and loan facilities, business-friendly laws – including
easement of doing business in Nigeria; improving power, infrastructure,
transportation and security services will go a long way towards realizing this
goal; granting of import licenses for heavy machinery and raw materials not
available in Nigeria, and education/seminars focused on spreading of information
on the available forms of business, risks and benefits, resources and their
accessibility, and market opportunities within and beyond the Nigerian shores.
The ministries of Finance, Trade and Industry, Power/Works, Justice, Transport,
and the Central Bank all have roles to play in towards meeting this goal. The
Ministry of Finance and the Central bank should work with the commercial banks
and other special interest banks, like the Banks of Industry and Agriculture,
Import-Export bank, and the Islamic bank, to make loan facilities available at
low interest rates – even if it means creating a soft loan or interest rate
regime just for small and medium-scale Nigerian business owners.
On their
parts, the Ministry of Trade and Industry and the Nigerian Export Promotion
Board would handle the sourcing of international and regional markets, and
promotion of Nigerian-made products, respectively. Also, the Standards Organization
of Nigeria (SON) has the role of ensuring that made in Nigeria goods and
services meet internationally-acceptable standards; this will help allay the
concerns of international importers about the quality of these products. The
Nigerian Customs Service should draw up a set of procedures to ensure smooth
and quick clearing of big ticket production/manufacturing equipment at the
wharfs, and reduce clearing costs for these and other business-related
machinery, so as to reduce unnecessary demurrage and holding cost that might
negatively impact on businesses’ capital
budgets.
Critical Infrastructure Needs
Without
steady power supply and a reliable access to markets, no business will be
successful, and this where the Ministries of Power/Works, and Transportation
have roles to play in ensuring the success of the president’s 2017 goals. Without
a doubt, power supply in Nigeria is epileptic at best, and the cost of
alternative power supply has driven many local companies out of business. The
major reasons why the national power agencies in Nigeria have not been able to
make much of an impact are sabotage by the staff and the fierce resistance of
generator importers. To improve power supply in Nigeria, government must first
ban generator importation; with that out of the way, it could then focus on
improving/modernizing available equipment, ridding the agencies of corrupt management
and staff, and proposing a billing system that includes lower rates for
business facilities like manufacturing and production warehouses.
Like power,
the Nigerian road network is terrible and deserves a lot of attention. The same
applies to the transportation system. Without necessary infrastructure, it is
very costly to do business in Nigeria, even for Nigerian businesses. The
responsible ministries must redouble efforts to improve Nigeria’s road network,
provide for an efficient rail and water transportation system so as to
efficiently move heavy cargo to their destinations. Frequent delays in air
transportation add to the woes of any business entity, by increasing their cost
due to unnecessary waste of time at airports. An efficient business environment
requires ease of movement and communication by air, land, and sea; and, between
these two ministries, and some other government agencies, a lot is expected of
them if the 2017 budget goals of empowering local businesses will ever be
achieved.
Enabling Business Laws
After the
finance and infrastructure comes the enabling environment, and this is where
the national assembly and the justice ministry find themselves working hand in
hand. In collaboration with the justice ministry and the Presidency, the
national assembly should look at laws currently on the books that need
tweaking, and new ones that may be needed, to ensure ease of doing business in
Nigeria both for indigenes and interested foreign investors. Currently in
Nigeria, it takes about two years to get all the necessary documentation and approvals
to set up a corporation; about half that length of time for a partnership, and
about six months if you want to set up a legalized Sole Proprietorship. A
personal experience: to renew/update my company information at the Corporate
Affairs Commission took four days in Abuja, and a whole lot of palm greasing.
With that experience, not many would want to set up a business in Nigeria. If
the business establishment laws are modernized, and bureaucratic bottlenecks eliminated
at both federal and state levels, doing business in Nigeria will be easier and
prospective investors will flood the nation.
While ease of doing business laws are
important, it is equally important – if not more so – to enact laws that
protects young indigenous businesses for at least 5 years, to give them enough
time to find their footing and compete at par, or near so, in the international
markets. Such laws would mandate government agencies at every level to source
their needs locally, and only look outside for those needs that are not
available locally. I believe there are laws or discussions in the national
assembly to this effect. Since one of the problems that kill businesses in
Nigeria is difficulty in debt collection – and payment of loans, laws that make
it mandatory for buyers to pay their debts within 30 day of purchase, or face
prosecution and confiscation of properties to the creditor, should not only be
enacted but be enforced. All of these will encourage many Nigerians to
establish businesses, with the assurance of the full backing of the laws of the
nation.
Conclusion
There are so
many things needed in Nigeria to successfully empower local businesses, and the
above are just a few of them. One thing must be acceptable by Nigerians:
economic recessions take about three years of focused investment in the right
segments of the economy to end; so, any hope that the current recession will
end by the end of 2017 is wishful at best. All of the above propositions, if
implemented, cannot come to fruition in the 2017 fiscal year, but a continuous
implementation over a period of three fiscal years will ensure a stable and
growing small and medium business sector in Nigeria that will be the major
employers of labor by 2023.
“The role of government must be to
facilitate, enable and support the economic activities of the Nigerian
businesses ….”
The Buhari
administration, and subsequent administrations, must not allow the above
statement to be just a budget presentation talk, as has been the case in many
years past; government must make sure that it means what it says by working
with relevant government agencies and ministries to enact and implement
policies that achieves what the president promised. To this effect, the N50b
set aside to expand Export Processing and Special Economic Zones; the N15b for
recapitalization of Banks of Industry and Agriculture; the seed amount of $1.3b
for the Development Bank of Nigeria, and the provision for establishment of
model technical and vocational schools are all steps in the right direction, if
the government can actually move from talking to doing.
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