ROBERT ODIACHI is the chairman at SIAO, an indigenous audit, taxation and accounting firm, with over 21 years of professional experience in financial advisory services, merchandising, construction and manufacturing. He was a member, presidential committee on revenue generation from 2000 to 2003 and presently the chairman of finance, insurance and legal services sector of the local content consultative forum. In this interview , he shares his views on the new government, the task ahead as well as building a viable economy.
WHAT ARE YOUR SUGGESTIONS ON HOW BUHARI CAN BUILD A NEW AND VIABLE ECONOMY?
It is very simple; we have seen the fuel scarcity issues, the power holdings and electricity distribution, people behaving the way they ought not to, the government should first of all restore order. Ensuring rule of law is followed, reducing impunity and rewarding performing people, sanctioning people who are not performing and restoring the value system in the economy and the populace at large such that people have confidence that if they behave in this manner, the outcome is certain. If we can restore order, instituting rule of law and punishing offenders, then everyone will sit up, it is discipline that is required.
Pay taxes on time as and when due, people earn their salaries as and when due because they have worked and be seen to have worked; there should be value for money in everything we do. Contracts should be awarded accordingly such that there is no impunity or abuse of the process, that is what this government was appointed to do; we know President Muhammadu Buhari by reputation, we know how hostile he is, we know he wouldn’t punish people unjustly, we know he will not stand to see the system abused, that is why people voted for him, because all of the other things will be added, if there is order.
Do you support that government should assist states with unpaid salaries?
Those governments that cannot pay salaries and are asking for help must show that they require help and they cannot meet up to their obligations and so they should go and meet the federal government, present their case and show how they aim to pay back by ensuring that they can cut down on their wastages and they can make more money through the increase of their IGR to pay back. It has to be a loan, it is not a bail out; just like going to get a loan from the bank, there are conditions and they must be met. You cannot be flying about in a private jet and say you cannot pay salaries.
What are the economic implications of the CBN devaluation of the naira?
It is a two way thing; there are objectives for devaluing the naira. There are times when devaluing the naira is a good tool to drive up production because once you devalue, essentially your production is cheap, export is expected to rise and of course you must have something to export. If you devalue your currency and you don’t have production, then you must query what that objective would be because inflation will go up and if you don’t have anything to export, the economy will contract. Sometimes, it is good to devalue to encourage export and reduce importation because it becomes more expensive to import when the currency is devalued.
If we devalue our currency right now, we may be limiting import and pushing out exports, if we don’t, we just have to pay more for our imports, and our earning will certainly drop. I don’t think we should say whether it is good or not, our production capacity is low and I don’t know what we have to export. Right now, people are looking at the foreign exchange market and people think it should be devalued, maybe in the short term it will help but in the long term it can’t except we have a lot of exports to increase our earns.
What are the impacts of Nigeria’s overdependence on oil as our main source of revenue?
Over dependence on oil has made it that all the other sectors of the economy are not growing; we need to diversify this economy. You can look around you, the distraction in the economy can be seen clearly, there is so much rent in the oil industry and it translates to the profits, margins of companies the oil and gas business are making, so everybody is moving towards that direction and abandoning the traditional business, it is difficult to farm, and do any other productive activity when there is free money. What we have now can be very risky or suicidal, because the fluctuations in the oil industry is cyclical, a year ago we were talking about 140 dollars per barrel today we are talking about 40-60 dollars but the issue is that we should learn. The money made from oil should be put into some productive activity such that the fluctuations in the oil can be cushioned, but right now the over dependency leaves the economy susceptible to all kinds of swings and it is so difficult to rely on any entity that has a middle product, if anything happens to that entity, we start going into a panic mood.
It has made Nigeria a poorer country from what we were since the 60s; it leads to unbridled consumption because it’s like a health condition which you can’t manage, it is better you have an economy which is just growing by small bits, than you have one that is growing by eight percent just because of oil. Now we are just four percent, the growth and projections are being adjusted downwards because of oil, needless to say, it is so clear what happens to an economy that is dependent on oil products particularly such that we don’t have control of its demand or supply. That industry is such that by now we should have learned our lessons; we had it in 1982, we had it in the 90s, it happened in 2007/08 and so it is clear that there is danger, we should be a more settled economy. I see this like a windfall and it should be ploughed into some projective activity. It is not a curse but we have turned ours into one because we have just consumed it and done nothing. Few years back, the federal government was borrowing treasury bills at 16 percent, that should have sent a signal especially when those bills did not go into infrastructure or productive activities, they were using that to pay salaries and recurrent expenditure, and so we had enough warning. Today, nobody wants to buy any bond because we are not sure they will be paid; we should look at it and see that cash ridden economy is not the best.
With Nigeria rated as the largest economy in Africa, which does not reflect on the living standards of an average Nigerian, why is it so?
When you stop leakages, then you start to amass resources into productive areas. The government should identify areas of leakages else there will not be enough to do any developmental activity and this means fixing things that are broken. If people have electricity, the vulcanizer on the street is independent, he does not need a handout, same with the sewing mistress, or bakery and so if you can guarantee an environment because you have the resources, the economy will take up on its own, it is when they are despondent that they wonder and throw their arms up; all people want is an opportunity to live a dignified existence.
The taxi driver does not want to start queuing looking for fuel or spend one hour for a 20 naira route just because the road is bad or there is traffic and his car is breaking down always because of the potholes, the economy of Lagos grew in the past couple of years because the embedded power allowed people to work extra hours, the cleaning of certain roads and security helped people stay in their offices longer. If we created farm settlements or industrial parks and provided small inputs, you will be surprised what those small things could do. Government should ensure that we stop the leakages and provide an environment for production to take place.
The government should also go into housing using indigenous contractors and not those companies with heavy machinery; we should use the poor people to build houses for themselves. Housing construction is the greatest employer of people. If we can have virgin settlements in bungalows, the government devotes say five billion naira to build houses per state every year, which amounts to about 200 billion naira, unemployment would have been reduced. You will need to employ at least 30 people to work in each bungalow including a painter, digger, electrician, welder and carpenter. And what happens after those houses are built, market women follow them, hospitals, schools, shops follow, these are the things communities need to strive, it is not rocket science and gradually it goes like that for all the 36 states in the federation. If the houses go for five million naira, people do not have to pay all the money at a go. As far as they have employment, the money will be deducted gradually from their salaries, these things are clear. Where will the federal government get these money from to build these houses, we are looking at less than 300 billion per year; if we block all the leakages in the system then money comes out, this is not an expenditure, it is a revolving fund; the money is always retrieved. They can do a pilot case and see how it works and move on.