MONDAYBUSINESS

Nigeria is still being challenged by the epileptic power supply which cast doubts on the privatization of the sector by the central government. What is your take on how government can solve the power issue in the country?

I don’t think that government is unaware of the power challenges in the country. I also don’t believe they are not making effort to fix the challenges. I think we have to recognize it is easy to say that power is the major problem and needs to be taken care of. However, the challenges in doing that are tremendous. For example, for many decades, the basic infrastructure of the then National Electric Power Authority (NEPA) were ignored. Government privatized two of the key elements of power generation and distribution - but the transmission arm only the state can come in here. It is taking some time to get power where it needs to be, but I believe it is being seriously tackled through privatization. The challenge is well recognized but actually sorting it and bringing about improvement in distribution, generation and transmission.

It is a huge task that you can’t do overnight so I don’t think it is a question of lack of awareness. It is a gigantic problem which spans decades. Again the privatization of the sector was a right step in the right direction. But in terms of finally getting to a stage where power generation and distribution is close to where it should be may take a little time because generation can’t be increased overnight. You need regular supply of gas. The good thing is that at least efforts are being made, there is private investment and the chances are there that we will get sustainable and reliable power supply once the issue of gas supply and transmission lines is fixed.

It won’t take a long time to fix the problem and all the government can do is what they are doing by supporting the investors in the sector. They have identified how best to achieve the objectives but it can’t be done overnight. When we get to a stage where there is a regular power supply that will be a tremendous boost. I expect that should concentrate on transmission. There is a lot of talk of cluster generation.

What is your take on the ailing refineries in Nigeria and do you support calls for their privatisation?

Refineries are one of the facilities that are best left to the private sector. The Nigerian oil industry is a partnership between the government and international oil companies. Perhaps one of the ways we can eventually get to substantial refining capacity there should be room in government with international oil gas companies and also making room for private investors. So it may be a combination of private investors. As we know Dangote is building a refinery in Lekki, Lagos and two other groups have proposal to build refineries.

So the answer is a mixture of both and perhaps privatization entirely, but because the government had hugely invested in existing refineries, perhaps some kind. Imagine if government decides to run one of the existing refineries, there is a chance that it may work efficiently but at the same time there is a scope, again there is need for enabling environment so that private investors will also invest in refineries. What we need is value addition locally, whether it is in crude or petrochemical, monetization of gas and etc. All of these require huge investment and there is a gas masterplan which is essentially designed to monetize the gas resources. Given the right incentives, Nigerians always rise to the challenge. The private sector has a role to play in collaboration with the government. It is the government that would set the template so that serious investors can participate. The private sector on its own can’t solve Nigeria’s refining problem but with the collaboration and backing of the

government.

What would you say about the ease of doing business in Nigeria, has government got it right?

It’s a kind of motivation Nigeria needs to make sustainable socioeconomic progress. There is no way a nation can make socio-economic progress without the substantive motivation of the indigenes. The key thing Nigeria requires is to have the enabling environment such that you have more and more indigenous business people and others who will participate in growing the economy. To state the obvious, no foreign investors will come to Nigeria to develop its local economy. They will come to exploit opportunities maximally for their own benefit. So clearly we need foreign direct investment, but what we need even more than just searching for foreign direct investment is have the Nigerian state to articulate its priorities where we want to go, where we want to be between now and 10 years. We need to concentrate more on encouraging more local investors and business people to take a commanding height in the economy so that they would have some partnerships with foreign investment.

We all know that local investors who have serious plans, are beset with many challenges including capital because access to same is difficult. The cost of borrowing is very high. That is why government has been doing intervention in various sectors. So intervention in needed perhaps in certain areas where government wants to emphasize in terms of priority. The critical thing is to ensure that policies are designed to maximally encourage local productivity through local business people so that when foreign investment comes in there would be partnership with the local business people and investment.

I think one area that Nigeria has been successful is the banking sector. Many years ago we had banks in Nigeria that were subsidiaries of foreign banks, but now we have grown an indigenous banking industry and I think a lot of the development we have seen in terms of online banking, cashless etc, these have been driven by the indigenous players in the industry because if the banks had remained a subsidiary of foreign banks, any growth in Nigeria will be completely dependent on the requirement of the banks.

That is why it is very important that our economy should be driven by indigenous players. Even the most advanced countries often scrutinized when a foreign entity wants to buy a particular business in their country to ensure that the acquisition is unlikely to be against their interest.

A good case in point is the local content most people are familiar with. If a foreign entity comes to Nigeria we should assume that they would not be thinking of how best to advance Nigerian interest. By the local content, which has mandated increasing local content component of investment, it shows that the government is responsive. It emphasizes that local content should be all-encompassing in every sector. This would guarantee employment and increasing capacity.

How do you think Nigeria could get out of economic recession?

I like to say that recession has more opportunities than not because now that we have a relatively weak Naira compared to other international currencies, it clearly got us to look inward to see how we can increase local capacities. I think the most important thrust should be how we can increasingly look inward for raw materials. In terms of targeted direct support intervention and again it has to be in line with priorities set at the macro-economic template.

We are all aware that tremendous efforts are being made toward reviving and modernizing the railway structure. So you can imagine what difference it would make if you have an efficient, fast railway connection; let’s say between Lagos-Abuja and etc, how it will bring down most companies’ costs and the ease of transportation.

Let’s look inward and see how we can best enhance local capacities. There is a lot of effort being put into power. I think most people are aware of the areas that need attention, that if we are able to increasingly fix them that will answer our aspirations -power, transportation, health, education and general local productivity.

The reason I said it is an opportunity is the fact that now that dollar is scarce, it is now redirecting efforts. That is the only way. If goods are moved around more efficiently, there would be less wastage in the storage and processing of products. It shouldn’t take too long to transform the economy. The good thing is that the economy will be transformed in an efficient way because of substantive local participation.

As it is said, necessity is the mother of invention. There are no dollars, fortunately there are other resources we have in Nigeria that all we need is to know how best we can exploit them in order to have a sustainable, growing economy.

Do you think government has done enough in terms of attracting foreign investment through its monetary and fiscal policies?

To attract foreign investors is to set the parameters right, but the importance of the private sector is that it is only when foreign investors see local investors investing that they will more likely invest too. The government can only do so much. You talk of the citizens to also see they can participate in value adding enterprise. It will take the government, the citizenry, the organized private sector and even the informal private sector to recognize that the task is for everybody.

Of course the government has to take a lead as the biggest player and the best way, in my own view, to attract foreign investors include a situation where indigenous investors are seen to be investing; in terms of monetary and fiscal policies in place. It is a dynamic process as well as universal phenomenon that fiscal and monetary policies have to be continuously reviewed and in the light of experience altered accordingly.

We need continuous finetuning of both fiscal and monetary regimes. I am sure that the CBN, the Bankers Committee and economic advisers to the government are continually finetuning the policies to respond to domestic and international factors.

To me the most objective is increasing local value addition.