Osunkeye: CAMA 2020 Reduces Tax Burden on SMEs

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Chief Olusegun Osunkeye is the Chairman of the Board of Directors of Omnibus Business Solutions Limited and Pilot Securities. He is also a former Chairman of Nestle Nigeria Plc, Glaxo Smithkline Consumer Nigeria Plc and Lafarge Africa Plc.

In recognition of his significant contributions through the private sector, to the industrial, commercial and agricultural development of the country, he has been conferred with several awards, including the National Honors Awards thrice. Osunkeye, who turns 80 today, in this interview speaks on a wide range of issues. Peter Uzoho brings the excerpts:

One of the focus of the government is to address the ease of doing business in Nigeria. To what extent is the objective being achieved? What are the gaps and the way forward?

We are a high cost country, by that, I mean the cost of producing an item or providing a service is relatively high compared to other countries in the West African region or Africa and beyond. Why this so, one is might ask. The reasons are many, starting with infrastructure, unstable electricity, and poor road network, inefficiencies and bureaucracy at the ports. However, the government has been taking steps to reduce the cost of doing business. For example, the recent Companies and Allied Matters Act 2020, which received the President’s assent on 7th August 2020, is a welcome development. It will reduce the cost for start-up companies, which are small enterprises. Those engaging in start-ups are our youths, young graduates and so, it should ease unemployment. The 2020

CAMA, along with the recent revisions of the Finance Act will also reduce the tax burden on small businesses and encourage the informal sector, which is huge in Nigeria. It will be beneficial for the country and help national planning. But more needs to be done in operational terms. By that, I mean the provision of stable electricity, portable water, and of course fixing of roads. It is daunting that most businesses have to own and maintain generators and boreholes to provide water, and in some cases provide access roads. Providing all these before producing a single unit of item, drive up the cost of production and renders us uncompetitive as a country. Whilst these infrastructure deficits are being fixed, it is very important to pay attention to the efficiency of the Naira spent, and the quality of the work done.

You are known for adherence to the principles of corporate governance. Is corporate governance today being practiced in its proper form?

Nigeria is a member of the committee of nations. The quest for excellence in corporate governance is a challenge that is being taken seriously in many countries around the world, including our country. Nigeria is a player in the global economy and therefore must endeavour to apply best practices and standards. Sound corporate governance helps assure business partner in investment decisions.

Nigeria has a good Code of Corporate Governance in place and the latest version which was painstakingly put together took effect in January 2018. It applies for now to the private sector only, but it is hoped that a Code of Governance for the public sector will come sooner rather than later. In this regard, the President has signed into law the new Companies and Allied Matters Act 2020 (CAMA 2020) on 7th August 2020.

It is an important Act which has brought us more or less up-to-date in the administration of corporate law. It has many innovative provisions not contained in the previous CAMA 2004. For instance, virtual meetings, in popular parlance, zooms, are now recognised. The same applies to electronic copies of documents and electronic signatures, thus bringing our corporate law into the digital age. The society for Corporate Governance Nigeria has made comments and commended many the innovative sections in the CAMA 2020.

With the controversy surrounding some aspects of CAMA 2020, which areas would you advise the federal government to revisit?

In the area of corporate governance, I would want that we give further thought. CAMA 2020 has lifted the threshold for describing small companies from a turnover of N2 million to N120 million and net asset value of N1 million to N60 million. The benefits accruing to SMEs will thus be available to far greater number of businesses and enterprises.

However, in the area of corporate governance, I do not see the overall benefits. CAMA 2020 does not require small companies to hold annual general meetings or appoint auditors or company secretary. I do not view this as positive. No investor or potential partner will rely on an account that is not audited.

The Federal or State Internal Revenue Service requires audited account to assess tax of a company. Banks and other financial institutions need to have reliable basis such as an audited accounts inter alia in considering credit etc. Under CAMA 2020, an SME does not have to hold annual general meeting which is an event set aside to review the company’s performance in the previous period, consider how the future environment is likely to be and take appropriate corporate action. CAMA 2020 has many clauses to help the cost of doing business in Nigeria. We would want to see corporate governance tenets enhanced even for SMEs so that businesses are run profitably and by extension, payment of income tax to government coffers.

Some analysts have posited that implementation of national orientation and ethics in Nigeria should be reviewed for enhanced effectiveness. What is your take?

When those of us in my age bracket look back to our youthful age and what we were taught to imbibe as we were growing up two or three generations ago, compared to what we are seeing now, we shudder and marvel. Dishonesty, cheating, violence, wickedness, waste, lack of career plan and lack of consideration for the next fellow, are all we see around us. It has not always been so from the beginning. As young ones, we were taught the virtues of honesty, hard work. I remember being drummed into our ears that hard work never kills, it is laziness/indolence that kills. It was an era honour system. For instance, if you were going on the road and you see the layers of yams or maize or oranges laid on the side of the road for sale, you pick the layer you want and drop the appropriate sum. The product may worth pennies, half-pennies and farthings as these are the types of denominations in those days.

The farmer picks the proceeds of sale on his way back from the farm in the evening. It was therefore no surprise to me when I later sojourned in England, Switzerland and Malaysia where there is a similar transaction model. I would go round the corner, pick my newspaper, drop the money and walk away. It evokes memories of what I was used to and learnt in Nigeria. Back then, were taught civics in secondary schools, in my case, Kings College, Lagos, which deals with how to behave and how to be a responsible citizen in your community. Essentially, it is an aspect of ethics being taught to us at an early age. Actually, civics or by extension ethics, in a broad sense should start from home, pre-school, with stories. In the 1940’s, we were educated with tales by the moonlight such as that of the crafty tortoises, foxes, snails etc. as the story stories have moral lessons. Our parents or grandparents who tell us the tales want us to imbibe or conversely not to imbibe the attitude of the central character.

Now most these values and honour system seem to have disappeared. I believe this may be the need for National Orientation Agency. It is strategic to character development for young ones. For enhanced efficiency and effectiveness, the Agency should be re-vamped. This will make its presence felt.

The agency’s activities should be felt at the grassroots. The activities must cut across all socio-economic cadres. The time has come for the agency to walk the talk and set example of virtuous behavior which will permeate every layer of the society and eventually become a way of life and fabric of our community as a people. This will ultimately become our national image and perception in the comity of nations. Other nations will treat us with courtesy, dignity and respect which we deserve and should expect.

The cost of governance in Nigeria has been frequently criticised as extremely high. What are the cost centers that government should look into?

It is true. Many have complained that the cost of governance is extremely high in Nigeria, and many have clamoured for a drastic reduction and made suggestions. To my mind, we should look at the three arms of government in the first instance. The legislative arm is bloated as to number of legislators and the cost – salaries, constituency and other various allowances, are humongous. Even the several oversight committees are duplicated in two Houses, then the various perks and other benefits. All these can be drastically reduced if we have a single chamber, say, the House of Representatives only, and do away entirely with the Senate. Many countries have adopted this model. Then we should take a look at the Executive arm. Let us slim the various ministries and agencies, eliminate the recurring issue of ghost workers, and take advantage of digitalisation. All payments and transfers must pass through the banking system and since every person must have a Bank Verification Number (BVN), where the BVN appears more than once, alarm is raised, and no payment. Constitutional amendment may be required to prune down the number of ministries and ministers, as the present situation requires that every state must be represented in the appointment of ministers. The judiciary should be strengthened to operate optimally. It should be financially independent. The numbers of judges at various levels should be increased, and digitalisation entrenched with training and re-training. The pruning cost should also be replicated at the state level.

With your corporate background in agriculture, can you share your experience on how to enhance workers’ productivity?

Let me draw on my experience in my Nestle years. I was put in charge of overseeing our 1,000-hectare farm situated in Kaduna State. We planted maize, sorghum and soya beans on about 900 hectares. A large commercial farm one might say. I learnt a few lessons, such as land clearing which took a long time over a year in our own case and required deploying heavy equipment. It is capital intensive, so funding is critical. To get this huge farm which is 16km left, off Kaduna –Abuja Expressway, we had to create or widen roads, and build bridges to cross streams. This is to enable us transport workers and equipment from Kaduna town to and from the farm and later evacuate harvested crops in 20-ton trailers on a continuous shuttling basis. To recruit and get enough farm hands who were required to assemble at a pickup point was a big challenge. Then we faced the challenge of productivity. We found that there was no work ethic to talk about. After collecting their wages, many workers simply did not show up for work anymore. We gathered from their colleagues that the work was tedious, and that they do not see why they should work that much to get only small money. This takes me to advise that the employers of youth should work on their mindset and work ethic, even as they have to be trained and put through on mechanised farming, not just hoe and cutlass. One more point, we found that the workers’ productivity was very low, given that they had to do physical work in the sun. So, we decided to give them at least one good meal a day, for which we killed a cow every day, and we provided good shelter against the harsh weather. The result vastly improved productivity. The workers were prepared to work longer hours which we needed, especially during harvest season. I suppose what goes for farming personnel-wise also applies to road construction, and similar physical exertion activities.

Long term commitment, provision of funds, teaching and training of the workers and their welfare, organisation of manpower and materials are pre-requisite for successful outcomes.

What are your guiding principles of life?

Have a mentor, be a mentor. I strongly believe that it is more blessed to give than to receive. There is joy in giving. This applies as well to giving of your time and talent to serving your church, community or other spheres of activities. You are blessed in order to be a channel of blessing. You are blessed to serve. There is joy in serving. In human relations, William Shakespeare said and I quote, “neither a borrower nor a lender be. “ It means do not lend to a friend and do not borrow money from a friend. If you do so, you may lose both your money and your friend. In business and corporate relations however, it is a different story, borrow to the hilt provided you know, you can, and will pay back. The banks are there to lend to grow your business. Once the banks can trust you on the strength of your transparency, honesty and integrity, they would be willing to lend to you. I have held American Express card since 1975, and I have kept firmly to the terms and conditions of use of the card. I was in my flat in London around 1990, when a letter arrived through the post from American Express, inviting me to take an unsolicited loan of £25,000, and do whatever I like with it, repayable instalmentally over five years at a reasonable interest rate. I was surprised and pondered over what to do with this unsolicited loan.

Around the same time, my bank, Barclays Bank, was canvassing for savings from their customers, offering interest rates which were well above the borrowing rate I would pay on borrowing. I therefore accepted the offer from American Express and put the entire loan in savings with Barclays Bank, thus creating a win-win situation for the three parties involved. I gained from the interest rate differentials.

Your faith as a Christian must have also shaped your guiding principles?

I always pray for the fruit of the spirit; which is love, joy, peace, patience, kindness, goodness, faithfulness, gentleness and self-control to guide and rule my life. As you dress, so you will be addressed. First impressions matter and more than likely, it reflects who you are; do unto others as you would they do unto you; politeness, courtesy, “thank you” “please”, “I am sorry” these little words matter.
Have an attitude of gratitude to enhance your altitude in the journey of life.