We need to boost the supply side of the FX market – Almona
Chinyere Almona is the director-general of, Lagos Chamber of Commerce and Industry (LCCI). In this interview with selected journalists including Gbemi Faminu, she speaks about Nigeria’s economy and business environment and recommends the way forward. Excerpts:
Although Nigeria is not new to trade agreements, it has not been able to fully maximize the AfCFTA as many manufacturing companies are yet to participate. What may have caused this? How can it be corrected?
The AfCFTA has not taken off operationally even though the agreements and articles have been agreed on by the participating countries. There are still administrative hurdles to resolve for the Agreement to take off effectively. While we wait on that, Nigeria needs to support businesses with infrastructure support in order to produce at competitive prices for their products to compete in the continent-wide market. Presently, Nigeria is experiencing a disturbing cost-push.
How can MSMEs and small-scale industrialists tap into the opportunities available in the AFCTA agreement?
First, they must build capacity in understanding the rules, opportunities, procedures, and financing options available for trade expansion through the AfCFTA. Secondly, the government must create an enabling environment by curbing the menace of insecurity that has made it difficult for businesses to access raw materials for production, if our SMEs produce at higher costs, their products will not compete well in the international markets.
Thirdly, there should be dedicated funding for targeted sectors where SMEs operate to empower more SMEs to scale up to meet international standards. Fourthly, SMEs require support in packaging and marketing to the whole world.
The naira has suffered more depreciation recently, which has affected business activities especially manufacturing, what can be done to ease the pressure on the currency?
The CBN has consistently tried to boost the supply of FX to make the market liquid, but we have a case where the supply of FX does not meet the demand and this has put persistent pressures on the Naira leading to its weak position against major currencies. Many businesses now source their FX needs from parallel markets at above N525/$. We need to boost the supply side of the FX market through more inflows from exports, diaspora remittances, and crude revenues.
What is the LCCI’s view on the e-currency the CBN is about to issue?
It is imperative that digital platforms need to be well supported and regulated to reduce cybercrimes. Since innovative digital solutions will continue to dominate the way business is done across the globe, Nigeria cannot afford to lag behind in the scheme of things. It is however important that strict regulations according to best practices are put in place.
There are concerns that weak macroeconomic conditions and the pressure on Nigeria’s real sector will have implications for unemployment, how can this be addressed?
Yes, we need more investments in infrastructure and access to credit for targeted job-rich sectors like agriculture, manufacturing, construction, technology, entertainment, etc. where we will see more resilient growth. We also need to support the recovery of the economy with more investment in vaccination, tackle insecurity, and boost the supply of FX for the importation of critical raw materials for production. All these will strengthen the real sector to create jobs, produce more to reduce the inflation rate, and consequently reduce crime and violence in our land.
What’s your view on Nigeria’s huge debt profile and FG’s continuous quest for borrowing to fund the national budget?
The total public debt incurred by Nigeria stood at N33 trillion as of March 2021 with a debt to GDP ratio of 21.13 percent. The Federal Government spent N2.02trillion on debt servicing in the first half of 2021, this figure represents 90.58 percent of the total revenue of N2.23 trillion generated within the period, a development that experts said signified a dangerous trend for the economy.
An overview of the 2022 Budget call circular showed that as of June 2021, the Federal Government’s retained revenue was N2.23 trillion, which is 67.58 percent of prorata target of N3.3trillion for the review period. This means that the Federal Government failed to realise N1.07 trillion of its revenue target in the first half of the year. There is a twin crisis of low revenue and high debt servicing which the managers of the economy must deal with.
What other feasible ways can the federal government boost revenue seeing that investments are dwindling, oil demand is dropping and businesses are struggling which is affecting tax payment?
We made a recommendation recently to both the state and federal government on how we can package our state and national assets to attract equity investments that can raise revenues for the government instead of borrowing. This recommendation is not about selling our national assets but finacializing and commercializing them for needed revenue without losing them to an outright sale. We can also widen the tax net to capture more tax bases and activities. But it should also follow that the sources of taxes are catered for to thrive in their businesses so they can pay taxes to the government.
What is LCCI’s position on tax payment in the country?
We have always advocated that Nigeria’s tax administration should follow international best practices, deploy more technology to reduce human interface, and the tax net should be widened instead of over-taxing the current tax players with higher rates or more taxes. Tax collection and administration should be done in such a way that it does not stifle businesses and make the business environment harsh for taxpayers to thrive.
What challenges have you encountered in your new role?
Coming on board during the COVID-19 season has been very challenging, there is depressed revenue and rising costs. In addition, our members are stressed by the pandemic and the struggle to keep their companies afloat, making it challenging to engage effectively.
What are your plans for the chamber as the DG?
As the DG of the LCCI, I plan to build on the successes of my predecessor, by enhancing stakeholder engagement and advocacy with various arms of State and Federal Government. It is also critical for me to diversify and grow the Chambers revenue sources and improve efficiency and service delivery to members to increase member engagement.
With my 30-years’ experience in multiple disciplines, such as corporate governance, management consulting, advisory services, strategy, and human capital development, I will lead the repositioning of the Business Education Services and Training (BEST) Unit to maximize opportunities and position it as a leading business resource center in Nigeria.