In this interview with FLORENCE UDOH, Mr. Foluso Phillips, the Executive Chairman of the Phillips Consulting Group, a firm engaged in business and management consulting, with offices in Nigeria and South Africa. He spoke on the challenge of under-development and how Nigeria can scale the hurdles to become a dominant player in the global economic system in the years ahead.
For several years, the Nigerian Economic Summit Group (NESG) has been championing the right macroeconomic policy frameworks for sustainable growth in the economy. How receptive have the successive governments been to the group’s advice and suggestions on how to really create enabling environment for businesses in the country?
You know the NESG as a group is a think-tank geared towards ensuring that government policies and actions are taken in sympathy with the private sector and also recognising that we all want to improve the quality of life for our people which includes in employment, social and other economic areas.
So, that is the basic fundamental starting point that we have. Now, over the last 17 years that we have been existing as the NESG, we have produced what we call 16 Green Books which are always the recommendations that we present to government after every summit. In these Green Books we have various issues dealt with, especially when you consider things about the policy recommendations on various aspects of the economy. Now, the ultimate that we want to use to measure what the Economic Summits have achieved is that first of all, we have a situation where last year the Chairman of the NESG was part of the Presidential Advisory Committee in recognition of the role that the NESG will play.
In addition, you find out over time different policies that the NESG has encouraged the government has adopted them.
We have covered so much and we now found that we were now at a stage of repeating ourselves over and over again and we moved and say enough about policy and that what we need to do is to drive implementation and it is on that implementation aspect that we are in now. After every summit, especially after the last two or three summits, we actually made a formal presentation to the Federal Executive Council and this presentation is a recognition on the part of government that what the Economic Summit Group comes up with is worth listening to.
Now, going forward in recent times it is now about accountability, it is now about performance, it is now about measuring and evaluating things that are being done.
We know also that the new recent thrust of government is about foreign direct investments and we are aligning with this 100 per cent.
This brings us to the issue of foreign investment policy requirements. Based on your assessment, do you think the existing trade and industrial policy frameworks have all the components that offer the promises of an enabling environment for foreign investments, particularly in terms of security, to thrive?
Well, put it this way. Let us start with the people who put up the initiative. Let us look at those who have been bold enough to make investments, let’s look at what they are doing and let us look at how well they are doing and let us see if they are packing their bags and leaving. I don’t think so. Nigeria, no doubt about it, is a very tough environment to operate in but there is something you call the risk-return factor. The higher the risk, the higher the returns I expect. And people who are bold and brave and can see beyond what I call the initial face of Nigeria know that there is a lot in here. As they say, it is a no barrier.
A country with 150 million people, oil producing, guaranteed income every month whether we work or not, is a starting point. And anybody that wants to do business knows that much, and they have come to a place where the population is large, and all they need to do is to add to what they are doing already to move things forward.
It's true Nigeria has problems of insecurity, but I challenge you to show me any nation in this world that has no problems at all in that area at all. Nigeria as a nation is going through a difficult but passing phase of Boko Haram and in no distance time, all these insecurity problems will be a thing of the past
Now, given the wanton wastages that have characterised crude oil exports earnings over the years with nothing to show for our huge foreign exchange incomes from the commodity in terms of real sector efficiency, job creation and poverty alleviation, what do you think could be done to utilise the revenue earnings for improved standard of living of ordinary Nigerians?
Let me start off by giving you the module of Botswana which is a very small country that ordinarily wouldn’t be compared with Nigeria. But Botswana is also very rich in mineral resources, especially diamond and so on. And what the Botswana Government decided right from the beginning when they realised the value of their minerals was that every penny or dollar that they earn from their minerals they would put into infrastructure. They did not use it to run government.
They said that they will run government from the revenue that is generated from taxes and other fiscal measures and therefore they have a very tight revenue generating process. Putting the revenue of the income from natural resources into infrastructure created a wonderful environment for the businessman to thrive and as far as the businessman thrives the government will fly. Also, they have managed the government itself because when there is business, most people don’t choose government as their source of business but they go and try and drive private business and investment and so on.
People don’t wake up and say where will I work; will I work for government? No, they want to work in the private sector because the size of the government is extremely small, extremely efficient and if you are not smart and capable, there is no place for you to hide and just believe that that is where I am going to receive my salary. Now, you know as I do here that right across the country, at the Federal, State and local Government levels there is a kind of belief that I have to go and work for government because there is plenty money there to steal .
BUT in Botswana, you try very hard to get your business going under these entrepreneurs or you starve. That is the module that Botswana used. Now, when we look at Nigeria and if you look at all the revenues that Nigeria has earned, we have said it before, oil is a curse to this country because I believe if we didn’t have oil, we will be a much more productive country, we will be a much wealthier country. Nigeria is rich but we are not wealthy.
To be wealthy, people have to be employed, there would be a lot going on in the business community, manufacturing and so forth. It is very unfortunate. We were just having a discussion when they said Toyota wanted to bring a plant to Nigeria but that the only way they can do that is to produce a minimum of 100,000 cars a year to make it worthwhile.
I can tell you that the total cars that Nigerians buys in any one year, I doubt in terms of new cars, may be 30,000 or 40,000 at the most, you won’t believe it, because the middle class is not there. Everything is conscripted, nobody can afford it and we go and buy ‘tokunbo’ cars when ordinarily we should be buying new cars. So, you find out that the economy is not growing and therefore people are not financially empowered and because of that everything seems to be contracting. The government needs to move things to the private sector and that is why we are looking at these FDIs.
This brings us to the continued clamour for devolution of government powers which will allow the local governments to take up the responsibility of socioeconomic development of the grassroots. People are agitating for a new structure of fiscal federalism. What is your take on this?
Well, I believe honestly that this is where Nigeria’s democracy will come into play because if I want to choose a Governor to run in my state and that Governor as the Chief Executive is going to have the responsibility of ensuring that my state survives through Internally Generated Revenue, through the attractiveness of my state to foreign investments, through the convenience and provision of an enabling environment for people to come and do business with me, then definitely the person who does not deserve that position will not be there. There is little allowance for you to start making money on the side.
You need to be focused. Now, having said that, I believe again that whereby every state will have to wait for what comes from the Federal pocket was at the initial stages, I will say is not bad.
But again going back to the module I used with Botswana, most states should have used the revenue to create an environment to make business thrive but you find that most of these states spend a good 70 to 80 per cent of revenue on the civil service and there is very little left for infrastructure development and for creating an environment that is more amenable.
So, when you talk about fiscal federalism, you have to think about it more carefully. It is going to test democracy and you will find out again that the person who leads the state as the Chief Executive had better be an astute, let me say, businessman in order to make sure that things work well.
Now, if we remove the funds that are provided to the states the states will suffer.
If we say that all revenues generated by each state should be kept by the states as you have in the United States and so on, a lot of states are going to be forced to get up and get things done. So, each state has the attitude of Nigeria as a federation which is that money comes in; how hard do I really have to try and where you have to work in order to thrive. That is why in the private sector, people work extremely hard for their money and therefore there is less corruption, there is a tightening of the systems and therefore there is a lot of efficiency that is expected from them.
In terms of budgeting, government says we want to use the non-oil sector as the driver of the economy, but in terms of really providing the fiscal support to the non-oil sector, we see some form of structural imbalance in the budget to the extent that the agriculture sector and other non-oil sub-sectors are not really financially empowered. How can we address this?
I think you will find going forward, certainly based on the recent orientation of government and from what I perceive, agriculture is going is to play a major part. The government has come to realize that agriculture as a source of employment will help in driving the economy. There is a lot that is being said now about agriculture value-chain.
What is also useful is that the Central Bank Governor, Sanusi Lamido Sanusi, is convinced about the sector’s potential to sustainable growth of the economy to the extent that he is committing several million dollars into agriculture, especially because the Central Bank has some developmental role as well. Having said that, you will found out that agriculture is going to be a major driver and many schemes that are now emerging with agriculture. With agriculture in place, we have a base and foundation for our manufacturers and industries.
People talk about the value-chain, people talk about funding the value chain, people talk about how can we invite big agriculturists and we are not just talking about the peasant farmers whom we have to look after. Don’t forget the present farmers will thrive when you have a huge agricultural plantation and processors around because you find out that all these processors encourage the farmers to go out of there and do out growers’ and so on and so forth as part of the old system.
So, I believe going forward you are going to find increasing focus in agriculture and I think the government has come to realise this and you will begin to see. A lot is being done and I think it will begin to materialise. We just have to be patient, this thing takes time but from what I see, I think that is the direction in which we should be going.