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Only the growth of the real sector can address unemployment in Nigeria – Abia Chamber boss
Sir Emma Nwakpadolu is the President of Aba Chamber of Commerce, Industry, Mines & Agriculture (ACCIMA). He says the growth and development of any organization depends largely on the business activities within the nation. He has taken a critical look at the 2016 and 2017 respective Federal Government annual budgets and what they portend, saying that the consistent rise in the level of unemployment and the upward increase in the level of poverty calls for more attention to business development and funding of Small and Medium-scale Enterprises. In this interview with PETER OKORE, the chamber President reviews the performance of the National economy, within the first half of the year, and proffers a number of suggestions geared towards revamping the ailing Nigerian economy, using the SME’s. READ EXCERPTS:
Let’s start by taking our base from the performance of the 2016 Federal Budget. What was the impact of that budget?
The nation’s 2016 budget, tagged:“the Budget of Change”, was focused on setting Nigeria on a path of sustainable growth by fighting corruption, boosting national security, diversifying the economy and creating jobs. That was well targeted, considering the loss of opportunities for growth and sustainable development which Nigeria has been suffering from all these years, given the massive corruption, lack of commitment and the dominant role of the public sector in the economic life of Nigeria. It is an attempt to reverse this decline in the nation’s economy, that current government policy of private-sector-led growth for job and wealth creation which is anchored on business activities, is being pursued with vigor.
Now, relate those indicators to the 2017 Budget.
This 2017 budget, called:“the Budget of Recovery and Growth”, is focused on an economic recovery and growth strategy, which I can describe as: “bringing the economy out of recession and to a path of steady growth and prosperity”. However, there are many prospects and challenges inherent in business activities in Nigeria.
Can you give some of the inherent prospects?
Yes! Let us go it sector- by-sector.
a. Economic Development: The role of businesses in economic development is quite enormous. This is due to the fact that profits made by business operators flow as an increase into the national income and thereby increases the nation’s Gross Domestic Product (GDP). The contribution of Small and Medium-scale Enterprises(SME’s) in industrial sector to the Nigerian Gross Domestic growth (GDP), was valued at 37%, thereby making it the second largest contributor to the nation’s GDP after the oil sector –according to SMEDAN in 2009.
b. Creation of Employment Opportunities: Business activities in Nigeria produce and encourage job creations and employment opportunities for the citizenry. This in turn promote national development. It is important to know that our indigenous small businesses provide more employment than the multinationals. Some young entrepreneurs are so vast that they can sit in the comfort of their homes and make legitimate cash.
c. Conservation of Forex: Our foreign exchange can be conserved through business activities in Nigeria as importation of raw materials, machineries and payment of foreign experts are drastically reduced. The moment Nigerian government starts supporting young business operators and encourage locally produced goods, we will begin to experience change in various sector of the economy which will in turn conserve our foreign reserve.
d. Improved Standard of Living: Encouraging business activities in Nigeria will go a long way to improve the standard of living of Nigerians through innovation.
e. Reduction in Rural-Urban Migration: Promoting business activities in Nigeria will help to down-play Rural-Urban Drift Syndrome. The migration of people from rural areas to urban areas in search of white collar jobs which has resulted to high rate of crimes and congestion in cities like Aba, Onitsha, Lagos, Port Harcourt, etc, will reduce when governments encourage business activities.
What are, at present, the challenges of business men in this direction.
Again, let’s enumerate them accordingly:
a. Poor Funding and Difficulty in Securing Loans from financial institutions: One major problem of doing business in Nigeria is the issue of start-up capital. It is almost impossible to secure loans from financial institution here because they consider it as very risky, due to the level of uncertainty surrounding the economy of Nigeria. Experience has shown that our commercial banks frustrate aspiring business operators with some ridiculous and unattainable requirements in a bid to get loan from them. Some of these unrealistic demands include huge collateral, exorbitant interest rates, etc. With these discouraging demands from banks, a lot of brilliant business ideas have been washed-down the drains, due to financial constraints.
b. Poor Infrastructural Development: Lack of infrastructural facilities has been one of the major challenges of business activities in Nigeria, especially, the issue of epileptic power supply, bad roads, dilapidated markets, polluted environments and poor drainage/sewage systems. All these negatively impact on business activities in Nigeria.
c. Inconsistency in the Policies of Government: Another major challenge facing business activities in Nigeria is the incessant changes in Government policies. This can be attributed to constant changes of the country’s leadership. Some of the policies hardly last for more than 4 years,(constitutional provision for political parties), because there is no continuity in our governmental system.
d. Quick Returns Syndrome: The desire for quick returns is inimical in sustaining business activities in Nigeria. A lot of businesses are folding every now- and-then due to greed and the quick return syndrome among business owners.
e. Security Challenges: No investor will like to put his money in any unsecured environment. The issue of kidnapping, Fulani herdsmen, Boko Haram and armed robbery, all hinder various business activities from thriving in Nigeria.
Now, from your appraisal of the economy and look at the impact of the 2017 BUDGET to SME’s in Nigeria. Any hope for them?
Yes! Looking at the 2017 national budget proposal and how it affects small and medium enterprises, I can see hope in five clear-cut areas, namely:
a. Increase in the ease of doing businesses in Nigeria: This is practicable since the underlying philosophy of our economic recovery and growth-plan is optimizing the use of local content and empowering local businesses. The role of government in facilitating, enabling and supporting the economic activities of the Nigerian business activities should not be undermined.
The presidential enabling Business Council, chaired by the Vice President, Prof Yemi Osinbajo is already established by the President, Mohammadu Buhari. It has the mandate to make doing business in Nigeria easier and more attractive. Getting approvals for business and procurement will be simplified and made faster. If the Government can implement this to the letter, then it will be easier for businesses and entrepreneurs to be more successful. It will also reduce the number of steps it takes to start a business and equally reduce the bureaucracy that increases the time it takes for businesses to deliver products/services to their customers.
b. Agriculture driving the diversification agenda with manufacturing and other industries: This year’s budget reveals that the true drivers of our economic future will be the farmers, small and medium-sized manufacturers, agro allied businesses, dress makers, entertainers and technology start-ups. They are the engines of our imminent economic recovery and their needs reinforce the Economic Recovery and Growth Plan.
If we must diversify the Nigerian economy, the Federal Government must stick to its effort to expand the non-oil sector. This is good news to every business activity within the non-oil sector. When government makes it easier for businesses in these industries to start, grow and remain competitive, it will have a great impact on the economy currently; and more importantly, in the long run as Nigeria will increasingly grow and process our own food, manufacture what we need and refine our petroleum products. Made in Nigeria goods will be bought by Nigerians as well as foreigners as we promote the manufacturing industries in Aba, Nnewi, Onitsha, Ota, Lagos, Kano etc.
From tailoring, leather works, cement manufacturing and petrochemicals, the objectives should be to make Nigeria a new manufacturing hub.
c. Infrastructural improvement: The 2017 budget also focused on rapid development of our infrastructure, especially, rails, roads and power. With an allocation of N213.14billion as counterpart funding for the Lagos-Kano, Calabar-Lagos, Ajaokuta-Warri and Kaduna-Abuja railway projects, as well as numerous road networks, there will be improved reduction in the logistics cost that businesses used to bear as they move their products around – from vendors to customers.
d. Access to Capital: This year’s budget equally stated that a sum of N15 billion has been provided for the recapitalization of the Bank of Industry(BOI) and Bank of Agriculture(BOA),respectively. Inadition, the development banks of Nigeria, was given another sum of US$ 1.3 billion, focused exclusively on the SME’s. This number sounds so good for government to be held accountable at the end of the year. As mentioned earlier, one of the major bottlenecks for business is access to capital.
Once these institutions can properly utilize these funds to provide capital for SME’s, then we can move our nation from an unsustainable growth model –one that is largely dependent on oil earnings and import, to an economy that focuses on using local labour and local raw materials.
e. Human Capital Development: This will tackle the issue of hiring well trained manpower for our businesses. The government should prioritize investments in human capital development, especially, in education and health as well as wider social inclusion through job creation, public works and social investments.
For our country to encourage business activities, how can government and business operators collaborate to move our economy forward?:
They can do this on a number of ways, namely:
1. Increase funding of SME’s through BOI, BOA, etc. Loans should be provided with minimal interest rate.
2. Provide enabling environment for private sector-led investment for economic development.
3. Make policies that will be consistent and favour aspiring business operators.
4. Stabilize the exchange rate.
5. Modernize agriculture and make it more attractive.
6. I equally recommend that the business operators in Nigeria should be encouraged to concentrate in learning before earning, so as to acquire the relevant skills which will help them to identify business opportunities, take advantage of such opportunities, venture into the business and succeed.
7. Strong patent law should be provided by the government of the federation so that local entrepreneurs will be protected from foreign producers.
8. Government should encourage the production and consumption of Made-in-Nigeria products to encourage our local manufacturers.
9. Corruption, tribalism and religious bias should be strongly opposed.
10. There should be equity in the distribution of our common national wealth.
Sir, what is your dream for the business sector?
Business activities play major roles in rapid and sustained economic growth and development of any nation. When business activities are well encouraged, manpower and skills necessary for accelerated growth will be created; while unemployment and poverty are reduced to the barest levels. It is, therefore, strategic and wise for Nigeria to assign a significant and increasing role to SME’s development in their effort to revamp the economy.
For businesses to thrive in Nigeria, there is need for investor-friendly environment; encompassing stable macro-economic policies. Government needs to address urgently the dilapidated infrastructural facilities in the country, starting with the power sector, roads/railways, provide adequate security and give every citizen the sense of belonging.
The educational sector needs to be revamped with emphasis on Science and Technology. There is need to change the mind-set of young people to embrace self-employment; rather than waiting for non-existing government jobs.
Lastly, there is the need to ensure that those with innovative ideas are provided with financial support to translate such ideas into reality.
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