Oyerinde: Innovation Will Take Centre Stage in 2024
The Director General of Nigeria Employers’ Consultative Association (NECA), Mr. Adewale-Smatt Oyerinde, who spoke with selects journalists postulated that 2024 is a year innovation will take the centre stage as businesses adjust and embrace backward integ
What is your view about 2023 and expectations for 2024?
We thank God that 2023 has come and gone. It was a year with many lesson points. Some dashed hopes and some “renewed hopes” as the new administration would say. Generally, 2023 started with the election campaigns and election of new administration, which immediately removed fuel subsidy and floated the Naira exchange rate. But were those policies right? Only time will tell. Were they timely? Yes, we believe that they were timely because we were really in the dish as a nation. And we commend the administration for taking those bold steps. The reality we have seen now showed that the past government was defending the Naira with over N150 billion every month that were borrowed to sustain the Naira.
The step to float the Naira and let it find its true value is a good one that will help the economy. The removal of the fuel subsidy was also a bold move taken by this administration and we hope that the gains of fuel removal will start showing from 2024. The monetary and policy rates seem to be going up which are also reactions to the many reforms that the government is coming up with and we hope that these reforms will start bearing fruits probably in the second or third quarters of 2024.
For businesses, it was a serious time to adjust to a difficult reality as cost of forex and inputs were going up. So, 2023 was a difficult year for many businesses and those that could not survive it, left Nigeria because the environment is no longer conducive.
But we hope that 2024 will be a better year as everybody continues to adjust to the reality that Nigeria is not a rich a country and begin to imbibe fiscal discipline so that we can all enjoy the prosperity and inclusive growth that we all anticipate. So, 2023 was a year of mixed bags of positives and negatives and we hope that we learn from the negatives and maximise the positives to change the trajectory of our growth in 2024.
What were the major lessons employers learnt in 2023 that would be taken to 2024?
One of the things employers have learnt is the need for us to be innovative. Therefore, innovation will take the centre stage in 2024 within the context of how businesses will generate their own forex and reduce their exposures to the fluctuations in the forex market? And one of those ways is to deeply explore the concept of backward integration. We have many of our members who have started local sourcing raw materials for inputs that were previously imported from abroad. Some of them have started to develop raw materials locally and export them to generate forex. That is one of the key lessons that employers have learnt. Another key lesson is the need to contain cost. As production cost continues to escalate, it has become imperative to start asking where we cut costs. Or where do we minimise waste so that the business will be sustainable and competitive. These are the critical lessons that employers have learnt in 2023.
How do you situate the Nigeria economy and make projections into 2024?
Economists categorise economies as developed, developing and underdeveloped. We will situate Nigeria as a developing economy. And a lot of things we are seeing in Nigeria like government not getting its priorities right as we have seen in the past administration are features of a developing economy. From expert analysis of 2024 budget, we hope that the current administration have learnt some lessons within the context of fiscal discipline and the need to set its priorities right in line with its development plan. The budget is a developmental document that should speak to the government’s seven point agenda. The government mentioned employment, infrastructure, food security, security, etc., the expectation is that a large amount of the budget should be speaking to these areas the government has marked out as its priorities. But for many experts, this current budget is not speaking directly to these priorities and we have escalated this concern to the government to take a critical look at.
What measures will you suggest to the federal government to ensure that the funds it promised to SMEs and big manufacturers are accessible?
We are canvasing for three definitive things. One is transparency. Let the parameters for selecting the 10 firms that will benefit from the fund be made known. Two, let the process of the selection of those that will benefit from the fund be transparent also. Once these are done and the funds are disbursed, the government has to definitively address the issues of legislative and regulatory environment. Three critical challenges we faced during the past administration when the central bank came up with many interventions were that the criteria for selection was not transparent; those that collected the loans were hardly known and the legislative and regulatory environment that those businesses will operate were not hospitable.
You cannot give someone money to do business when the contradictions in the environment will make those businesses not to be sustainable. It is setting them them up to fail and invariably built up a large pool of nonperforming loans. These are the issues government has to look at so that whoever that collects the loan will operate in an environment that will enable him to grow and pay back the loan.
What are your thoughts on how to arrive at a new minimum wage that will be acceptable as the negotiation will soon commence?
NECA as an organisation representing the organised private sector is committed to the national minimum wage. And being a strong constituent of the International Labour Organisation (ILO) we affirm that a wage commensurate to the realities of the current situations in the country should be negotiated. We affirm our commitment to the negation, which we think is timely. We think that the N30,000 minimum wage is no more realistic because inflation has eroded its purchasing power.
For employers, arriving at a minimum wage that is reasonable is a case of enlightened self-interest because a manufacturer or business man can only sell as much as the consumer can buy. So the more disposable income an average worker has, the more his capacity and ability to buy, and more the ability of businesses to sell their products. It is an enlightened self-interest for us to support a minimum wage that is realistic. But we cannot also lose sight that within the context of negotiation there are other variables beyond inflation rate. You will also look at the ability of businesses to pay, the economic situation and productivity as it is. When the conversation starts we will approach it with an open mind to negotiate openly to support workers as much as possible and practicable, so that we can arrive at a minimum wage that can actually take workers home. But I will also mention that there have been conversations around the concept of living wage. While living wage is desirable, the reality globally is that there is no frame work at arriving at a living wage now.
The conversation is going on at the ILO and the International Organisation of Employers and we are supporting and championing the conversation for a living wage. But there must be a framework. We have Convention 131 on the setting of national minimum wage but we do not have any framework for a living wage. This makes it difficult to talk on a living wage. But for a national minimum wage we have a parameter that is already established and has been used in setting the minimum wage at N18,000, which also helped us to arrive at N30,000 and we believe strongly that the same parameter will be used to help us arrive at the next national minimum wage that will be acceptable to all stakeholders.
Nigerians are really suffering and what do you think will be done to reduce it?
Previous successive administrations will take the blame for where we find ourselves now. If we had removed fuel subsidy 10 years ago we would not be where we are currently. If successive governments had addressed the issue of our refineries long ago, we would not have been where we are presently. Also, all of us directly or indirectly are co-conspirators in getting this nation to its knees. We have either supported the non-removal of fuel subsidies or were unscrupulously benefitting from the subsidy regime. But these are our expectations for 2024. The Port Harcourt refinery has partially come on stream. It is expected that the Dangote Refinery will also come on stream.
We have also heard that one or two refineries are also coming up. The expectation is that there should be slight drop in the price of petrol. The argument that crude oil will be sold to local refineries at international prices does not hold water. Otherwise, what is the benefit of the natural resources that God has deposited in our country? We are paying subsidies because we were importing PMS. We are also looking at 2024 where there will be more stability in the fiscal and monetary policies’ space, when government will have more foreign exchange revenue as it addresses the issue of oil theft and sell more crude oil to earn more FX. As Port Harcourt and Dangote refineries begins to produce our propensity to import petrol will also reduce, which will reduce the pressure in the forex market; which might also affect the value of Naira in a positive sense. So, we expect stability in the fiscal and monetary space.
Thirdly, we expect government to take more than a cursory look on local manufacturing. If we real want to deal with this many issues that we are facing we cannot escape promoting “Made in Nigeria” products.
There is no option to local manufacturing. It must take place. Nigeria must produce what we wear and eat and we must also export. Those are just fundamentals for national development. Beyond the N75 billion the government has promised to give to manufacturers, we expect it to take a deep look at the regulatory and legislative environment to make sure that they are conducive so that all legitimate businesses will operate without hindrance from either the regulators or legislators.
In fact a key parameter for any regulator is how many businesses it has promoted. There key performance indicator should be how many businesses do they promote. We will also want government to take a deep look at the issue of national debt. We cannot continue to borrow and dig holes for ourselves and expect that the World Bank or the IMF will have unusual compassion on us for debt relief. We do not also have options than to imbibe fiscal discipline not only in words because it has to be seen in government expenditures. We cannot be seeing legislators buying cars with hundred millions of Naira; we cannot continue to be seeing government renovating houses with N5 billion when it is not building a new one. These are some of the issues we want government to look into in 2024.
Why is the government lacking the will to resolve the logjam in our sea ports?
If you will remember there was an executive order during the President Buhari’s administration to create sanity in the ports. There was also a taskforce that was created to make sure that the Apapa corridor was cleared of trailers and the rest. But few months later everything came back. So, it will take very strong political will to address the issue of Apapa ports, which are among the biggest in the country and are generating billions of Naira in revenue for the government. It is ironic that successive governments have found it difficult to address the issues about Apapa ports. Today, we are having Nigerian businesses using ports in Togo and Republic of Benin as preferred terminal ports for their imports before they bring them into Nigeria. It is worrisome and probably the managing director of the Nigerian Ports Authority will be in a better position to explain the science hindering the resolutions of Apapa ports crises.
How will the issues of “Japa” and high unemployment problem be resolved?
Mobility of labour is a global phenomenon. So, as people are leaving the country foreigners are coming into Nigeria to get employment. For us the issue is this: when your best brains are leaving it creates problems for you. It is also creating problems for organised businesses. The exit of trained labour to foreign lands is creating distortions in the production chain. Unemployment is rising because the environment is squeezing existing businesses in such a way that even their capacity to produce is not being maximised. These issues are all situated in the regulatory and legislative environments, the fiscal and monetary issues that have not favoured the organised private sector for many years.