The crisis rocking the National Assembly (NASS) and delay in appointment of federal ministers by President Muhammadu Buhari has continued to generate ripples. Dr. Sam Nzekwe is the former President, Association of National Accountants of Nigeria (ANAN). In this interview with Deputy News Editor, LEO ALIGWO, he said that the crisis might delay effective implementation of 2015 budget of N4.1trillion if not timely resolved. Excerpts.
The Federal Inland Revenue (FIR) generated N1.85 Trillion nationwide as tax from taxable income within the first quarter of 2015. But the impression in certain quarters is that Nigerians don’t pay tax. What is your view on the issue?
Yes, Nigerians don’t pay tax. It’s only the workers whose emoluments are known that pay tax. The business men, trailer drivers amongst others in the private sector don’t pay tax, particularly Pay as You Earn (PAYE). Even the company income tax, they don’t pay, and they vie for big contract which I don’t know how they secure it.
These are the areas the government has to look into. It has to ensure that the contracts awarded to these companies are commiserate to the level of tax they pay. In fact most of the companies are inside portfolio. If they pay tax, the FIR would generate more than the total revenue it made public. This is why these groups of people live in affluence and spend their money carelessly.
Another area the FIR has not performed well is the Value Added Tax (VAT). VAT is a fast revenue yielding scheme it is a consumption tax but the FIR has not been able to register all vat able persons including companies. Most traders and other business men who either run enterprises or deal in vat- able goods don’t even understand what VAT is all about due to poor awareness on the part of FIR and Corporate Affairs Commission (CAC) .
The autonomy of the Local Governments has continued to generate public discuss. Do you support the autonomy of the local government?
Yes, I do. Also, I’m support of financial autonomy of the local councils. The joint state local government account should be scrapped to pave way for development of local areas. I did a job for one the state governments and I discovered that there was a problem when the local government chairman revealed the level of revenue made available to it by the state administration. The later normally falsely claim that it uses the money to execute project on behalf of the former. This is why the local government should be autonomous so that the chairman would be held responsible if anything goes wrong especially misappropriation of fund. They should have autonomy over their budget and discharge same accordingly. The question is why must the state government hijack the fund and make local administration stooge to it? The federal government should therefore ensure that all fund allocated to the local governments is directly release to them, and the chairmen should be held responsible if they fail to perform.
What is your advice to the National Assembly (NASS) regarding the implementation of 2015 budget of N4.1 trillion?
Members of the National Assembly are still grappling with internal intrigues including leadership tussle. The law makers, especially members of the All Progressive Congress (APC) should be able to settle their differences as soon as possible, to enable them handle national issues for which they were elected. The NASS crisis might further delay the implementation of the 2015 budget if it is not resolved on time. Suffice this to say that the house must be in harmony before they can look into the budget, otherwise the nation will not move forward. Also, the delay by the President, Muhammdu Buhari in appointing new federal ministers is another issue that is likely to affect the prompt implementation of the budget. Indeed, the proposed reduction in the cost of governance and cut in the salaries of the law makers, governors and other group of politicians will affect the implementation of the budget.
I commend Buhari and his Vice, Yemi Osibanjo for direct for 50 per cent cut in their salary. Expectedly, these proposal and other new realities if implemented by the President Buhari, will not make the budget realistic for the remaining half of the year.
Do you support the clamour for further devaluation of the local currency, naira which is presently exchanging at the rate of N253 to 1US$?
The naira is already devaluating itself. What the CBN is doing is paper work. The truth is that if we want the value of naira to shore up, we must import less and encourage more domestic production. Unless the government diversifies the economy, naira will continue to devalue itself. You need to visit the bureau de change (autonomous market) to get the exact exchange rate of the naira to the US dollar and other currencies. The trend will continue until the productive sector becomes fully operational with enabling environment created for the Small and Medium Enterprises (SMEs) to thrive.
In fact, the commercial banks should make available cheap fund to the SMEs to enable them thrive. To this end, the CBN’s Monetary Policy Committee (MPC) should work towards reducing cost of borrowing for the industries and they should be able to repay same at agreed interest rate.
What is your advice to President Buhari under the prevailing economic and security crisis which have exposed the masses to acute hardship?
President Buhari knows much of the high expectation of people who voted for him. A lot of people were happy when he assumed office, and we believe that given the structure of his character as no nonsense man who does not tolerate corruption, he will listen to the current public mantra of change. But it seems people are confused because they don’t know the direction he is facing now. If we have good governance, it will eradicate corruption. Again if good governance is adopted in appointing the right people into the various offices; it will curb corruption in the country. In the same manner, due process should be used in removing those who are not doing well in their office.
The Governor of Central Bank of Nigeria (CBN), Godwin Emefiele recently announced the ban of 41 items from allocation of foreign exchange. What’s your view on the development?
It’s a welcome development because several years ago we have the same experience when some items on the import list were not necessary allocated foreign exchange. Definitely, the banned items needed to be curtailed if we have to move forward. However, we must have alternative before curtailing such items. For example, you can’t ban the importation of rice when there is no local alternative. Such action will lead to starvation. We don’t have to leave our border open for importation of items we can produce within the country. In one of my interactive sessions with the former CBN Governor, Prof. Chukwuma Soludo I told him that if he compare the volume of foreign exchange released to the end users with the goods that they bring into the country he would discover that there is a very big gap. You will also discover that what is sustaining Nigeria could be money in the Diaspora or money that had gone to the bureau de change operators which we have don’t record of such funds.
Therefore the local industry must be allowed to survive. The local industry must be prepared to grow otherwise you will be punishing the people if the domestic firms are not given opportunity to survive amid provision of critical infrastructures like electricity. The government must play its own part well by ensuring that the industry it wants to protect thrives.
CBN’s action is a move in the right direction but the government should ensure that the items that were removed from the apex bank’s list of foreign exchange allocation are not vital to the economy.
How would the CBN’s decision impact on the masses and economy in general considering the N1.3 trillion spent annually by the government on importation of rice and other cereals?
The CBN’s measure will create scarcity of most of the banned items in the market, just as People would be forced to patronize available local alternative. The masses will grapple with problems in the absence of local alternative. The masses would be sentenced to Malnutrition if there are no local alternatives of the banned items. This is why we are calling For diversification of the economy to agriculture and creation of enabling environment for the Productive sector to thrive as the country would gain much from it.
Are you satisfied with the level of local production of rice and other products in the market?
No, I’m not satisfied because I don’t find it in the market. I have often asked the traders in the market for the locally produced rice. It is not available in the market. Rather what you find in the market is foreign rice. I’m not satisfied with the performance of local industry because of their perennial complaint of epileptic power supply, flooding of the market with imported goods like rice and other products that prevents them from moving forward.
The monetary and fiscal authorities must ensure that we have local alternative before banning the importation of foreign goods into the country. Despite CBN’s denial of foreign exchange to the importers of the banned items, importers of second hand vehicles popularly known as ‘tokunbo’ and related products are still bringing them into Nigeria. There is no doubt that importer of the prohibited items source their foreign exchange through recycled fund and bureau de change. In other words, about 70 per cent of the fund used by the importers did not come through the CBN.
How do the people in Diaspora contribute to the influx of fund used by the importers and other business group in Nigeria?
There are so many shady deals going on in the system. What the people in Diaspora do is that the importers pay them in naira in exchange for dollars or pound equivalent. The government has to dig deep to understand what is currently going on in the system because most of the importers did not source their fund through the apex bank. Indeed, most of them got their fund through the Diaspora and other means in Nigeria.
The former military President, General Ibrahim Babangida had during his tenure lamented that he had tried all economic policies which didn’t work and wondered how the nation survived.
Do you think the extension of the deadline for Biometric Verification Number (BVN) for bank customers by the CBN to October 31st is a step in the right direction?
I think it’s a step in the right direction considering the stamped in the Deposit Money Banks (DMBs) prior to the extension of the exercise by CBN on Wednesday July 1. Nigerians like the last minute rush. We are known for that. It is good that the apex bank extended the exercise to enable all bank customers register their BVN. However, the exercise was marred by poor awareness because most people did not know about it thought the registration of their BVN with banks was voluntary and geared towards protection of bank’s fund. They didn’t know it was compulsory. It was lately that Nigerians realized the importance of the exercise. Also, most people occupied their mind with how to put food on the table for their family. They did not show interest in the registration of their BVN with the banks because of the failure of similar exercise in the past like the national identity card.
Available statistics from the Nigerian Deposit Insurance Corporation (NDIC) showed that about N25.4billion bank fraud was committed in 2014, are you sure the exercise will curb fraud in the Deposit Money Banks (DMBs)?
The exercise would tremendously assist in checking bank fraud. The high volume of fraud being recorded in the banks was informed by the absence of customer data base. For example, somebody can obtain loan or defraud a bank and move to another state or town within Lagos state and start living normal life, and defraud another bank again and relocate to another area.
It is not going to totally eradicate fraud but would aid recovery of fund because the identity of the fraud star would be easily identified with the BVN. It would curtail bank fraud.
Will the ongoing registration of BVN bring more people into the banking net?
This a big question because a lot of people are outside the banking net. About 65 per cent of operators of the Small and Medium Enterprises (SMEs) which is the hub of the economy are outside the banking net. The financial inclusion and e-payment programme of the CBN is only working in the organized sector in contrast to the informal sector where people prefer the use of instant cash for business transaction rather than cheque. This is because they do not only trust the scheme but are afraid of being defrauding by fraudulent persons with clown or dud cheques that has nothing to do with banks. A lot of people have lost their money in the Automated Teller Machine (ATM) due to poor security, and the government has been very sluggish in handling the issues of clown cheque and malfunction Point of Sale (POS) installed by commercial banks and supermarkets for business transaction.
The cashless Policy of CBN is yet to be fully embraced by the masses, especially the traders and rural dwellers due to lack of awareness. The bank has to wake up to its responsibility in this area as part of the financial inclusion programme of the government.
Importation of textile costs Nigeria a whopping N10.2 billion annually in contrast to the $40 million she earns annually on export. What is your view on the proposal by the government to reopen closed textile industries which previous provided job for over 300,000 Nigerians?
I endorse the government decision to the effect. The textile industry is money spinning and job creation sector of the economy but the problem is that we are too theoretical. The industries can’t thrive without an enabling environment, especially the provision of infrastructure like constant electricity, adequate funding and cheap transportation network. The decision of President Buhari to revive the industries located within the Sothern and Northern part of Nigeria is a step in the right direction.
Your reaction to the recent collaboration between the National Agency for Food Drug Administration and Control (NAFDAC) and the Nigeria Custom to enforce the ban on importation of poultry products into the country?
I strongly endorse NAFDAC argument on Federal Government’s ban on importation of poultry meat, considering the fact that the imported poultry meats which are not only treated with dangerous chemicals such as formalin are not only injurious to health but hinder the growth of local industries. The poultry meats are treated with cancerous chemical abroad in an effort to preserve them. In fact, I can’t understand why we should continue to import poultry products when we have local industry to supply the poultry need of Nigerians. We have no reason to continue the importation of foreign poultry meats because we have enough local firms to satisfy our tour domestic demand.
Smuggling of banned poultry meats into Nigeria is a big business for the smu8ggers, and that is why the illicit business has continued. I don’t know why we can’t get enough supply of poultry products from the local industries.
The government should not only encourage poultry farmers to survive but beef up their production. I’m totally against the ban on imported poultry meats because it‘s a dangerous business, and I find it difficult to eat it whenever I see it, I’m afraid to taste it because of the dangerous chemical used in preserving it abroad.
Also, the Association of Nigerian Poultry Farmers should work on their members to produce more poultry meats to meet local demand hence they had alongside NAFDAC discovered the health implications of imported poultry products.
However, the absence of enabling environment such as stable power supply to preserve their products has remained among the major problem hindering them from meeting the domestic poultry need of the people.