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How to reset Nigeria’s ailing economy, by expert - THE NATION

JULY 03, 2022

Nigeria’s economy which is on the brink of collapse requires deliberate efforts by all and sundry to turn the tide, Eben Joels has said.

Joels, who is Country Lead Partner, Stransact Chartered Accountants, shared useful insights with our correspondent during an email exchange, lamented that Nigerian economy remains largely a mono-economy which relies solely on sales of crude; a development he said is counterproductive.

According to him, “when international gas prices skyrocket, we make a lot of money. We still make a lot of money, but today, our population is rising and our need for gas consumption is also rising. We make a lot of money selling crude, and then use the same money importing refined petroleum products from aviation fuel, diesel to prime motor spirit. We’re even struggling to meet our bills in importation. Previously, we made a surplus, but there is no more surplus. Because pricing is international, when prices go up, the cost of importing also goes up.”

While noting that one of the things the outgoing government promised to fix was the refineries, with a pledge by the then Group Managing Director of the Nigerian National Petroleum Corporation (NNPC) assuring that it was possible in one year.

Lamentably, he said, seven years after, the refineries are not fixed, rather the government wants to acquire a stake in Dangote refinery. “I don’t think the people who run the country take the issues seriously enough to understand that we need to develop our own local refining capacity, even if it means empowering local small scale modular refineries. Rather than declare them illegal, the Federal Government could work with them, get them investment, standardise their processes, and create a modular refinery chain. The more we import gas as crude oil prices rise, the more our naira falls. The political class needs to be awake.”

On what can be done to stabilise the habitual free fall of the naira, Joels said it was a no-brainer. “The common sense approach is that the naira will appreciate if production appreciates and a lot of people earn foreign exchange. A lot of people actually earn foreign exchange in Nigeria now. Eight years ago, things like monetisation of the YouTube or social media accounts for dollars to flow into our accounts wasn’t as ubiquitous as we have it now. That tells you that we need to free up our economy so that individuals are able to earn foreign exchange directly.

“The government needs to relax our exchange controls, remove export restrictions, make the naira a free market determined currency and not a government imposed rate. The more we have the government put their hands in things, the more problems we have. If we fix our ability to export without restrictions, and remove restrictions around the control of naira and let it find its true market value, the currency will stabilise and would be a proper measure of the strength our economy; rather a situation whereby the value of naira is tied to how much dollar is needed by politicians.”

While attempting a prognosis of the problem of the nation’s tax administration, he said a lot still needs to be done within that space.

“In today’s world, everybody knows that to get things done, the best way is to have the buy-in of the other person. Global companies know that it is a big stain on their reputation for them to be accused of evading taxes. They also want to be compliant. The approach of a wise tax man is to appeal to the sensibilities of the company to remind them that they are corporate citizens who need to be seen as such. The government does better in their approach to collecting taxes. Although the approach is much better than it was seven years ago when they had all manner of people at everybody’s door claiming to be consultants for FIRS, harassing people who work very hard to keep the country’s economy afloat. They are better, but there’s still a long way to go.”

On what can be done to boost the small and medium scale enterprises, he stressed the need for continuous education to orientate SMEs.

“Every society and home is built on values. The values that the business holds, it sets out to be, to become, is the strongest thing that helps the business to succeed. Capital and every other thing is a plus. Most businesses start without identifying what their values are, so they get into other SME markets because they need to survive and then they do anything and everything anybody in Nigeria would do to survive. An SME that wants to go places, needs to identify the values it wants to be associated with in business. Those values should be based on the society or immediate environment. You cannot set out to go global and set your operations manual local- there is a mismatch in value alignment.”

On the role technology can play in the area of tax, audit, due diligence, he said it is inevitable. “Technology is already playing those kinds of roles. Today, you don’t need to fly everywhere. You can do almost everything online. In terms of the methodology to be used in carrying out due diligence, there are quite a handful of specialised tools available now to make the job simpler. We recognise technology as an integral part of our practice.“


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