John Kachikwu is the Chairman, Lagos Chamber of Commerce and Industry (LCCI) Small and Medium Scale Enterprise Group (SMEG). He is also the Chief Executive Officer, Jon Tudy Interbiz Nigeria Limited/Jon Tudy Interbiz Corporation, U.S.A. In this interview with Taiwo Hassan, he recounts the challenges facing SMEs
What is your assessment of the 2018 budget presented by President Muhammadu Buhari to the National Assembly recently?
I am glad that President Muhammadu Buhari presented his budget for 2018 early enough despite the economic headwinds in the country. However, for the fact that he has presented the 2018 budget earlier than last year, if it is quickly approved by the National Assembly, it will impact positively on the economy.
But my fear about the 2018 budget is that of the 30 per cent capital expenditure. It is on the low side considering the economic situation at hand; because when you are talking about capital expenditure, we are talking about infrastructure like electricity, road network, security and others.
These are key factors when you are talking about the economic development of any country. So if you don’t budget enough money for capital development, obviously it will affect the economy in all ramifications. So we (organised private sector) were looking at 50 per cent instead of 30 per cent approved for capital expenditure in 2018 budget.
But to be very honest with you, yes, the Federal Government, under President Muhammadu Buhari, has done well to have been able to present the 2018 budget early enough this year. But if the National Assembly is unable to approve it early enough, we will still come back to the status-quo, because of the delay in the budget implementation.
In the proposed 2018 budget, the president claimed that the economy was fully diversified with non-oil sector accounting for over 90 per cent of total nominal GDP. Is this true considering the economic realities?
Well, to a large extent, that is what it is supposed to be because the non-oil sector needs to be encouraged for it to participate immensely towards Nigeria’s economic development. But then, government is doing something better now in that area.
I can say it is much better now than what it used to be in that sector. Before now, when you repatriate your forex, for you to access it, it was always a difficult situation. And if at all, you are able to penetrate the bank, the bank will buy it at N315.
But now, when you repatriate your export proceeds you can now sell at N360. So it is very encouraging now for exporters even though we don’t have access to the dollar, but at least, the exchange rate used is quiet encouraging. Probably, this is why government is projecting 90 per cent for non-oil sector.
But the truth is that they are being over ambitious by projecting up to 90 per cent for non-oil sector contribution to the GDP. As OPS, we can say the non-oil sector is currently contributing between 65 per cent or 70 per cent to the GDP. Anyway, it’s a budget so it is expected since they want to aim high. But the variable available to us shows between 65 per cent or 70 per cent for the non-oil sector of the Nigerian economy.
Are exporters still repatriating their export proceeds through the commercial banks? If so, what are the challenges?
Of course, through the commercial bank but the commercial banks will now return it to the CBN. So it’s still ongoing at the moment. But now, it’s more stable in the forex market compared to how it used to be in the past when scarcity of dollar hit the forex market. We are happy with what is happening in the forex market and kudos to the CBN for continuously interfering in the forex market.
Controversy is trailing the FG’s tax holiday waivers given to investing firms, including pioneer status incentive (PSI). Do you think the waivers are necessary at this period?
The tax waiver is similar to what the former US President, Barack Obama, did some few years back when he stimulated the US economy by encouraging manufacturing firms and also giving them money to run their factories. Let me tell you, Nigerian government is not giving out money to manufacturers here but the tax waiver is a way of encouraging these blue chip firms like Dangote, Flourmills, Unilever, for their contributions to the country’s economic development for decades.
There is definitely need for government to encourage private sector and what they are doing is good for our economy because I don’t see anything wrong in that tax waiver at all. The waiver is good and is just to encourage tax holidays given to investors that are coming to invest in Nigeria. So I think the government’s tax holiday policy is in the right direction and needs to be encouraged because that policy is good since it was meant to encourage the private sector.
Recently, the Federal Government released some funds for the settlement of claims on Export Expansion Grant (EEG) for exporters. Do you think this intervention has brought succour to the non-oil export market?
Yes to a large extent, because before now, most of us in the export of goods if you get to our factories today, you will see the level of expansion and this is attributed to the EEG. Although we have not benefitted for now, we have already submitted our application forms to the government and from information reaching us, it’s quiet encouraging if the Federal Government under the Nigerian Export Promotion Council (NEPC) can implement this new policy in time.
So it is quite encouraging for exporters because by giving us that grant, definitely MSMEs will now grow faster than before that we had to source money from the bank at 30 per cent or 35 per cent interest rate. This is quite encouraging; we are just waiting for the implementation. You know that putting this policy in place is not the issue but the implementation process is what matters most.
What is your assessment of the current EEG with regards to the non-oil export market?
The new policy on EEG is quite encouraging for the Nigerian economy because it is going to increase the export earnings of the Federal Government and also encourage exporters to do more. So many of us are now going to expand our businesses.
For instance, in the past, we used to export one container every month but now, we are exporting like three or four containers since about three or four months back. We have been exporting these containers amid the new EEG policy. However, we have not benefitted directly but with the encouraging words coming out from NEPC, based on the various circular released and other important things that they have been sending to us, it is quite encouraging and we are hoping that if the policy is well implemented then more people will go into export and you know what that means to the country and our economy.
Ideally, the tax credit system being planned is not going to be favourable to the SMEs operators in the country. But obviously, for the big players like Olam, Dangote and co who would benefit immensely from it. For instance, Olam is just a single firm. But when you are tal
Do you support the initiative to restructure the EEG as a tax credit system? If so, how much do you think Nigeria can generate through this initiative?
king about SMEs that are into export, you are looking at thousands.
So it is better to encourage the thousands of SMEs than encouraging only one single entity. So that tax credit will not be favourable for the SMEs and I am speaking authoritatively as the chairman of SMEs Group of the LCCI, so anything that will benefit the SMEs when we are talking about export is what I will definitely support any day any time. So the proposed tax credit system conversion of the EEG is not going to be favourable and work for SMEs. It is not a good policy since it won’t encourage SMEs that are into export.
If so, have you made a case to the Federal Ministry of Industry, Trade and Investment to halt the proposed tax credit?
Yes, of course, there was a communiqué after our last meeting, which we have already presented on the matter, so we are hoping that government will look into it for the sake of the SMEs sector.
Do you believe CBN’s 60 per cent concessionary forex allocation to the manufacturing sector for raw materials and machinery importation is strictly and judiciously being implemented to the satisfaction of the OPS?
Yes, I must be very honest with you based on what is on ground right now and from the economic perspectives, this CBN’s 60 per cent forex allocation for raw materials and machinery importation has tremendously reduced the hardship manufacturing sector went through since the past three or four years now.
Right now, many of these manufacturing firms are having access to forex compared to what it used to be in the past. We are very happy that this has eased the hardships that manufacturers in the sector have been going through for years.
So we hope that government will sustain this policy because it’s quite encouraging. You can see that many of the companies are now operating at 65 per cent or 70 per cent installed capacity, which is quiet encouraging.
Has the forex policy restored some ailing manufacturing firms in the country?
Yes. For those that left they are coming back gradually into the country, while for those that are here and about to close down, they are now coming back fully and the effect of this policy would not be seen until the first quarter of 2018. That is when it will be very clear that the Nigerian economy has bounced back. Then Nigerians will equally see that we are out of recession.
What’s your view on the Senate Committee on Customs, Excise and Tariff and Marine Transport’s plans to publish the names of 60 firms found culpable in the alleged N30 trillion revenue?
I must say that I am encouraged by this Senate Committee on Customs, Excise and Tariff and Marine Transport investigation on the activities of some private sector operators because we have lost so much money in this particular sector.
You can imagine quite to N30 trillion, so it’s not a joke! The truth is that under their oversight function, if they are able to scrutinise most of these alleged companies found culpable in this N30 trillion scam by recovering this money from them, obviously that would go a long way in sanitising the economy and also increase our foreign reserves.
Most of these things occurred in the forex market and some of them are in the oil and gas sector where they were given waivers to operate. So we should just pray that they can do it, that is the most important thing. Do they have the capacity to deliver? Do they have the will power to cleanse the system? If they do, obviously, it would go a long way in helping the economy.
What can you say about the high level of corruption in the private sector?
That is the reason why I asked the question whether they have the capacity (will power) to do it. Because when you are talking about corruption in the country if you don’t have the will power, corruption comes to stay.
The fear in the minds of millions of Nigerians on this Senate Committee is that nothing would come out positively at the end of the day after they would have compromised. So we just praying that the Senate Committee on Transport and Marine would not compromise along the line because Nigerians are watching this drama with keen interest.
Recently, Nigeria refused to sign the ECOWAS single currency including the Common External Tariff (CET). What are the economic implications since we are key signatory to regional market integration in West Africa?
I will like to refer you to the European Union (EU) on the recent step taken on Britain’s Brexit. If you remember the EU countries when they were about to have Euro, Britain pulled out and many of the EU countries were against Britain but for the fact that the kind of economy British has, they were unperturbed.
So coming back to our own ECOWAS treaty, we are aware that Nigeria signed the treaty quite alright, but you know the implication of Nigeria signing this treaty for this common currency, it would definitely affect us, because the WA countries would now flood Nigeria with different consumable goods.
For the kind of economy we have right now, that is not feasible because it would definitely have negative impact on our unemployment rate. So the Federal Government has done well for not signing that treaty- common currency for now until the economy stabilises.
By the time it stabilizes, we can now think about signing the treaty. But for now, it is not going to be favourable for us economically. So it was a good one that they did not sign it. So I give kudos to President Muhammadu Buhari for rejecting it.
Are you in support of Federal Government streamlining multiple levies charged by agencies?
Yes I think it is a good policy. Again if they (government) can streamline these agencies, It will be good to see a one-stop shop agency for the SMEs and manufacturing sector in Nigeria; because right now, this multiple taxation is obviously affecting most of our members.
It is affecting the SMEs because these people are trying to find their rhythm at the moment amid recession. You know they have to take care of so many bills such as security, lights and other things and ironically, when one agency comes with a levy and even before you finish that, another one comes to you.
So it’s quite discouraging because this multiple taxation is killing the SMEs and I just pray that government should implement this policy that is tailored at reducing them. If they are able to implement it, it would go a long way to alleviate the suffering of the SMEs because they are not finding it very easy at all, especially with these levies and interest rates.
I am very particular about the interest rate because at 31 per cent what can you achieve and we are talking about bank defaults among us since many of us are not able to pay back our loans collected from the banks. What can you do with 30 per cent or 35 per cent right now, because the CBN gives to the banks at 14 per cent?
They were giving money to the commercial banks at 12 per cent and they increased it last year to 14 per cent and considering the logistics and overhead cost from the commercial banks, you don’t blame them because they need to mark up. So that is the issue with this interest rate.
It is not favourable to the SMEs. But it is favourable to the foreign investors because when a Chinese or Indian businessman comes here he gets that money at one or two per cent from his country, brings it here, go to the bank, fix part of the money at 16 per cent or 18 per cent and then use the balance to invest. You can see that already he has made over 100 per cent. But for the SMEs, have they made any money? No. They have to struggle to borrow at 32 per cent, which is not encouraging.
In every economy right now in the world, it is only in Nigeria and Ghana that I have seen interest rate above single digit. We have been talking about this. In Nigeria, the only bank that is giving interest rate at single digit is Bank of Industry. But, is it easy to access BoI’s money? Is not easy for the SMEs, because many of us are undocumented?
Nigeria’s fish deficit hits 2.2m tons
Despite smuggling and abuse of import quota restrictions, Nigeria is currently facing 2.1 million tons of fish deficit.
The Director of Federal Department of Fishery (FDF), Muazu Mohammed, said this in a chat with New Telegraph in Lagos.
He said that the country still depends on one million tons of fish annually as against the 3.2 million tons demand.
Statistically, the country’s total demand is estimated at 3.2 million tons, while it depends on 1.12 million tons of domestic production from aquaculture, artisanal and industrial fisheries.
The FDF boss added that 80 per cent of fish produced in the country are catfish, while other species account for only 20 per cent.
This newspaper gathered that the restrictions have not yielded any positive result because of abuse of quotas and large scale smuggling.
Fish farmers who spoke with this newspaper noted that some of the local farmers government was trying to protect were already out of the business due to lack of fund and other challenges.
Speaking on the development, President, Fish Processors Association of Nigeria (FPAS), Chief Wole Omole, blamed the deficit on government’s policies, which had created uncertainty in the fishery industry.
He said that some members of the association had been facing challenges of finance, debts and smuggling in the business because government had not done enough to protect their investments.
Already, Omole noted that many of the local fish farmers had closed down their fish farms since they have run into debts.
He said: “Let me say this to you, government is just paying leap service to farmers operating in the industry. Money does not get to real farmers who are willing to expand their fish ponds. Also, fish feeding is very expensive in the country. As I talk to you now, I have diverted from fishing business because the profit is not there and this has to do with the cost of feeding the fish.”
Omole explained that investors were finding it difficult to break even in the business even in the long run.
The FPAS president added that lack of political will by the Federal Government had stifled the growth and development of fishery in the country.
“Look at the importation of frozen chicken and turkey the Federal Government banned, but you still found them in the marketplace,” he noted.
According to him, importation of foreign fish, lack of capital, strong smuggling network and inadequate feeds had crippled the ambition of local farmers to meet national demand. This is why the country is facing such a huge deficit, he said.
Omole blamed government for allowing influx of fish imports into the country despite its import restriction quotas.
Echoing him, the President of Fishery Association of Nigeria (FAN), Rasaq Adefowoju, decried the high rate of smuggling and importation of fish to the country.
He said that without government assistance to local fish farmers, the current fish deficit would continue to widen.
Adefowoju also stressed the need for government to create an enabling environment for local fish farmers operating in the country.
The president added that only the solution was for government to provide a bailout fund or loan for the farmers from the Central Bank of Nigeria (CBN) to enable them embark on massive production at single digit or at six months moratorium.
Adefowoju said: “The problem with us in the association is finance. We have enough local fish farmers in the country that can produce fish but there is no financial assistance from the government.”
It would be recalled that since 2014, when the Federal Government introduced the import restriction, exporters from Norway have been finding it difficult to bring fish into the country due to lack of foreign into the country due to lack of foreign exchange to order for supply.
However, finding revealed that some fish are being smuggled through the neighbouring Cotonou Port to the country by fish merchants.
Last year, the Federal Government complained that about $700 million was spent on importation of fish into the country.
The Minister of Agriculture and Rural Development, Audu Ogbeh, lamented that it was no longer sustainable for government to continue to spend such huge amount of money on fish importation.
Consequently, he said that funds would be made available for research institutes to scale up research work into the local production of other fish species, aside the regular catfish and Tilapia.
The minister said: “We need to start looking inwards to see how Nigeria can produce some of these fishes both for local consumption and then importation. We will also encourage massive investment in artisanal fish production, to meet the protein needs of Nigerians, because it has been discovered that lack of protein in some women have made them to developed fibroid
Dangote: Businesses, residents lose N86bn daily to Apapa gridlock
Businesses and residents are losing N86 billion to Apapa-Wharf road gridlock daily, Africa’s richest man and President/CEO, Dangote Group, Alhaji Aliko Dangote, has said.
He stated this in Lagos while condemning the challenges posed by traffic jam and heavy presence of different types of taskforce, including the Customs, on the major route leading to the nation’s largest port.
Dangote, who was on an inspection tour of the on-going reconstruction of N4.3 billion Apapa-Wharf road by AG Dangote recently, stated that businesses and residents are losing 20 times the project’s cost daily.
By calculation, N86 billion is being lost by business owners and residents on daily basis.
He said: “People don’t really understand how much money businesses are losing because of the gridlock here; if you quantify it in billions, it is 20 times the cost of this project every single day.”
Consequently, he urged the Federal Government to move the taskforce, including Customs, away from the route to ease traffic.
The reconstruction of the road that leads to Apapa and Tin Can Island Ports is being undertaken by Dangote Group, Nigerian Flour Mill Limited and the Nigeria Port Authority (NPA), which are together committing N4.34 billion to the project.
Justifying the involvement of his company in sponsoring the project, Managing Director, Flour Mills Limited, Paul Gbadedo, lamented that it has been difficult for businesses and residents of Apapa.
Noting that the economy of Apapa is very huge, he said that businesses cannot see the traffic and road deteriorating without doing something.
He stated that 75 to 80 per cent of imports passed through the Apapa ports, noting that the road is strategic.
Dangote stressed that it did not make any commercial sense for Customs to mount check points outside the wharf after they might have checked and certified goods at the ports.
“If there should be any more checkpoints, they should be at the toll gates, not here where they are obstructing traffic flow,” he said.
Africa’s richest man said he was impressed with the progress and quality of work being done by AG Dangote, the contractor handling the reconstruction of the road.
He also lauded the palliative work going on on Apapa Oshodi Expressway and the Trailer Park being constructed by government off the expressway, pointing out that these were efforts being made to ensure that the access roads to the ports are decongested.
“My impression of this road has changed because AG Dangote is doing a great and excellent work here. You can see the quality of work being done. This is quite impressive. Even in Germany, you cannot see this kind of quality of road. This road can last at least two generations in which case you will be talking about over 60 years. It is so solid that it can take any weight and any traffic,” Dangote said.
“I can assure you that we will double our efforts to complete the project on schedule, that is, latest by the end of June,” he said.
Chief Executive, AG Dangote, Ajif Juma, stated that the company is facing a lot of challenges, citing traffic and gas pipeline as major ones.
“But now we are working hard to ensure we finish on schedule with some of our workers on night shift,” he said.
CBN to banks: Settle customers’ complaints within 2 weeks
Deposit Money Banks ( DMBs) and other financial Institutions have been directed by the Central Bank of Nigeria (CBN) to settle customers’ complaints on issues of overcharge, unauthorised deductions and other matters within two weeks.
CBN Head of Complaints management Division, Mr Tajudeen Ahmed, conveyed the Apex Bank’s directive in Abuja. He said the regulator would ensure that bank customers receive redress on issues of excess charges or unauthorised withdrawal.
Ahmed reiterated the CBN’s commitment to eradicating the culture of excess and arbitrary charges. According to him, the CBN has since issued a circular,which could be found on the its website showing all legitimate bank charges. He explained that any charge outside what is contained in the circular was not allowed and should not be charged.
“The Consumer Protection Department issued guidelines to banks dated August 16, 2011, directing all banks and other financial institutions to resolve all customer complaints within two weeks of receipt of that complaint,” he said. “Before the expiration of that complaint, the financial institution is expected to be engaging the customer on a continuous basis to update him or her on the status of the complaint. “If it is not resolved within the deadline given, then such a person is encouraged to draw the attention of Central Bank of Nigeria to find solution to that complaint.”
Ahmed enjoined customers with unresolved complaints to contact the CBN by writing to the Director Consumer Protection Department. He also advised disgruntled bank customers to visit any branch of the CBN closest to them to lay their complaints.
“The CBN continually engages the banks to find out if their conducts and practices are fair to their customers in order to stimulate people’s confidence in the banking system. “Non-adherence to that normally results to regulatory sanctions as the case may be,” he said.
Ahmed faulted banks for setting a limit on ATM withdrawals to get customers to make several withdrawals to cash large sums. “I have also observed and noted this. Don’t forget that at the beginning, it wasn’t like this. Over time, we started having this problem.
“One of the reasons is that the quantum of N500 denomination is much more than that of N1,000 denomination,” he said. “When we approached the banks about these problems, they said that the machines become easily faulty when it is set to dispense up to N30, 000 to N40, 000 units.
“However, CBN has directed that the machines that allow payment of up to N30,000 to N50,000 should be installed. “This is still ongoing. The Banking and Payment Department of the CBN is championing it.” In her remarks, Head, Consumer Protection Department, Mrs Hadija Kasim, admonished bank customers to imbibe cashless policy.
“Let’s not forget that ATM cards can also be used on Point of Sale (POS) terminals. We are encouraging people that unless it is absolutely necessary, they should reduce the carriage of cash. Cashless transactions are more convenient, safer and you will avoid the problem of overcharges,” she said. She advised bank consumers to use bank transfer channels for transactions in cases where sellers do not have POS.
Metro and Crime12 hours ago
I married my sister to obey God, avoid divorce –Brother
Saturday Magazine12 hours ago
FESTUS KEYAMO: My poor parents flew like king, queen to witness my SAN award
Features12 hours ago
Doctor by day, robber at night
News14 hours ago
Police arrest mastermind of Imo bank robbery
Politics20 hours ago
APC reconciliation: You’ve my full support, Oyegun tells Tinubu
Show Biz12 hours ago
NIGERIAN MOVIE STARS WHO APPEAR RICH BUT AREN’T
News13 hours ago
Ozubulu massacre: My life under threat from faceless people –Witness
News13 hours ago
Ogun 2019: Isiaka, Paseda plot alliance, back Obasanjo’s coalition