President of the Institute of Chartered Accountants of Nigeria (ICAN), Deacon Titus Soetan, recently hosted the media to a state of the economy discourse, where he fielded questions from journalists. Olaseni Durojaiye brings excerpts from the interactive session
What are your views on the current inflationary trend in the economy?
Inflation as we know has moved to 18.3 per cent, GDP is still sliding down and going to the south, I pray it will go north. Now, how do we get out of recession? That inflation is as high as that is a bad omen; we’re all feeling it, nobody is exempted; our desire is that things will come back to normalcy where we will have single-digit inflation because anything higher than that and the nation will be on fire.
But we know that we got to this situation through a process and my thinking is that only a process could take us out. I don’t think there is a magic wand that will, in one day, transport us to a situation of opulence; of course we can get out of this if we get ourselves together and pursue appropriate economic policies and replicate this at all levels; like government’s plan to reflate the economy and government’s intention to borrow money.
What are your views on the Federal Government’s plan to borrow?
When we hear of borrowing money for example, we’re scared because money borrowed in the past have not been used very well so I sympathise with Nigerians; if you want to borrow money and you’ll pay back with interest how are you sure that the money will be used judiciously.
There is nothing wrong with borrowing money but government must make sure that the money is judiciously spent. We must make sure that the money is spent on infrastructure; we must make sure that the money is spent on things that will grow our economy and, it does not end in private pockets because if it ends up in private pockets we’re going to remain in the same level year in, year out.
How soon do you see the country getting out of the current recession?
We will come out of recession but it will take a little bit of more time if we remain focused and the citizenry support the government. I like to add that we should develop tourism and shun frivolities that we spend our hard-earned dollars on; we must acknowledge that we are passing through a difficult time.
I believe with the policies that the government is putting in place and the support of everybody, we will get out of recession in no time. I read in the papers that a certain agency projected that Nigeria is going to grow by about 2.7 per cent next year, meaning that people are now seeing that the recession will end early next year. Let us hope and have faith that the government will continue to do things that will make the citizens to continue to have faith in the government because that is very important but government action will decide if citizen will have faith in them or not.
What are your views on ease of doing business in Nigeria and how it can be improved upon?
As a professional institute, we’re not pleased that when the report on ease of doing business is released Nigeria is always at the bottom side, it is a shame and I believe much lies with the government to make sure that our policies are simplified and then people obey the rules while those that are expected to enforce policies do so faithfully and don’t cut corners.
The challenge is not that the policies are not there, it is the implementation that has not been good enough. Time that it takes to register a company is on the decline, in other markets it takes a week to register a company. How long does it take to do in our country? These are some of the issues and I think government should continue to review the issues that people are talking about by making them friendly so that people from outside of the country can then come in and invest in our country because if they know that it is difficult to do business in our country they will not come to do business here; but if they know that policies here are friendly and implementable they will come. So the environment is important and government has a huge role to play to make sure that the environment is friendly.
Conferences, summit and all manners of talk shop are often convened and recommendations are made, but the recommendations often end up gathering dust at the table of government functionaries, how do we avoid that?
I think you’re right but we shouldn’t stop talking, if we stop, that means we’ve given up. However, I believe not all the recommendations end up gathering dust, may be some are implemented while some others are still being looked at; but it is important that government get the right advice and it is our responsibility to continue to give the right advice not necessarily by constituting ourselves into trade organisations or labour bodies, no; but to present our views on the way we feel the country should run because we have no other country; if it is good it will be good for us all and if the reverse is the case, we will suffer it together.
Some people alleged a disconnect between government and the organised private sector and called for a quarterly meeting. Do you support this?
We will welcome a quarterly engagement process with professional organisations where government can brief the associations on its activities and to set benchmark for their achievement, so that government can communicate its achievements, like how many new businesses have started? How many foreign investments have come into the country?; We will welcome a situation where government will create a forum where it will come to periodically to communicate its stewardship to the various professional bodies in the country. That will be a better approach to things than what is happening now where government appeared to be on one side and the citizens on the other and no one seem to know what is happening in government. So I believe if government convenes quarterly meetings with stakeholders in the economy; we can get some results out of such sessions.
In your view what is it like doing business in Nigeria?
That is very easy to answer. All over the world, it is not easy to do business. There is a theory that 95 per cent of businesses die during the first five years, but our case is even worse. What is the level of our infrastructure? So you find out that some members of the organised private sectors that you talked about may prefer to shift base to other countries where there is constant power, where communication is better and you generally have a friendlier business environment. But here, there’s no electricity, interest rate is high; no business thrives in such an environment.
My advice to government is to invest more in those things, particularly infrastructure. We all know how much it takes to generate power to run businesses, even offices. You can imagine that we’re still talking of 5,000 megawatts when the country needs about 30, 000 megawatts. These are some of our problems and this is why the organised private sector is not really thriving; and if any country wants to make progress it is the private sector that must drive that growth process. It is the private sector that can get people out of the streets into paid employment; how many people can government employ? The number is very limited.
Economies develop when the private sector is thriving, but when the environment is not conducive you find out that businesses don’t thrive as it should; again, the government has a lot of role to play to make this happen.
When do you think Nigeria can get out of the current recession, in specific timeline?
I would have preferred yesterday, not next year. But people can project seeing some things that are going on. I believe we should not lose hope because we can’t be in recession for the rest of our lives, we got here, it’s not a bus stop, it is a corner and we will move ahead but how quickly we move ahead and out of it, depends on a number of factors.
We talked about government spending, and government said it wants to borrow money, to do what? I believe to spend on infrastructure, which will improve employment generation and open up other areas of opportunity for people to thrive; these are strategies that take nations out of recession.
So people can project, but no one can say emphatically that the economy will come out of recession in the first quarter. We should have hope that after putting all the strategies together may be early next year or quarter one of next year we will get out of recession. It is in the interest of every one that we get out of it fast.
What is your view on government’s plan for another foreign loan?
If you cast your mind back to the period of, may be the previous two governments, there was the excess crude account and money was being put into it; at a time I think the figure reached more than $20 billion and, what is happening now was what happened then, the political class said the federal government had no right to save for them and that every money that was going into the federation account should me shared according to the format, and that is what the law says. From over $20 billion to under $2 billion as we talk now.
If we had pursued the agenda to save up and we’d have saved up to about $100 billion, so by the time the price of crude oil crashed, it will not affect us as much as it is affecting us now; that is how we have found ourselves in this situation. So whether as a nation or as individual, if we don’t save for the rainy day we are just deceiving ourselves and that is the issue. I will want to plead with our political leaders not to always think of today alone but to think of tomorrow as well.
Nations that save don’t get into problems easily because they have fallback positions, it is because we don’t have fallback position that we have to go and borrow money at exorbitant rates and we have no choice, really. If you don’t save, you will borrow in times of trouble and anybody that wants to borrow, it has to be at the terms of the lender, which is not good for us. So I think it is a good thing and I will recommend it.