Recession best time to diversify economy – Ohunabunwa

Mazi Sam Ohuabunwa, a quintessential professional pharmacist, former chairman of the Nigerian Economic Summit Group (NESG) and ex- chairman, Manufacturers Association of Nigeria (MAN), and Founder, Sam Ohuabunwa Foundation, in this interview with GANIYU OBAARO, BUINESS EDITOR; and JOY ANYIM, says Nigeria should take advantage of recession to diversify its economy. Excerpts

Sir, how would you access the Nigerian business environment, taking into consideration the president’s policy on ease of doing business?
Well, the business environment in Nigeria remains very challenging; and it is not just a matter of opinion, the world has designed mechanisms for accessing countries in terms of the ease of doing business. They have designed mechanism for looking at global competitiveness of businesses; and if you check us out, unfortunately, when you look at the global rating on each score, we are doing poorly. In fact, the last one I saw was in 2016; and we were at 169 in the global ease of doing business out of 189 countries; in terms of difficulty in doing business or what they call ease of doing business ranking.
When we have countries like Denmark, Singapore, we are even worse than many African countries. We are even worse than Ghana in terms of ease of doing business. So, global investment goes to where there is ease of doing business, places where we have competitive economic business environment. Well, this is not lost to our nation, especially this government, who seems to have realized this and seems to be putting focus on it. Of course, this is not the first time, during the last (President Goodluck Jonathan’s) government, they even set up a global competitiveness committee. I was invited to serve on that committee set up by the Ministry of Trade and Investment under (the then Minister, Dr. Olusegun) Agagu. But the new government has built on that; and we now have a global competitiveness commission or ease of doing business commission that is now focusing on issues.
We are not just looking at general issues; we are looking at what are the components, because that is what I recommended. I said look, ease of doing business has different components, and some may be more difficult, while some may be easier. For example, having power is a problem that is not going to be easy for Nigeria to solve because, it is proven tractable. Such as how long does it take you to register a company, how long does it take you to get a Certificate of Occupancy; how long does it take you to transfer properties from one person to the other, issues of intellectual property possession, the ease with which you can pay even government levies, issues related to taxation and such other things. And even the way investors are treated, ability even to respond to investors’ inquiry, the regulatory environment, those are the things that all contribute to the ease of doing business. How visitors are welcomed, the look of our airport. Nobody is interested in the size of your airport as they are interested in its cleanliness. Nobody is interested in the level of skyscrapers, but as in terms of how they feel welcomed. Nobody is interested in whether the roads are all tarred, fine, but do they feel secured when they arrive your country?
These are the issue we are talking about. What about corruption? Do you do things without having to grease palms and do all those kind of things?” And I thought that we can deal with some of them, I believe that that is what Minister of Trade and Industry Mr. Okechukwu Enelama is doing working with the acting President. They have focused on a few areas; and say, let’s deal with these areas, let’s remove the number of people that harass you in the airport in the name of checking you.
We need both foreign and local investment. The more you make it easier for people to do business in Nigeria, or Nigerians to do business in Nigeria, the easier it will be for other people to come. Our operating environment is still very though, because of too many issues; and one of them is policy consistency.
This is because everything that goes about investment is a question of carrot and stick. If you have something that motivates an investor, that makes him feel welcome, that makes him feel that if he puts his money, he will get it back with a good profit, nobody will ask him tomorrow you are a stranger, we are taking your asset, you are coming from India or China, you have occupied everywhere, start going like they did in Uganda at some point. Those kinds of things are issues today; you cannot do it and get away like that.
Of course, it hurts Ugandan economy for a long time. The times of nationalisation of asset are gone. Today, it is free trade; and people have a right to make their investment and repatriate when they feel like and sell off. The ease with which you can do that is also a measure of your global competitiveness. I think Nigeria is aware, we hear the right things being said by government, but as they say, the taste of the pudding is in the eating. And, it is when we see these changes over a long time; not because the vice president went to the airport and then conveyor belt begins to work and when the man leaves, it stops working. We want to see this conveyor belt working all the time. Over a time, the world will recognize it and investors will say, Nigeria is changing.
Over the years, we have relied on oil as our means of foreign exchange. There is a government policy now, which is tailored towards moving away from oil, what they call diversification. In a recession, do you see us achieving the diversification process in line with the thinking of the Federal Government and what are your reasons?

I think the recession is perhaps the best time to start a diversification. Why? Because it is a time when your choices are limited; so you are compelled by the desire to survive to become creative and innovative. It is creativity and innovation that lead to diversification. When oil money is flowing; and we can afford to spend our money, buy what we want, our thinking is limited, we follow what we call the least line of resistance, we go into what they call the comfort zone; and so you just follow the comfort zone, you wake up in the morning, you order your breakfast and they give you all kinds of imported food.
Now the day you wake up and imported food is not coming like we experienced in the recession, we begin to say can we eat corn, can we go back to Acara and we will also look for a way to improve on Acara. The truth of the matter is that recession is the best time to do diversification; and I believe of course that the challenge is sustainability. And because the cause of our recession is drop in oil; and some time drop in volume, now, if we get to a place where the oil price recovers and the oil volume recovers as it has happened before, Nigerian will go back to it, especially from the policy perspective; and that is why I have written and said look, if I were government, which of course, former President Olusegun Obasanjo started, with the excess crude income, he started setting apart money that was above the budgeted price, which is good.
But, the then governors, led by the former governor of Rivers state, Mr. Rotimi C. Amechi said ‘we have a right to keep our money’, so, when the oil price fell again, we didn’t have enough. Because in 2008 and 2009, we overcame economic shock, because of the excess crude account. I am saying that look, if I were the president of this country, what I will do is to say okay, lest see at the point at which we come out of recession; and we say oil price is 50/55, from now, a law will be made that any price above oil income should not even be spent, it should be put in reserve for future spending. We can only spend it on issues related to diversification. Norway did something like that; and today, Norway earns money and theirs is not a matter of excess. Every, money they earned they invested it in their sovereign wealth fund; then the interest from saving it in the bank; they use it like an endowment and invest it. The capital is there accruing; and you take the interest to run your affairs. You guarantee the future development of the country, and you guarantee the stability of exchange rate, because local currency will have so much power by the amount of reserves it has.
As a member of Manufacturers Association of Nigeria, we know that at different levels, you have discussed the Micro and Macroeconomic challenges facing Nigeria, particularly infrastructure, energy crisis. The DG and the chairman, both of them have expressed that government should give them discriminatory rates or concession in terms accessibility to foreign exchange. To what extent has this been effected in terms of bailing you out of the socio-economic crisis facing the sector?

It is usually difficult for government to implement these policies, where they talk about preferential allocation. There was a time when there was difficulty in manufacturers sourcing foreign exchange in 2015 and 2016 till the early part of this year when government instituted that policy. It was an attempt by the Central Bank Nigeria, CBN, but if you ask manufacturers, they will tell you that not much happened, because of the reality of treating scarce commodity.
The moment you have scarce commodity anywhere in the world, price will jump. If you put price low at the artificial level, then you immediately promote black market; you promote corruption and subterranean activities. The incentive for rent seeking increases, it was a good intention by CBN, some companies got a little bit of benefit, but it didn’t last; and because such policies truly are difficult to sustain, the incentive to break the policy is so high, because you say there is a dollar to be sold and somebody is willing to buy the dollar at N500; and you say sell it to somebody at N305, if you are a very nice guy, you can tell the person I want to sell at N500 and say there is almost N200 difference, we share it equally, let everybody go home that if you are a moral person. What I am saying is the incentive to break it is high. So, it will require people with very high moral strength an environment where the moral system is high to obey this rule and that is why we are writing, please let the naira float.

Are you therefore satisfied with the interventionist role been played by CBN so far?

Absolutely. The CBN took us in the wrong direction. They caused the depreciation of the naira, they cause the scarcity of the foreign exchange flowing in, because the capital importation came down, and it was coming to a very low level. You know if you want to do business in country, you have to bring your money through the official route so that you can also export it. Somebody wants to invest a hundred dollars, or one thousand dollars, you tell him that if he invests one thousand dollars, he will get N300, 000 when he gets here while this same dollar somebody is willing to give me N500, 000. What do I do and of course if I give it to the N500, 000 person, I can get the money, but I can’t take it out, I say okay, I am waiting for you, but I won’t bring my money. Now government has intervened, they have narrowed the rates.

Do you think the financial sector is doing enough, the banking sector holistically? Now, the minister of finance, Kemi Adeosun was saying we want to develop new products, various channels, the Diasporas bond, the government bond, to attract investment to the capital market, to what extent can this impact on the Nigerian economy?

Well, I believe that those are critical issues that the ministry must focus on, because your economy is driven by a couple of things. First, is what is the amount of investment coming into your country, what is the amount of local investment going on the country and both of cost what we call economic transaction, overall what is the level of economic transactions going on. And we know that money is the common denominator or most economic activities. So government is looking for ways to attract investment, which is money to stimulate local investment which is also money. In the process to provide funding into the different sectors of the economy; to stir up the wheel of production. What they are doing is the right thing. Now, are they doing it sufficiently is the question, are they doing it consistently, and is the question. We have no common view, no common vision; and that is why we are promoting Vision 2010, Vision 2020, but all of them have not worked because of lack of consistency.

Have you also bought into the idea of economic growth recovery framework?

It is a national issue, it is an economic issue. Our people don’t allow policies to endure. Nigerians are not interested in who started the policy; we are not interested in who started the policy, in whether you call it green revolution or agricultural agenda. They are the same thing. What Nigerians want is improvement in the quality of their life. So when the right policies are taken, the response is immediate. Look at what happened in the stock exchange in the last couple of months, the exchange has recovered more than three trillion. My prayer is that somebody stays on it and sets up a system for sustainability because we have seen too many stop and go; it is not in our interest that everything is politicized and that’s not good enough.

But what particularly will be of interest to the Nigerian public and our readers is the new tax drive anchored on Voluntary Asset Income Declaration scheme; launched in Abuja, the tax Thursday, the tax moratorium, the ninety days and the rest of them which government is looking at. I don’t know how workable, given the economic insistency in the tax drive to ensure that as we are moving away from oil, what are those things that must be put in place in terms of template to achieve the goal of the new tax drive?

Again, as a policy issue, this is well intentioned, because all over the world, it is tax income that drives development. Of course, it is not as if Nigeria has not been having tax income, they have been taxing oil companies on royalties, they are all taxes, but we are talking about taxing people, taxing the citizens. It’s good, firstly because of what we talked about oil coming down. Second, it is even advisable that we don’t utilize oil above a particular price level. We should permanently save. So, where do you get the alternative money, locally?
Raising awareness about tax is okay, because the truth is that there is a lot of tax evasion in the country. People evade tax, especially those who are in private and self employed areas. Multinationals avoid tax; and it is legitimate to avoid tax if you can. But if you evade tax, it becomes a legal issue. Morally, both tax avoidance and tax evasion is not acceptable. So I think government should follow up on this on a different level. First is, let us as much as possible bring in those who are not paying tax into the tax net, and not to push those who are paying to pay more. Some of those who are paying may not be paying enough, but it is better to leave them until you have seen their businesses improve, until you have seen the economy improve, because if the economy is down, most performances are down. But there are people who have not been paying let’s look for them.
The other tax forgiveness that says even if you have not been paying, come and declare today; and we can forgive you the one you have not paid, so it is good, it is an incentive to draw people who have conscience to come and pay. I think that to sustain it is that government must first give incentives to those who are paying so that they pay more. There must be something those who are paying tax are gaining which those who are not paying on their own will even desire and want to join. That is the way to drive people to pay tax voluntarily with the issue of coercion. Third, I have always said that tax issue is something that the collection method should be simplified. You pay to local government; pay to state and federal government, there is multiplicity of people who collect tax. I recommended it when I was the chairman of the Nigeria Economic Summit Group that we should have one tax source.

How would you like to be remembered sir?

Answer: I am one of those who believe that every day I live, I live it as my last. So all I intend to do today, I try and ask God to help me to do them. Because, God can call anybody anyway. For me, my legacy is that this man came, understood why he was created by God and fulfilled God’s purpose for his creation. That is what I will like to be remembering for so that when people speak about me, from all I have done in my different opportunities, they will know that this guy had a mission and he fulfilled it on earth. My children will say so, my wife will say so, my community will say so, my professional association will say so, all the group that I belong to and the country will say so and humanity will say so. That I left the place better than I meet it. By the Grace of God, NERCA house there, the foundation stone was laid and commissioned during my tenure. I try to leave a legacy in terms of the mission. In 1978, five years after I joined NIMET, at Christmas when I was receiving the long term service award, my chairman could not believe I was only five years in the company he was saying I had stayed longer. He said it was like I had spent 15 years in the organization and he asked me to keep it up.