Mr. Babatunde Ruwase is the new president of the Lagos Chamber of Commerce and Industries. In this interview with ABIOLA ODUTOLA, he outlined the hurdles of the Nigerian economic growth and proffers measures that can make the Nigerian business environment conducive for investors. Excerpts:
What is your assessment of the nation’s economy?
We are just exiting from the recession and what the government is doing now is commendable. They are taking the right steps, but the only problem we have as a business group is the political effect of this effort. This is because there is no amount of effort you put on economically, if we do not get it right politically, it will create a big problem and that is where we have our concern.
A situation where the different arms of government are not working harmoniously as much as they should is not good for the economy. For instance, our budget has been up for weeks now, yet not much progress has been witnessed on it. The legislative arm of government needs to address whatever differences they have with the executive arm. The disharmony in the system is worrisome, and hindering the implementation of economic policy decisions.
The IMF recently stated that the combination of lower real GDP growth and uptick in government arrears “has resulted in a widespread increase in non-performing loans, triggering higher provisioning, straining banks’ profits, and weighing on solvency.” How can the economic managers mitigate these issues?
That is not correct, because as at the last check, a lot of investments have come into the capital market. The rise that we have in our foreign reserve today is a factor of increasing oil prices and foreign portfolio investment. The Nigerian capital market is rated as one of the most profitable investment places in the world; people are interested and they are coming into it. The problem with the portfolio investors, however, is that once things are going bad, they are the first to leave and that was how we got to where we were the other time; they pulled out fast. They always go to where they would get good returns and when they see the red light approaching, they flee quickly. So one cannot also rely on them and that is why we are worried on the growth based on this portfolio investment inflow, because you can never plan with it.
On public debts, there is nothing wrong with public debts because if you have to fix your infrastructure, you will have to get money and you will have to borrow from somewhere, but what you are using the debts for is important. The sovereign fund instruments that were floated recently were used to upgrade certain public infrastructure. So, it is not bad if we increase our debts to develop our infrastructure. So, I am not concerned about the debts, but how it is applied.
There is nothing wrong with public debts because if you have to fix your infrastructure, you will have to get money and you will have to borrow from somewhere, but what you are using the debts for is important
Nigeria is still doing very little in non-oil export according to the latest data from the United States Government. Should this not be a concern for us, considering that the economy is still largely driven by oil?
We should be concerned, but then, the government is doing a lot. Like I said, if you look at some parts of Nigeria today, you will find out that there is no cultivation of crops. In the North-East for instance, there is no cultivation; there is no meaningful economic business one would see and it is gradually spreading to the middle-belt, which we call the food basket of the nation and that was why I said if we do not get it right politically-because some of these things are just being politicised-it is will be difficult to move on.
Why we have not contributed a lot in the non-oil export sector? Another thing that has come to our notice is that some of those things that go through the West African sub-region are actually from Nigeria, but because of the stiff regulatory conditions reported by exporters, people will rather export produce through Lome, and Benin Republic. Recently, we met with the Nigerian Export Promotion Council that the LCCI has this working arrangement with them to see how we can encourage and create standards and remove all the obstacles that are in the way of exporters. We are actually concerned about the low non-oil export the country is doing presently and the NEPC is working with us, alongside other government agencies. However, with this political distraction that we have, if we do not handle it properly, there will be no meaningful growth.
Nigeria is believed to be one of the fastest growing economies, yet the poverty gap keeps widening. How can the well-being of the ordinary Nigerian be addressed?
Our population is growing at a rate faster than the rate the economy is growing. That is one problem that we have; we have infrastructural decay which this government is trying to address. That also is a problem. People are no longer in the rural areas and there are jobs in the rural areas. Everybody wants to move into the urban areas. There is also a concern about the lack of skills. How many of the unemployed are employable? You still find Nigerians going across the border to employ masons because they have the skills that we do not have. So, these are things that are also promoting these problems. We have infrastructural decay; you have people without the right skill that is required to drive the economy, there is no power and factories are closing down or they are downsizing their production capacity. Getting agricultural produce into the hinterland and to the market is very difficult and by the time they get there the produce would have been very costly to the extent that the ordinary man cannot afford and there are also lots of wastages. These are some of the issues we must take a lot at holistically. The Economic Recovery and Growth Plan by the Federal Government is supposed to address this. If we can religiously and truly implement this plan very well, it will go a long way, but then, like I said, we need to get it right politically, because more of politics is being played in the legislative arm of government. We must really get this arm to buy into these ideas to be as passionate as what we see from the executive arm of government. We are supposed to be the production hub of West Africa and even Africa, because most of the people are here, but lack of infrastructure is affecting this goal.
Should Nigerians or investors be worried over the state of the economy as the election approaches?
I do not think they should be worried, because that was how we got into recession. During the last election in 2015, everybody was buying dollars, and people who could move their families were moving out because they thought the situation was going to be terrible, likewise the portfolio investors also took off and this led to the beginning of the recession we just experienced. We should just be hopeful, be patriotic and I believe that we are going overcome it. Nigeria has huge potential and if foreigners have the confidence of coming here, why do you think I should feel hopeless as a Nigerian? I am very hopeful that things would turn out for good and it also depends on us. We should not allow ourselves to be manipulated by the politicians who are always using religion or using tribal sentiments to cause discord among the people.
