Dr. Boniface Chizea, management consultant and Chief Executive Officer of one of Nigeria’s leading Management Consultancy Company, BIC Consults Limited, is a consultant to a retinue of organisations which include among others the Central Bank of Nigeria, United Nations Development Organization. The former banker who is a notable commentator on economic and financial matters, in this interview told Bamidele Famoofo that stability is needed to drive growth in the economy. He argued that the current economic situation in the country remains unpredictable and may not be able to sustain the five percent GDP growth achieved in the economy in second quarter in 2021.
How did you respond to the news of the five percent GDP growth that Nigeria achieved in Q2?
I think it is good news. When we had 0.51 percent in the first quarter of 2021, nobody said anything but now that we recorded a 5 percent growth, there are comments all over, some are saying it is not true, alleging that figures were manipulated. But some of us who have been around and tracked the activities of the Nigeria Bureau of Statistics (NBS) could say it has some integrity. This is country was in recession in 2016 when Dr. Yemi Kale was still in charge of the NBS, some of us were on the alert to see if he was going to manipulate data because the economy going into recession is not good news for those in government. But consistently they have kept to their business. They reported the figures as they were then in 2016. That is why some of us are sold to their integrity and we will take whatever they give to us to the bank. Also, we should note that the five percent growth is related to a base rate because second quarter 2020 was the pandemic year, the economy by -6.1 percent. So, I think it is a welcome development. It means the economy is moving in the desired direction.
Can we say business is back on track based on the figures we have in Q2?
Of course business is coming back on track. When you look at the performance in different sectors like the ICT, construction, manufacturing among others, you will agree with me that activities are gradually picking up. Though the economy is not yet where we want to see it as it has not impacted on employment and the lives of the ordinary Nigerians but we will get there if we maintain this momentum. But may I say that what we are seeing should be music in our ears. We are in the right direction and we hope we get there sooner than later.
How do we balance this good news of GDP growth with the reality of hard life in the country?
What you see is that there are issues with the economy; there is no doubt about that. You are saying the obvious because the situation in the economy is worrisome. The monetary authorities are practical struggling to ensure that there is stability in the economy. You want some stability as a business person who either is doing business in the country or an intending business man who wants to come and invest his money in the economy. As a business person, I want some level of predictability for me to be able to plan and to to be able to determine what profit margin that is possible for me in my line of business. When it is not predictable you have uncertainties and you cannot manage risk where the business climate in the country is not certain. But then there are still good news from the country. Example is the Dangote Refinery which we have been waiting for and which almost ready to come on stream. When it eventually becomes operational despite the changes in timelines for it to start production, it will be a game changer.
What’s your opinion on plan by Federal Government to own equity in Dangote Refinery?
I think it is a good move because it is a big investment and considering all the concessions that government and the Central Bank have given to that investment. I support the move because with the concessions it is necessary for the authorities to have an eye into what is going on in that place. Remember that they are going to buy crude products from government and refine and sell. Undoubtedly it is in the interest of the ordinary Nigerians and not government and the sponsors alone that such an investment succeeds.
For the first time the NNPC declared a profit in billions of naira. Is it part of the good news emerging for Nigerians and how would you situate it with the recently signed PIA?
I would say again that it was good news that the NNPC declared a profit for the first time since it has become operational in the country. Also, the host communities in the oil rich areas should be happy that they are getting three percent of the revenue in that sector which amounts to about $500million. It is moving from nothing to something. There is nothing wrong for them to ask for more on the basis of justice and equity as they are saying but they may not get that for now.
Which sector do you think should be driving growth in the Non-oil sector?
My preference is agriculture. Agriculture is the mainstay of any economy. Agriculture has performed better than oil going by the recent GDP figures given us by the NBS as it contributed about 24 percent to economy growth in second quarter in 2021. Where do you place ICT? ICT is the way to the future. I encourage our youths to look in that direction. ICT is SATURDAY TELEGRAPH 4 SEPTEMBER 2021 there and it will be a major driver in jobs creation. Look at the case of Facebook and others. We must decide on where our focus should be as a country knowing that our biggest problem which needs a very urgent attention is unemployment and we must make haste to create jobs. Our informal sector is almost as large as that of Italy. There are lots of Nigerians in that space struggling to make a living but they are not visible. This is why I must let you know that GDP is being under calculated in this country. This is because the NBS only focus on what it can track and they are the businesses which are in the mainstream but what about the guy that is repairing phones in a corner whose economic activity and contribution to the economy could be captured? Go to the Computer village market where phones are repaired and sold and the Oke-Arin market in Lagos Island where you find business people who are not in the mainstream. However, the same metric which we use in calculating GDP is still the same that is used everywhere in the world.
How should government handle the big informal sector in Nigeria to make it count in economic growth and development?
I believe what government needs to do is to make the environment to be enabling for everybody. For instance, if government removes the subsidy on fuel as mulled, there will be a spike in prices of commodities in the economy. An increase in fuel price for instance will affect everyone in the country as purchasing power will further dwindle as a result of price hike.
Should the question of subsidy still linger considering the coming on board of Dangote refinery?
I do not think subsidy should be a problem again because we are going to sell crude to Dangote refinery in Naira and when it refines the crude, he will also sell to the local market in Naira. The main cost is the cost of transportation of crude and the refined products and freight charges will be eliminated. But there is an argument that the international market price will also determine what the refinery sells. Yes, but I say cost would be to a large minimized and that should impact positively on local consumers. By and large, I can’t see that refinery operating here and government is still talking about subsidy because the cost they subside is associated with logistics of the refined products which we bring into the country for local consumption. The demand pressure on foreign exchange will drop when the refinery comes on stream as the 30 percent of our forex dedicated to fuel importation will be saved. Taking the demand pressure off the table will also impact the exchange rate.
What do you say about FG’s planned investment in the nation’s moribund refineries?
It is like putting money into a sink hole. I think what we should do is to privatise the refineries. Now that the President has signed the Petroleum Industry Bill and we now have the Petroleum Industry Act (PIA), it will bring a level of certainty into the oil industry and allow for private sector participation. Investors can now move into the sector with more investments.
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