Foreign exchange scarcity and diversification
What we are going through now is caused partly by the way we managed our economy in the past without saving for the rainy day. But I believe that what we do with this crisis we are facing could actually be the impetus for this diversification. But like you said, we have been talking about it for a long time. But you know you can talk about something but you don’t do it. But I don’t know if you have ever been in a situation where maybe you are sick and they told you that what you need is to exercise. Nobody would tell you to start exercising. So with what we are going through, it is extremely important that we make the most of it for this diversification because it is a bit like that exercising; that transformation we need and that’s what we are working on.
Lack of incentives to local manufacturers
I think your question can be looked at in number of ways. One way is, what are we being forced to do differently? The things we are being forced to do differently are as important as the things we have chosen to do differently. We are being forced to look for other sources of foreign exchange because we don’t have the foreign exchange. Talk to any manufacturer, he would tell you that the best thing that can happen to him is to source for materials locally. Even if there was no policy change, his foreign exchange is a lot less than he wants. And I can tell you a lot of local manufacturers have become quite innovative and creative and I think Nigerians would see the fruit of that. If you look at agriculture, from what I understand, we are going to see a better harvest because there has been a refocus on agriculture that is authentic as opposed to just talking about it as a nice thing to do but we are not doing.
What we are doing is that we have a policy around the sectors where we have a comparative advantage or what you might call a relative advantage. And these sectors are going into agro-processing where we are making sure that there are input materials. You said there are no incentives; those input materials, be they capital equipment or raw materials, are concessions in place for all those things. The only thing is that the concessions in the past were abused. So whether it is in terms of import concessions or export concessions, the work that is going on now is to make sure that genuine manufacturers get it. And that is an important difference because what happens when people get something for nothing is that it discourages those who are doing something. And if you ask people they would be honest with you and tell you part of the reason why they didn’t do as much in the past was because it was abused. It was political. You know people just enjoyed it. But I think you find under this government that these policies are being implemented with more rigour, more discipline and more clarity, targeted at those who actually should benefit. I think you would find that you would create a better economy going forward.
Creating conducive environment for local and foreign investors
I think you are right. One of the things that foreign investors and even local investors wanted was to be sure that currency was appropriately priced by market price in a way that they don’t suffer devaluation later after they’ve done the exchange. That’s really what the concern was, which is why a more flexible and market oriented rate favours foreign investors in general. The second thing they are looking for, which the president has given us the directive to drive, is that Nigeria should be an easier place to do business. For too long it is almost as if we have accepted the badge that we are a difficult place to do business and it is fine because people make money when they do it. But I believe we would do a lot better if we freed up the system in a way that will make it easier for people to do business. Remove a lot of the red-tape and the president has launched a council and directed that we setup a council – the Presidential Enabling Business Environment Council – chaired by the vice president that is focused majorly on ease of doing business and making Nigeria more attractive. A lot of work has gone in behind closed doors.
Level of consistency in policy implementation
That’s the third leg as well. That has been extended from security, which you know a lot has been done to ensure macro-economic stability, which is basically a predictable environment including stable policies. That’s why if you noticed that when we came in we haven’t actually done the so classic policy flip-flops; the things that are there we have said we will implement them. What I believe is that for investors, we have gone through an economic cycle, not just Nigeria but globally, where people became a lot more cautious. However, we are committed to sending very strong signals to those investors that our market is open. And if we do those three things, and I speak as an expert, they would come.
One of the challenges, and this is something one should understand, is that because of the difficulty we are going through right now people want to see result and they want to see it now. But it doesn’t mean that those things that would take time we shouldn’t do them. So, somebody who is sick he wants to get well now but it may mean that the drug he is taking now will make him well tomorrow. And it is important that you stay consistent particularly if you are the doctor or the one working with that patient. Show a lot of empathy, work them through the process and my view is that Nigeria is definitely going to get better in the areas we’ve talked about –diversification of the economy and investors coming in. It would happen and I speak with authority.
What did you meet, what was the average?
Well, Nigeria had been sliding in terms of the ease of doing business index of the World Bank to the point where we were rated 169 out of a little over 180 countries. And we have been sliding from being in the top 100 and I believe we will reverse. So, we’ve said in the first year at least we want to move 20 spots and then go on. But what is important to know is that there are specific things to do which we are doing. And those things would lead to a difference. Like I said in the presidential council, which is inter-ministerial and we are meeting on it, we are going to use the Nigeria Investment Promotion Council (NIPC) as a secretariat and I am confident that you would see the result. Now, remember that the fact that somebody says something and doesn’t do it doesn’t mean that if you say it you won’t do it. That’s just not the way it is. So we can speak for ourselves and tell you that this commitment is real and is going to happen and obviously is being rolled out as we speak and we would see the result.
The other thing we are going to do is to communicate better because one of the things we want to do is make sure we are working with Nigerians not just saying this is what we are doing; this is what we are doing together. So, for instance, we are going to work with private sector. We have identified the private sector lead that would be announced soon. That’s going to be the head of this ease of doing business enabling environment forum. We have identified private sector firms that are expert in it. We have identified somebody who led it in another country in Georgia who is a former prime minister who’s come to help us. So there are several things we’ve done which, when we roll out, I am quite confident we would be getting the results.
Selling point for Nigeria
Let me start with an African proverb, which says you can’t be taller than me and shorter than me at the same time. Nigeria is not so unique that if you do the right thing you won’t get result. I think it is a myth to believe that. Like you said, people just talk and they don’t do it and they say, ‘well, why are we not getting the results?’ It’s just self deceit. I can assure you that despite all the rhetoric about ease of doing business, if Nigeria focuses on it and we do it, we would get the results and I am 100 per cent certain we are going to focus on it and we are going to get the results.
However, it is a process; it is a moving target. In other words, it is not a given. It is not one of those things where other countries would just sit back while Nigeria overtakes them. But if we are prepared to work harder, which I know we are, and if we are prepared to be more transparent, which we are already doing, we have engaged the World Bank, for instance, and they have already commended us in what they have seen in the first few months of our engagement. So, my confidence is coming from the commitment we have and the fact that Nigerians, when they set their mind to do something, do it well.
Readiness for foreign investors
Can you imagine if we made it easier for people to get visa into the country. If you can get your visa in two days or you get it on arrival, and we clean up our airports, investors will be attracted to come. These are the things we are planning to do. We call it the entry process. If we clean up that process, we will get results.
Our airports not in great shape
No, the airports can be better. Obviously nobody is even debating that. I haven’t met any Nigerian that says the airport is in top shape unless you haven’t visited other countries. I think what we are talking about is, ‘what would it take to make it better?’ Our commitment to you is that you are going to see it rolled out over the next few weeks because that’s an example. The entry process is one plank of what we are doing in terms of visa, the arrival experience and the departure experience; all that would change for the better. We are not in denial about the need for positive change.
What I can tell you is that that is probably one of, if not the number one priority. There is a list of 10 things we could do in terms of our priority areas. In terms of ease of doing business, making life easier for foreign and local investors. The entry process – visa, arrival, departure – is number one. And I can tell you that it is going to get immediate attention which means that I expect to see immediate result in a matter of weeks.
Nigeria’s 169th slot on ease of doing business
We would like within a year to improve by at least 20 points and then within the life of this administration which is over say three-year period we would like to be in the top 100 which means we want to get to where we were 10 years ago. Of course, we have a lot of work to do but we are not afraid to work.
Protecting local industries from imported products
Protection of local industry goes beyond just making it easier for them. The World Bank has 10 areas on which it evaluates you and we are working with each of those areas ranging from how easy it is to register your business to taxation; how simple is it? Is it multiple-taxation? Or is it streamlined? And so on. The good news is that working together with the states through the national economic council, there is a commitment to this ease of doing business and making life easier for the people. One of the opportunities we must utilise as a government and I mean government broadly, both national and sub-national government, is to make things better for our people. And I know there is a real interest in that from the governors as well as from the Federal Government.
This is important because it signals empathy at a time of great economic challenges and crisis. So I think this is one of the areas we would cover in terms of how to make taxation and tax payments streamlined and easier.
On protecting local industries, there are two things at least we expect to see immediately. One is digging under the global trading routes – multilateral trading system, which is world trade organisation and so on. There are legitimate defences that countries are allowed to have against dumping and substandard goods coming in. We are trying to make sure that those rules are not only sharpened but properly enforced because they protect local industry. The other thing that is also important are incentives that can and should be given, particularly at times such as this, to local industries. They range from things that create better environment like electricity. We believe that we need to redouble our effort because I did a tour of local industries recently in the South-west zone and I can tell you that power was a recurrent decimal in terms of concern. So we need to address that. We were in meeting recently with Minister of Power and other Ministers talking about how to speed up the delivery of power. And then there are also incentives you can give. You know financial packages that can help them in terms of tax reliefs, which we are also going to make sure we bring to the fore. So I think you would see as we go on that we are going to roll out more and more policies that are friendly to local industries because that’s exactly what we want to achieve. It is all part of this diversification.
Low hanging fruits for local manufacturers
I can say two things. The first thing is that we need to know that certain incentives are in place as we speak. They need better implementation. I talked about that earlier. And the low hanging fruit is just to implement better what already exists. That is, do better what you promised to do already before you get into new ones. And the way to do it better, in my view, is – I am going to use something negative positively – to be discriminating when it comes to somebody getting something he deserves and somebody else doesn’t deserve. It shouldn’t be and that has been a problem in the past. You may be an exporter and somebody else is not an exporter and I use, EEG, the export grant we give out. People who were exporting were getting it and people who weren’t exporting were getting it and, of course, it led to a lot of abuse. So, all those things need to be targeted at those who deserve to get them. That’s what we are doing. But I am saying in addition that because of the economic times, remember you have to plan for tomorrow as well. And I don’t want us to despise the importance of planning for tomorrow because at times it is what you are going to give me now. As important as that is, I am sure you remember the story of Esau and his brother; it is always important to defer gratification in some areas to get a better result tomorrow. And I am a great believer that the key to success in life is delayed gratification. There are times you delay gratification because you want a better tomorrow. So we are doing both.
Ban on importation of tomato paste
I think tomato industry is one of the examples of the agro-processing sector where we want to encourage local production because we produce tomatoes and make sure we process them as well. And we would definitely prefer local production to foreign import. What we met was like the local production was very low and there were a lot of imports coming in, including by those who are complaining. So what you find in a lot of this is about promise of what people would do if you ban the imports and the challenge there is that it has to be done in a programmed way. If there’s no production and you stop import, you are basically saying ‘don’t consume tomato for now until the production is done’. We have a plan, which might be one, two, three, four, five-year plan where you would say as you ramp up local production, you reduce whatever the gap is in terms of what we were importing before. And secondly, you make sure that the policies are tailored to favour those who are in the industry. So it is not like some other people are importing it and some other people are producing it. And that’s basically what we are working out with tomato industry right now.
What we have done for other sectors like sugar and cement is almost like what they call backward integration. What it is, is that you give incentives to people for producing locally and as they produce, before the production is at the quantity you require, you allow them to import some of the deficit or whatever gap there is and then over time you close that gap with local production. That’s what we are implementing for local tomato manufacturers as well.
SMEs accessing credit at single digit interest rate
There are three things we are doing for SMEs and we need to do better. One is that SMEs pay a disproportionately higher cost when the cost of doing business, either cost of power or others, is higher. So they actually benefit disproportionately when you lower those costs. And I would say even if it is for that reason alone, we need to be very aggressive, lowering the cost of power, the cost of doing business in general because the SMEs benefit from it even more than the big companies. Number two is financing through the Bank of Industry (BoI) and other agencies in the Ministry of Industry, Trade and Investment as well as other government programmes like the social intervention/investment programmes. We are targeting them – the most vulnerable in society and many of them are SMEs. If you look at, for instance, social investment programmes, there is money there for market women, artisans and farmers basically to give them money they need to trade.
Protecting the labour market to ensure people are not abused by external investors
I think there are two ways to protect the labour market. By far the most sustainable way is to create conducive environment for employment where people grow their businesses and because businesses are growing, they employ more people and it is competitive, and if you don’t pay them well, they would leave. So that needs to go on and that has to do with the economy itself in general. The second thing we are doing, which falls under the Ministry of Labour, is better labour relations with employers. And at times, you include packages for employers so that they can employ more people.
Implementing local content
In fact, it is part of this local content that we talked about – Buy Nigeria – which is basically buying things we produce, employing more Nigerians. So when we work with foreign investors now, it’s a very specific area of interest. How they are going to train Nigerians and have programmes for developing Nigerians after employing them.
Making foreign companies comply with local content laws
That’s something we do. That’s why we are paying a lot of attention and I think it would get better and better. But there’s no question that every country protects its citizens. I think it is a smart policy; you can’t have a country with the population we have and then you are importing labour. It is part of our commitment going forward. Basically, part of the agreement is that they must employ Nigerians, especially where government is involved. I remember that with some of these people we have terms of engagement and I know that where that is the case employment of Nigerians is a condition.
Promoting Nigerian brands at govt level
I think it is both brand and plain procurement policy. So part of our procurement policy, which has been there but just needs to be re-enforced and re-energised, is buy Nigeria. We have been talking about it to the point where, starting with government leading by example to say, we buy Nigerian products where they are available as a matter of policy, as a matter of even regulation. And then promote, when it becomes a brand for Nigerians as well, Nigerian companies, Nigerian individuals to buy Naija, buy Nigeria. So, I think that’s a very key part of localisation, industrialisation and diversification And these are core things that need better implementation but there’s no question that’s the way to go.
Getting certification from NAFDAC and SON
That’s an example of where ease of doing business would help. One of the things we are going to do is to work with some of those agencies people need to get their approvals within good time. The ease of doing business is inter-ministerial effort. It is a big deal but you will see result. So, it won’t be like they talked the last time and they didn’t do anything. But I can tell you that with agencies like NAFDAC and SON, you will see results there in the sense that we are going to have timelines during which those things have to be approved. There has to be some other intervention where there is a health risk involved, that would address it and still make it easier for people to get what they need; that is the way to encourage and empower people by giving them the approvals they need to produce.