Many believe that in getting the economy on its feet, creating jobs for the teeming youths and economic diversification are critical. In this interview, the Minister of Trade, Industry and Investment, Dr. Okechukwu Enelamah, says creating special economic zones is one of the various measures being adopted by the present administration to promote industrialisation. He also spoke on the urgency to dismantle the roadblocks torpedoing the ease of doing business, among others. Ndubuisi Francis presents the excerpts:
How would you assess Nigeria’s economy after a year as a minister and what are the strategic roles your ministry is playing to diversify the economy vis-à-vis trade and investment?
Let me say that when I think about the Nigerian economy, I think in terms of what the Nigerian economy has been traditionally and what the reformed new economy that we want to create would be and what would be different. I think in the past what was good about the Nigerian economy was that we had an economy that had actually started the diversification to some degree, if you look at the GDP and the composition. When they did the rebasing, one of the things we found out was that the GDP was no longer what we thought it was. Services, for instance, had grown; people were going into non-traditional services and we found things like telecoms had grown. We found things like trade and other things had grown, manufacturing was about 10 per cent and agriculture was about 20 something per cent. Oil actually, in terms of GDP was about 10 per cent however when it comes to the revenues of government. We also found out that oil was still about 75 per cent or more then, even though that reform had started.
Secondly, we found out that the foreign exchange earnings of the government (over 90 per cent of it), was also from oil. So when we talk about the new economy that is diversified is that we clearly want to diversify our sources of revenue when it comes to foreign exchange earnings as well as more generally for the government. In order to do that, we need to do a number of things. One is that the sectors of the GDP that are significant
but don’t contribute revenue in monetary form need to be better monetised, which means we need to give them the resources they need to be more productive beyond subsistence level, like agriculture. We need to empower our people to do productive agriculture that is profitable so that they can pay their taxes, they can export and do the things that people do versus just producing hand to mouth to eat which is really part of GDP but frankly doesn’t impact the revenue in any form.
It also means the government needs to be more attentive to the people. What do I mean by that? We need to create a more formal economy not because we want to put more burdens on people but because we want to recognise them.
When we talk about formal economy, it’s almost as if they are not there; they are not registered anywhere whereas if you look at the Social Intervention Programme of the government, one of the things we ’ve been telling people is that we just want to know who you are. As a Nigerian you have a right to be known as a Nigerian say this is what I do, whether you are a trader, a market woman, an artisan—you have a right to be known so
as to make that registration non-burdensome; not a burden to the people but of benefit to them. I think you would found out the economy will formalise just like when people talk about formal economy they think in terms of the cost-all the road blocks, the
redtape and all the taxes they ask you to pay with no benefits, It’s really about a government of the people—what you are trying to do for the people.
That then brings me to the core of the programme, which is how do we diversify the economy from oil? In order to diversify the economy, we also need to make the other sectors–agriculture, agro-processes, agric business which is the agriculture value chain, industry and manufacturing, the petro chemicals, downstream that move from oil to all the things and even a
sector like auto industry because we consume a lot of cars. We might as well have a very developed industry as opposed to a nascent industry that we just import the cars use them and then sell the tokunbo at some point.
We need to do more than that because this market is large. The good news is that the people who bring these cars are prepared to do more with us because the market is large. If you look at Nigeria and ECOWAS, it is just that it’s capital-intensive to do it. Those things are the things we are working as a plan and the Ministry of Trade and Investment has a particularly important role to play because we view ourselves as a key enabler to those that are in industry, trade and investment.
Permit me to explain what I mean by being a key enabler. i think all those issues that people have with doing business, whether it takes too long, whether people are trying to give them a hard time, I think we have a particular responsibility as a ministry to make it easy for them to understand and make sure government is listening to them.
The good news is that this is what is shared by the entire government right from the president. That was why the president launched the Presidential Enabling Business Council. That’s why it is chaired by the Vice President.
In fact, that is the meeting I am going for now; the council is meeting today.
You will find out that all the other ministries are there and there is a willingness to serve. It doesn’t mean that the work is easy or that the attitude will be changed in a hurry. The work ought to start with the journalists who will communicate the ideas of the government and the people, the private sector— the stakeholders because it has to be a partnership Once the government says this is the position …that’s what happens in other countries.
And you find out like all the other key ministries that all the agencies sort of interface… There is a willingness for them to work together. It doesn’t mean that the work is easy, it doesn’t mean that the entrenched attitude will be achieved in a hurry but it means that the work ought to start.
And the people, the private sector stakeholders because it has to be a partnership. Once the government says this is the position, and somebody tells you something else, you say no, I have a right. I know that I should get this approval in a day, why are you telling me to come back next tomorrow? I think once you start that, you find that, you see change and that’s what happens in other countries and it will happen here.
The final thing I will say is that we are also working on the Nigerian Industrial Revolution Plan as a key programme of government that would help to diversify away from oil and most is around agriculture and agro processing. What we are doing in sugar, food and food processing, fruits and tomatoes and all those, what we are doing in textile and garment, cotton, textile and garment (CTG), auto. What is going on in housing that government is doing almost in an industrial scale.
There is so much going on and one of the things why meetings like this are very important is that we need to communicate better so that people understand better what is happening even if it takes time get the benefits to come through so that people understand what is going on which will yield results imminently.
Let’s talk about the roadshow you went about recently. What is the impact like?
I think what you find is that Nigeria is a country that people are genuinely interested in and I view that as an asset, a blessing. There is no country you go to, no matter how big or small (the president goes along)—even at the ministerial level, where they don’t give us the highest treatment they reserve for the most important countries in the world. When we went to Germany, the president met with the president, the Chancellor, and I had a business forum with the elite of the business community and eventually the president came and addressed them. And Germany is interested in working with Nigeria for several reasons. They are very import in auto, in parts, and even the way they built their economy– training people beyond academic degrees with emphasis on vocational training and they expressed interest to work with us.
I think that you find that there is a lot of benefits that will come from the Germany trip. They are also interested in investing in all the areas that we are looking at, including renewable power. And we have a very strong Nigeria business association network; trade association that is working with us very actively and we have met with them even after we came back here. Some of their ministers and parliamentarians came to meet with us.
Singapore is interesting because as you know, it is a small country that defied the odds and became a very successful, sophisticated first world country and it was under very good leadership by the former prime minister, Lee Kuan Yew, and the main lessons is that number one; they had a government that provided clear leadership and direction. They had a 30-year
roadmap and they achieved it.
Number two is that like they worked with the private sector and the international community, Singapore created a very strong signal, ‘please come an invest in their country.’ So, it’s a translocation, almost a place where people do business for the rest of the world but it’s a small country. The third thing and one that is very relevant to us today is integrity. They basically said no to corruption. They just said no we are not going to tolerate it. They used a few profile examples and people knew they were serious. If you go to Singapore now, people think they are more
honourable than others. It is not true, it is just that if you do the wrong thing, you get punished and people became rational about it. After a while, they started saying it is because of my goodness that I’m not doing wrong. But really, is it because of their goodness or because there is a price for doing wrong–the cost. Nigerians will get there too and we will be saying we don’t like to do the wrong thing because when we do, there are
consequences. And then, the final thing I would say about Singapore is that they are very interested in Nigeria as well and they signed an agreement with us for investment promotion and protection.
We just got Federal Executive Council (FEC) approval for an avoidance of double taxation agreement with them which we signed with the Ministry of Finance and they have a lot of global players that are based there that are doing business in Nigeria and want to do even more with us.
Many of those you know, like the indomie people, the Olam people,— there are quite a few of them. But the point I am making is that we have a lot in common and they are very interested in Nigeria, they want to help us. They were
one of the early players to create special economic zones and industrial parks and used them to industrialise. We are doing it now. They have said we are prepared to work with you to industrialise Nigeria using those special economic zones. They have already written us sine we came back and we went just two weeks ago. So they are very proactive as well. That is what you see. And of course, Turkey as you know, we have a lot of similarities with Turkey as well and I think there will be a lot of benefits coming from there.
Could you tell us how much investments have come in the last one year?
Yes, people are surprised about how big investment inflows are because they have come in large chunks. But let me tell you that we have gotten a total of well over $20 billion. You know why, because of the major infrastructure projects because the one we call an inflow is not just when the money physically just here but also the commitments that have come. So if you look at the infrastructure projects that we and doing, there is a twenty billion or more infrastructure project with the China Eximbank, it’s been signed and it’s now implemented around railways and related infrastructure. There is an agreement with General Electric which is about $2 billion they have committed in the last one year. There are the private sector investments that talk about Chellarams which sold a major part of their business to Kellogg’s of the United States. That deal is may be a $400 million deal.
There was a deal that was done by Chi- the fruit juice company with Coca-Cola which is also hundreds of millions of dollars.
There was also a deal done by BUA which sold something to one of the international players, and it bought a part of that group. Again, it is a sizable sum.
However, we want to increase the steady inflow of foreign direct investment across all levels because there are many more people waiting on the sidelines apart from the big people who are doing multi-year infrastructure projects. As you know, NIPC, has just appointed a new hand for the private sector. As a government, we want to partner with the private sector; government doesn’t have all the money it needs to develop the country.
Therefore, government is willing and committed to partnering with the private sector players and also development capital to develop the country by making sure the capital goes into the right places. I think you will find that in investment, things are picking up even in terms of statistics.
There is a significant uptick in investment even though some of it has to do with fixed income investment but it’s still capital that we need.
Another thing I want to say regarding investment is that the oil companies have reached an agreement that is now being finalised to bring in more money into the oil sector. You will hear more about it from next week. We are just going through the process. You know everybody has a stake in oil.
There was a meeting with the National Economic Council tecently and other stakeholders will be briefed. But it’s a very important programme to bring in billions of dollars into the country, they say you need oil to get out of oil and this will improve the oil sector significantly
Minister sir, talking about exports what are the bottlenecks and what are you doing about them?
We have said we want to diversify the economy in terms of foreign exchange earnings and also in terms of revenue and if you think about what that means, it means non-oil exports. To do it means we have to do certain things well. My view is that it goes in to the enabling environment and ease of doing business. The process of exporting from Nigeria is very difficult and not competitive and the Federal Executive Council has actually asked us (that is myself and the minister of finance) to come and address the council on practical steps to make it easier to export from Nigeria trading across our borders. We are working on it as we speak. The bottlenecks in terms of administrative, bureaucracy, red tape and all the approvals you have to get and all the inspections and all the waiting at the ports that need to be addressed. People that are serious about export make that a competitive advantage by doing it. Look at Kenya, for example.
The second thing we need to do is to give more incentives to those that are exporting so that they will prefer exporting particularly value added export. We have met with the exporters to look at Export Expansion Grant and we have told them that we will find a mechanism for making sure they get paid what they are owed. We clearly want to do it not in cash but in kind which was what was happening before. It’s just that we want to de-emphasise imports and emphasise tax because they have to pay tax to the country and say why don’t you use those taxes to offset or defray what we owe you so that there is a shaking of hands. They are looking at that. They have engaged us and we plan to launch that in 2017. We also need to pay the value chain by way of trade (as you know when you are exporting to other
countries), export has become very dynamic and sophisticated and technical.
You just don’t wake up one day and say that your goods will go to China or Europe or wherever you want, you have to actually enter into what they call strategic trade agreements with those countries that have quid pro quo in terms of win-win and then your people have to plunge into the value chain.
Let’s say you are supplying raw materials for somebody who is making clothes, you enter into an agreement with them about the quality they want and how much they want it; so you plan for it otherwise you find out you stay with the commodity and it’s very random and very cyclical. It’s a painful place to be because that’s the bottom of the chain, and it just goes up and down. But when you get into the value chain, you enter a contract and the guy says as you supply this quantity of semi-finished goods, this is the price I will pay you. It doesn’t matter what the world is doing. He has to pay that price and you will see us doing that
more and more. We have a very good trade team in the ministry that are driving that process for us. When it comes to ECOWAS and Africa, we are also re-engaging to make sure that we strengthen our regional and continental ties. There is something called Continental Free Trade Area Agreement which we are going to be working. The ministers are meeting in two weeks time; the whole idea is to make sure that this working understanding is ready to be considered by the presidents or the heads of state in the next AU meeting which will happen early in the new year.
The former Georgian prime minister was picked as part of Enabling Business Environment Secretariat. What informed the choice?
The choice was because Georgia was one of the first few countries that had done remarkably well in going from a difficult country to do business where they were ranking 100 and something out of 100 and something, which is the place we still are as a country. Georgia came in the top 10 and became number 8 and people actually did the reform so there was a reform of government in Georgia under this man who was the prime minister and he worked in the government for eight to twelve years. During that time, he achieved all that and he decided to say, you know that I understand how to do this now that I’m no longer in government. Why don’t I advise other governments? And he came to Nigeria and so we are entering an agreement with him now to act as some kind of consultant with his team.
He has a firm called Reformatics that just deals with government reforms and he is going to work with us and he is a very inspiring person.
During the last UN General Assembly, there was a sideline meeting on investment. You were in that meeting and you spoke very well on Nigeria’s conducive environment for investors. There were issues of not getting data and not knowing the right tracks for those who want to do business in Nigeria and you mentioned that the government was going to strengthen avenues for ease of doing business in Nigeria. How far has that gone?
That process of engagement is a full time effort and every country that is serious about attracting investment gives it a lot of attention. I’m sure you are aware we have an investment promotion agency and that is what we have in Nigeria Investment Promotion Council (NIPC). The leadership has
been strengthened and NIPC is reinvigorated and we are working on that. That is the general answer but more specifically is that what we do is that after each of these business fora and meetings, we then engage the individual players to do what we can. Most important thing we can do as a country is to make it easier to invest in the country and generally remove
the bottlnecks, which is why the enabling environment initiative I talked about earlier is a panacea. It’s an important intervention and it has to be the legacy of this government and if we do that, Nigerians will remember the President Buhari government as one that came and walked the talk because every government talks about making it easier for people to do business. It doesn’t mean it’s easy to do. It simply means you have to roll up your sleeves. We’ve not put the infrastructure in place, we’ve an enabling business environment secretariat, headed by a reformer, Dr. Jumoke Oduwole. We also have a Presidential Council on it that’s meeting today and I think soon, you’ll start to see the results. We need you (the media) to help us communicate those results; communicate the initiatives of the government to
the people so they’re encouraged and know that we’re a hardworking government, because if you don’t tell them, they ‘ll think we’re just sitting down, talking and doing nothing.
Could you tell us more about the concession loans from China?
Let’s start with China as a country and as a strategic ally. China has a deliberate policy now of partnering with Africa and has identified Nigeria as particularly important because of our strategic role in Africa.
Furthermore, before this government, China had offered to work with us on our key infrastructure projects. China is one country that’s not afraid to spend serious money in another country. That’s the state they’ve gotten to. They’ve the money and they want to put it to work. That’s why you’ll hear about China in rail, airport concession including remodelling, hydro power
projects and many more. These cost tens of billions of dollars. When it comes to business to business, a lot of our Nigerian businessmen are partnering with the Chinese. That’s why the President made a state visit to China and it was very successful because a number of agreements were signed. Those are now being implemented. On the government to government level, and it includes the China Eximbank loan. I think we’ve made a lot of progress. We’ve been to china on a number of times. On the business to business level again, it’s working. You know how it is, they’ll start from MoUs, substantive legal agreement, they’ll come, investment agreement, shareholders agreements, etc. What we’ve done is that whatever we can do to help that process we’ll do. Under our ministry, we’re working on special
economic zones. We have, as a government, been increasing our budgets, infrastructure and other things needed for the special economic zones because they’re for industrialisation and that’s one of our top priorities.
The China Exim bank, working with African Exim bank has come to us to say they can invest a billion dollars alongside us in those economic zones. We met with them last week again on it. So, there’s a lot of action and work going on. You’ll start to see the results as we go on.