With Implementation of IFRS 9, Banks’ NPLs Will Drop Significantly
The challenges of insecurity and political uncertainties are still rife. Very high interest at over 20 per cent is stifling business growth and limiting SMEs access to credit and hampering SMEs’ potentials as a major employer of labour. Generally, government should create the enabling environment for businesses’ growth in terms of building a very strong infrastructural base, creating a supportive tax regime for SMEs and building a strong legal structure to protect SMEs. This is when we can have a truly diversified and inclusive economy
Would you say the federal government is making progress in economic diversification agenda?
Yes, we are making progress. But the issue is, what level of progress are we making when crude oil still remains the major source of government revenue in Nigeria? It is believed that increasing the tax rates and widening collection capacity are the answers to the budget deficit in Nigeria. No, diversification is the answer, the only way to move out of poverty to prosperity and be a player in the global economic space. One of the most potent areas for diversification is agriculture. A legion of measure had been put in place in the past but not much has been the outcome. Agriculture is formidable as it can increase the supply of food for both internal consumption and export, provides labour, enlarging the market for manufactured and other goods and services as well as increasing domestic savings. In all of these, we require high level of ethics and innovation for our products to be acceptable in the international market. Though we are making progress, it is at snail speed. We require much more than we are doing.
What are the factors inhibiting federal government’ s move to fully diversify the economy?
Let me start by saying that the Nigerian economy is diversified to some extent. According to the National Bureau of Statistics (NBS) statistics in respect of GDP Q1, 2018, the sectorial contributions to GDP are as follows: information and communication, 12 per cent; manufacturing, 10 per cent; crude petroleum & natural gas, 9 per cent; trade, 17 per cent; real estate, 6 per cent; agriculture, 22 per cent; and other services, 24 per cent. The foregoing information provided, however, indicates that the country’s economic diversification can still be further deepened. Diversification should be both in terms of breadth and depth. The depth so far is shallow especially in the agricultural sector that should be driving the economy in the context of current development. The inhibiting factors are clear for everyone to see and the most fundamentalist he absence of critical infrastructure such as electricity, good roads and water.
It is also important to provide the enabling environment (especially in the context of security, legal and ethics) that would ease business activities and also encourage investment. The diversification clamour would be a mirage if there is lack of consistency in policy formulation and implementation.
ICAN acknowledges government’s sustained drive in diversifying the economy which is exemplified with the launch of the Economic Recovery and Growth Plan (2017 – 2022). According to the Plan, the diversification policy focuses on the key sectors driving and enabling economic growth, with particular focus on agriculture, energy, MSME, manufacturing and other key services. As an institute, we believe that government would sustain this laudable initiative and broaden the economic base of the country, thereby reducing the economy’s level of reliance on crude oil which is neither renewable nor sustainable.
There are feelers that CB N may propose increase in interest rate. What do you think?
This question needs to be situated against the background of the economic objective being pursued in the country. Interest rate is a powerful economic tool for controlling the flow of money in the system. While there have been varied views on increasing interest rate, my own stand is that the apex bank should ensure that such a move will not impact negatively on the SMES, the major employer of labour in Nigeria.
The monetary policy rate( M PR ), which is the benchmark interest rate is at 14 per cent, has been unchanged for along while and the same applies to other policy rates. The CB N has maintained this tight monetary stance for awhile now. At what point do you think the apex bank should relax the tight monetary stance?
It is important to stress that interest rate is a formidable economic tool used to control price fluctuations (for example, inflation), stimulate growth and to attract foreign investors into an economy. There is always an economic dilemma with the use of interest rate by the apex bank in an economy – should it be reduced to stimulate growth or be increased to curb persistent increase in the prices of goods and services, inflation? The dilemma lies in the difficulty of simultaneously pursuing the twin objectives of growth and low inflation rate.
For instance, when the Central Bank of Nigeria (CBN) increased the rate in July 2016 from 12 per cent to 14 per cent it was intended to control the persistent increase in inflation that characterised the economy then. There were however divergent views on the appropriateness of the policy then. However, the policy has been able to reduce inflation consistently for 18 months. There has also been a marginal improvement in growth rates since the country emerged from the 2016/2017 recession.
We therefore believe that the CBN will consider easing the monetary stance when the fundamentals are right. Theoretically, reducing the interest rate will further stimulate growth in the economy as lower interest rate makes funds available in an economic system and such funds are engaged in productive activities that will create jobs for the citizenry.
Nigerians admire the way I CAN has been carrying on with its succession plan. What advice do you have on the way togo for other professional bodies?
It does not require any comparison of ideas to come to the conclusion that the ICAN succession planning model has been second to none and has become the toast of other professional bodies over the years. I sincerely give credit to the founding fathers of our great institute whose sense of character and presence of mind have been the thread for sustaining the tradition of succession planning in ICAN. This is a heritage we pride ourselves in during the course of our 53 years of existence.
Having said this, we must not fail to appreciate the fact that different bodies have rules and regulations guiding their activities. While the succession planning of ICAN has been widely acknowledged and praised, I think it is important to respect the individual differences characterising the various professional bodies, especially that making comparisons is a sure path to frustration. ICAN strongly desires that our rancour-free change of baton would be replicated not only by other sister professional bodies but in the nation as a whole. More especially as the election year is fast approaching.
How many members are currently in the I CAN fold? What is the level of confidence inthebody?
At ICAN, our relentless commitment to build world-class professionals for the accounting sub-sector has been the primary impetus for our continued drive for increased membership. From a modest beginning of 250 members in 1965, the Institute has to date produced 45,103 chartered accountants, and 23,011 Associate Accounting Technicians (ATs), who are very talented, ethically committed professionals working in every sphere of the global economy to support businesses, public sector organisations, not-for-profits, individuals and communities to achieve their financial and strategic goals.
And I think the facts speak for themselves on the issue of the level of public confidence in the body. For instance, different accounting job advertisements place special premium on possessing ICAN certificate as a prerequisite.
Besides, ICAN is a member of many international professional bodies such as the International Federation ofAccountants, (IFAC), PAFA,ABWA and has just also been admitted a member of the Chartered Accountants Worldwide (CAW).
What is your take about Forensic Accounting Bill presently before the National Assembly?
The summary of the matter is that the bill is not auspicious for a number of reasons. Forensic and investigative audit is a special area of practice of accountancy that describes engagements resulting from actual or anticipated disputes. Forensic accounting is adequately covered within the scope of the training that ICAN provides and therefore the quest for a separate Institute for just forensic accounting is totally uncalled for. Whatever perceived lacuna that this bill seeks to fill has been adequately covered within the scope of services that ICAN members render. Won’ t it just be like the Chartered Institute of Taxation of Nigeria( CI TN ), which special is es in taxation? Or are there any fears I CAN is entertaining? We collaborate with sister professional bodies to collectively contribute to growth and development in the country. Our concern with this new bill is the imperative of protecting Nigeria’s accounting sector from adulteration through the promotion of quackery. The profession is a noble one, which continues to serve as the conscience of the society. Hence, all stakeholders should jealously guard this long standing confidence reposed by the public in the profession.
Mr. Akin to la Williams, the Do yen of Accountancy in Nigeria was 99 years old recently. Do you have anything to say about his life and achievement?
It is not whether I have anything to say about the life and achievements of Mr. Akintola Williams. It should be whether I would have enough space and time to chronicle the life and successes of a man, who has been unarguably known and regarded as the doyen of accountancy profession in Africa.
He was the first African to qualify as a chartered accountant as well as the first president of ICAN. He established the first indigenous firm of chartered accountants in Nigeria as far back as 1952. In recognition of his services to humanity, he earned several prestigious awards such as the CBE (1997); OFR (1982) CFR (2001). There is also the Akintola Williams Arboretum at the Nigerian Conservation Foundation headquarters in Lagos. Akintola Williams is a colossus, whose achievements cannot be adequately chronicled. He has been one of the greatest accountants the world has ever known and still walking actively across the pages of history as no other had done, even at his age.