To make desired progress government must urgently cut the high cost of governance - Aiyela
Against the backdrop of the recently announced economic recession in Nigeria by the NigeWelbeck Electricity Distribution Limited, in this interview with ZEBULON AGOMUO, believes that some actions and inactions of government at all levels may have led the country into the sorry path. He deplores the excessive waste of fund that goes on in government in the name of servicing personnel cost (recurrent expenditure) as against capital expenditure. Excerpts:
The Nigerian Bureau of Statistics ( NBS) recently announced that Nigeria has entered into recession, twice in five years. What does this mean to the poor citizens of this country?
While it is difficult to predict exactly what will happen in a recession, there are certain aspects of a recession that are common we should expect and prepare for. I think for us Nigerians, the major indices to prepare for are a likely depreciation of our Naira sometime next year, increase in inflation and an increase in unemployment. A recession basically means that our collective production as a country is going down rather than going up; so, the government should use this as motivation to turn things around and back to growth by next quarter, by creating an enabling environment for businesses and investors.
The government has been on borrowing binge. As a businessman, what are the implications of excessive borrowing that was not channelled into investment; and what does the recession mean to you as a business person and investor?
I think the government at both the Federal and State levels needs to make some drastic changes very soon; otherwise, we may begin to default on some of the loans we have taken. We have just received from the Federal Government, the overview of 2020 budget implementation and while they earned a total revenue of N2.83 trillion, it has gone ahead to spend N7.09 trillion, meaning that in order to fund its budget deficit, the government has had to borrow more than it has earned. No business would be able to survive a situation where they were borrowing
more than what they earned year after year, they would go into liquidation!
When one scrutinises government’s spending for the period of January to September, 2020 in light of these borrowings, it seems the majority of it is being spent on personnel cost and debt servicing, being N2.43 trillion and N2.54 trillion, respectively. Funds released for capital expenditure during the same period was only N873.9 billion. This has to be addressed and turned around in order to increase government revenue and ensure they are able to service their loans.
The coronavirus has wreaked havoc on businesses in the current year, and the recession has worsened the situation, meaning that many Nigerians would have a bleak year end; how do you feel about the situation as a Nigerian and how do you think citizens can begin to get a fair deal from their leaders?
I think that firstly we all need to be aware of what is going on, so that we can ask for specific reliefs rather than just demanding for “good governance” which is quite vague. A good way to do this would be to form lobbying groups. For example, my company is in discussions with others in the Independent Power sector to form a group that can then go to government to highlight to them our issues and let them know how they can help us and others in our industry to perform better.
One of the problems we face is a lack of understanding from civil servants and politicians of the complex issues businesses in various sectors are grappling with, and may not know what to do to help. Again, it is difficult to get any government to listen to you and your issues; however, as a group or an association, it is more likely you will be heard.
Businesses have been going through terrible time occasioned by the Covid- 19 and then the # ENDSARS protest. Do you see a breather in the near future or what is your projection on the outlook for 2021?
I am an optimist and I want to believe that the government is working towards addressing the issues bedevilling us as a nation. That being said; I think the 2020 Finance Bill will address some issues and hopefully stimulate some growth as it reduces taxes for SMES which we hope will encourage growth and therefore, reduce unemployment. I know that the Federal Government has funds in place to help SMES cushion the negative effect COVID- 19 has had on their businesses as well as other funds available through CBN to fund expansion of businesses. Down here, the Lagos State Government has vocational schools where they offer to train young people in a craft that can generate them enough income to support their lives.
So, I think the outlook for 2021 may be bleak for now, however, I see this changing within the first quarter of next year.
If you were one of the handlers of the nation’s economy; I mean, by way of making economic policies and all that; what would you be looking at or what would you be telling your team by now?
Number one has to be a reduction in recurrent expenditure, most especially personnel cost. We simply cannot continue to allocate 70percent of our spending on personnel costs and debt servicing. The cost of governance must be slashed, we simply cannot continue in a situation whereby personnel costs are 85percent of our total earnings! There are other areas of waste that can be removed, for example the Nigerian National Petroleum Corporation (NNPC) recently announced that from January to August this year, it spent N81billion on its refineries, in spite of not producing even 1 litre of fuel. That money could have been used to train 810,000 young people in a craft or trade that would see them lifted out of poverty. So, government needs to reallocate some of their expenditure to areas where they will get better results.
For the states, they should be looking for ways to partner with private investors/ businesses. Every state in Nigeria has an abundance of land in their possession that is not earning them anything. By concessioning their land and other assets, states can attract investment from local and foreign investors. An example of this is the Imota Rice Mill, built on land Lagos State concessioned to investors. So, rather than the land lying fallow, there is now a rice mill that is helping to feed the nation while employing young Lagosians.