The Federal Government of Nigeria must introduce major reforms for economic revival

Managing Partner, Stransact Audit, RSM correspondent firm in Nigeria, Eben Joels, speaks with Justice Okamgba on the nation’s rising inflation, mounting debts, weakening naira, 2024 budget, among other issues Some analysts have said Nigeria debt may not be sustainable with almost 90 per cent of its revenue going for debt servicing. What is your take on this? I do not share this view. It’s unfortunate that most of the debts we take are not used for the purposes for which they were meant. They are stolen by office holders. If we plug the leakages, the infrastructure deficits we have are such that, if we channel our national debts to fix them, there will be a consequential quantum growth in our GDP that will make the borrowings more sustainable. How do you think the government can unify our multiple exchange rates? I believe the CBN policy reforms are ongoing, It does not appear that the CBN has applied all the fix they intend. Do not forget that the events in the CBN itself have dampened the confidence of the global community, and has held us out further as a country with very poor governance. It is a sad thing for the country for a CBN governor to be accused of all the things the last CBN governor is being accused of. I will like to stay neutral and hope that he’s not guilty of such reckless actions, the impact of which is on all of us. It will take some time for the CBN itself to gain the confidence the world had in it as a trusted regulator. But more importantly, our foreign reserves which were depleted severely, need to start growing again. Remember that the last time we moved closest to a convergence between the parallel market and official market forex rates, our foreign reserves was at an all time high. The amount we spend on importing petroleum and similar products was not what we have now. Hopefully as we stop spending our forex earnings on importing petroleum, the Naira will gain significant mileage. However, I seriously fear that if those in charge of governance do not act quickly, our economy is at the risk of being completely dollarised. We hope to see those days when global events that push the price of crude oil to very high levels, translate to a windfall for Nigeria rather than hardship for Nigerians as it is right now. World Bank has said 130 million Nigerians are facing multidimensional poverty. What is the way out to reduce this number? I saw a report recently that said there was a marginal reduction in the number of people in absolute poverty in Nigeria in the last six months. We cannot reduce poverty if people do not have jobs. In certain societies, jobs are as important as life itself. In the Japanese society, a man’s right to work is as important as his right to life. These are societies with enough social cushion for those at the risk of poverty. It will take us a while but we should do more about small businesses who are the largest employers everywhere in the world. Our small businesses here get aesthetic support from government. We need to borrow a leaf from the US Small Business Administration (SBA). If there’s no actionable program to spur the growth of small businesses, the government and big businesses by themselves cannot lift enough people out of poverty. Do you think the government can actually do anything to reduce the Japa wave? What can be done? The government should start governing rather than ruling us. Like I said previously, it does not take a lot to please Nigerians. Many Nigerians leaving the country are forced to that decision. It is not an easy decision. For every 10 people that left Nigeria, there are probably more than 50 per cent for whom things became way tougher such that their friends and relatives in Nigeria never here from them again. It is particularly tougher for those forced out of Nigeria in their middle age. If you leave Nigeria as a successful doctor in your mid 40’s for example, and you are forced to become a caregiver because you are not eligible to practice medicine in that jurisdiction, how do you think such a person will fare mentally? What do you think it will do to the person’s self esteem? We need a country where there are consequences for judges who sell judgment to the highest bidder, for politicians who snatch or stuff ballot boxes, for public officers with eye popping assets that they clearly never worked for. We need a police station that does not charge a fee to track a crime. We need public health emergency services that work. We need a community policing system where every village has a functional police and patrol team. We need public schools that work as well as the ones we attended. If we get this over the next 4 years, Japa will reduce. The country’s economy is obviously in a parlous state, with the excruciating cost of living, dearth of infrastructure and low productivity. What can the government do to refloat the economy and get it back on even knee? The government should undertake major structural reforms. For example, this country is long overdue for a Federal Personal income Tax. It is sad that all the egg heads are unable to see this obvious fix. It is even more sad that the most recent public corruption case in Nigeria is that of funds meant for humanitarian and poverty alleviation activities. To steal directly from the less privileged appears most callous to any enlightened person. We can fix this by simply requiring every individual adult of a certain age and above to file a tax return to the center and they get any poverty alleviation payments through their banking and other official information submitted in a tax return. This is how it works in other advanced societies where stealing of public funds is not as ubiquitous. There are many other obvious fixes, but the issue is that politics and state capture has been the biggest industry in Nigeria since 1998 when we returned to democracy. There is no genuine intention to fix this country by a critical mass of its political leaders and its people.

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Corruption remains a drainpipe on the economy, how well can this administration tackle the issue? President Tinubu started well, he dissolved all non-statutory boards to select new ones. To be candid, the fight against corruption in the country can only be won if there are consequences for official corruption. The recent actions of the government that includes sanctioning a Minister in a so called juicy ministry is a good step in the right direction. Judging by the number of political appointees, a bleeding economy, poverty index and other unnecessary cost components. This administration is accused of running a profligate government. What do you think? The biggest issue we have is the absence of industry and enterprise. There are few motivations to be entrepreneurial in Nigeria when you can make more money and live an easier life by taking a political office. Until the incentive for political office is no longer the opportunity to acquire wealth and power, we would all continue to wallow in our poverty. There will be only a minimal amount of Foreign Direct Investment (FDI), if there are are no examples of big brands that have come into Nigeria and prospered. Talking about big brands coming into Nigeria and FDI, how did you convince RSM international, one of the largest accounting networks in the world, to come to Nigeria through your firm Stransact? According to the United Nations, the population of Nigeria could reach 730 million inhabitants in 2100. The country’s growing young population means that public infrastructure is stressed but this presents opportunity for future economic growth under the right political environment. It was not difficult to let RSM see the importance of Nigeria if the network intends to deliver on its strategy to be a leading global accounting, tax and consulting organisation globally. RSM has been around for over a century. They are the fifth largest accounting firm in the USA, the world’s largest economy. RSM is also probably number 5 in Germany in terms of revenue after Ebener Stolz, Germany’s 6th largest firm joined our network. What is important for the network is the commitment of the member firms to certain values which we call the RSM DNA. Upon interaction with RSM 4 years ago, the network was convinced that Stransact is a firm that shares its DNA. We built our firm on values. Unleashing the human potential is why we exist. We are still improving our processes and methodologies and as soon as our internal quality attains the global standards set by RSM, we shall be rebranding as RSM in Nigeria. The 2024 budget is over N22tn with a large chunk of it planned for capital expenditure. Do you think this revenue projection by the government is achievable, given the lingering economic crisis bedeviling the country? There are a lot of leakages in the system that can release some of the deficits in the budget. Priority should be placed on accountability, exploring diverse revenue sources, and fostering an environment conducive to private sector participation. While the emphasis on capital expenditure is commendable for infrastructure development, careful monitoring and efficient utilisation of funds will be critical to ensure that the allocated resources contribute substantially to economic growth and long-term sustainability and does not end up in private pockets or in funding political activities.

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This administration wants to achieve a trillion-dollar economy, and has indeed set machinery in motion by putting certain things in place. Do you think the size of the economy matters so much, as the impact on the socioeconomic growth in terms of macro and micro economy? Such targets are a good start. It is good to have good dreams and to set ambitious targets. While the ambition to achieve a trillion-dollar economy is commendable, it’s essential to recognise that the size of the economy alone may not be the sole determinant of national prosperity. The emphasis should be on the qualitative aspects of economic growth, focusing on improving the standard of living for citizens and fostering inclusive development. More importantly, the government should harness the UN’s Human development indices and build a program around them. What do you make of the news of Dangote Refinery finally coming on stream after many false starts? Do you think that would make any difference in terms of cost of PMS and other petroleum products in the country? The commencement of the Dangote Refinery represents a milestone for Nigeria’s energy sector, promising to reshape the nation’s petroleum industry. As one of Africa’s largest refineries, its successful operation holds the potential to significantly boost local refining capacity, diminishing Nigeria’s reliance on imported petroleum products. Hopefully we will never see fuel queues again. It contributes to our energy security and presents an opportunity for substantial savings on foreign exchange, positively impacting the country’s economic dynamics. What other measures can the government put in place to galvanise the economy in the short, medium to long term? In the short term, immediate measures to galvanize the economy should include targeted fiscal stimulus packages aimed at specific sectors most affected by current challenges. These can be tax incentives, grants, or subsidies to encourage businesses to retain employees and invest in operational efficiency. Additionally, expedited infrastructure projects can provide quick employment opportunities and inject liquidity into the economy. In the medium term, the government should focus on enhancing the ease of doing business to attract foreign investment. Implementing regulatory reforms, streamlining bureaucratic processes, and ensuring a stable and predictable policy environment can significantly boost investor confidence. Medium-term strategies should also include comprehensive skills development programs to equip the workforce with the capabilities needed for emerging industries. Looking to the long term, fostering innovation through research and development initiatives is crucial. Investing in education and technology infrastructure can create a knowledge-driven economy, positioning the nation for sustained growth. Moreover, the government should actively pursue sustainable development goals, emphasising environmentally friendly practices and promoting industries that align with global trends. Strategic partnerships, both domestically and internationally, will play a pivotal role in all phases of economic revitalization. Collaborations with private enterprises, research institutions, and international organisations can bring diverse expertise and resources to support comprehensive economic growth. What’s your forecast for 2024 in terms of the economic outlook? The economic outlook for 2024 is contingent on proactive economic policies and global dynamics. A comprehensive strategy addressing inflation, exchange rates, and security challenges is crucial for steering the nation towards sustainable economic growth. Overall, I can say that the economy will be better this year, though not a total transformation but it will be better. The local economic environment will be better than 2023, this is tied on the gradual phasing out of the current impact of petrol subsidy and FX reforms on the non-oil sector, and higher crude oil production relative to 2023 levels amid supportive oil prices. If CBN is able to have a better grip on inflation and exchange rates, it will be positive for the economy. If inflation continues to trend downwards globally, then it will be good for the economy because it will reduce the extent to which imported inflation will affect local prices. Credit: PUNCH NEWSPAPER

The Federal Government of Nigeria must introduce major reforms for economic revival - Eben Joels

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