 You're welcome back. We're going to have a second guest now. I remember that I said first guest. Well, Mr. Zickel Etanyok was actually our first guest. But our first hot topic today, we'll be looking at the challenges or all the Nacima having challenged Tunibu on SMEs and private sector driven economy. That's what we'll be looking at now. So we're glad to be joined by Mr. Frank Eleanya, a technology and media news editor at Business Day. Good morning and welcome to the program Mr. Eleanya. Thank you so much. It's always a pleasure being on the show. Okay. The Nigerian Association of Chambers of Commons, Industry, Mines and Agriculture, Nacima as we're calling them, have urged the President Bola Tunibu led government to tackle challenges that small and medium enterprises, SMEs encounter in the country. And some of these challenges that they mentioned are poor power supply, multiple taxation, infrastructure, infrastructure forex, availability and diesel availability and all that. So we'd like to hear your thoughts. Nacima have mentioned these as the problems that they, that sector faces. Let's get your comments on how right they were or are there things that they are living out? Yeah, they are absolutely spot on. I believe one of the things that they are referring to is the fiscal policy measures of 2023, which have added more taxes on top of what the industry is currently facing. Don't forget that the industry, according to the Nigerian Bureau of Statistics, suffered a decline of about 2.8% there about. And that's a decline from actually last year, which was at 3%. The industry also is currently facing, like everyone else, is currently facing inflation, which is at 22.22%. It is not easy. There was a report that business they wrote about that came out in today's paper, which looked at the fact that on sold, on sold products, the number of on sold products have actually risen. Why is that is because consumers are pressured. They are facing a lot of pressures. They don't have the amount of money they have to buy goods are getting thinner and thinner every day. No thanks to the inflation, which I mentioned earlier is at 22.22%. It doesn't help anybody that you go and pile up more pressures by adding more taxes to the manufacturing sector. If you want the economy to grow, what you need is an economy that is productive. And where is the engine room for production is the manufacturing sector. If you what you need to do right now is to find measures by which you reduce some of those pressures. I think the idea of adding more taxes is absolutely a bad idea at this time. Don't also forget that we are also facing the removal of subsidy, which also means that consumers are buying their products at a ridiculously high high rates now because of the pump price that retailers have to add to whatever it is that they are selling. So if you put all of that together, what that means is that in the next quarter, we're going to see more on sold products on the shelves of the manufacturing of manufacturers, and it doesn't look good. What we need to do now is how do we reduce that pressure on manufacturers? So if we're going to help them, if they're importing things into this country, all those excise duties that the government is always excited about, you know, collecting, maybe we need to think about how do we relax some of those? How do we relax some of those excise duties? How do we relax some of the taxes that they are facing from maybe the state and also the local government? You know, so it is everywhere and it needs to be addressed immediately. The economy needs to start growing and it needs to get back to the point of to the point where we're creating employment. You know, so at this point, you don't expect any manufacturer, you know, to to create more businesses or to create more jobs. You know, but then the new president has said that he plans to create one million jobs, for instance, from the ICT sector. How do you do that when you're also pulling more pressure in the form of taxes on the ICT players? You know, so some of those things are what needs to be considered. And Nassima is very, very important when they say that the government needs to review his approach to taxes. We said before that there is a need for harmonization of taxes. There is a need for a review of some of the taxes that doesn't make any sense. You know, some of them are actually duplicates. The state government collects the the local government comes for his own. You know, so all of that house pressure on the productivity of the manufacturing sector. So I think it's high time that we look at this and say, how do we get these people back to their to their plant? How do you get them back to to producing stuff again? We need to become a productive country one more time. Thanks. As of today, we know that tax or the the the story in the newspapers is that tax to GDP has risen to 10.86 percent. Now, explain to us what the implication of that is. So what that means is that unemployment is not going to reduce. OK, like I said before, who pays the taxes one less less ourselves, who pays the taxes? You for every item that you tax, the manufacturers, yes, you collect it from their bank accounts, yes. But then they place that money on the goods that they produce, which the consumers will eventually pay for. So what does what that means is that if consumers currently are pressured and they're not buying what is already being made, how sure are we that they're going to buy the ones when we increase the taxes? You know, so that's what we are facing. You know, for for the manufacturing sector, it's it is critical that we start thinking about how do we incentivize that sector, how do we incentivize the players? How do we make them more productive? It's it can continue the way we think where the government is is going about it. There's something I read just a while ago from the PWC, which says that some of these increases that the government is making is actually inconsistent with the fiscal policy that is signed over 2022 to 2024, where it plates that it wasn't going to increase more taxes on the sector. So it's important that we stick to that. That there needs to be some consistency. There needs to be some measure of the commitment that says that we see what you're facing and we want to help you get out of it. We want to make you the engine room of this economy. We have seen that oil and gas sector isn't quite playing the role that we expected it to play in years past. You know, it is dropping currently contributing about six percent between six percent to seven percent to the GDP. What we have now is to rely on our non oil sectors. Make them productive. Make even the service sectors needs to be encouraged. The telecom sectors need to be encouraged. Every sector that is not oil actually needs to be encouraged right now. If we're going to move the economy forward, already what we are facing is that inflation has has declined for four consecutive times, which means we are inching closer to another recession. If we don't address these issues about productivity, then there's no way we're going to avoid it. The government needs to start looking at how do you incentivize these in these industries? How do you make them productive one more time? And which is also one of the concerns I have when the when the president came out and just literally just announced the removal of subsidy without announcing was the cushion or what are the palliatives that you're putting in place to help people go through the phase that you're asking them to go through. Also today on on a business that we're talking about if you're going to ask people to make sacrifices, you too have to make sacrifices. So we are waiting for this government to do something about the cost of governance. How do you how do you want to run the government? It means we need to know about it. And that needs to be we need to start seeing that some of the expenses that the government run that are necessary are being cut. For instance, why don't we sell off some of those aircraft that the government has about nine of them? So some of those things the government also needs to start making sacrifices on its own. If you're asking people to make sacrifices, then you have to start making sacrifices. That is what the manufacturing sector is looking for. Make some sacrifices and also give them some incentive. Let them know that you care. The CBN at that time started this program where they were giving a hundred Naira for every one dollar that a manufacturer brings into the country. And I said to someone, look, it is not going to do anything. It is not going to move the needle, you know, because you have an address of fundamental issues that the manufacturers are facing. You can just because you're giving somebody hundred Naira for one dollar isn't going to be enough motivation for him to go back to the plant. There needs to be some commitment to show that you are addressing issues around electricity. You are addressing issues around infrastructure. You are addressing issues around health, around education, because they need talent. So those are the things that needs to be addressed before we start seeing things moving to the to where we want them to move to. You talked about encouraging encouraging the SMEs, the encouragement could come in two ways or one of two ways, maybe giving the incentives you have talked about by way of loans, soft loans and all that or or removing the tax. But both of them cannot go together because the government still needs to make some money and all that. In your opinion, which of the incentives will be better for the manufacturers and any other any other person or any other organization under the SMEs that you're thinking about? What kind of incentive or sacrifice do you think should be should be the first that will be given to SMEs to make them grow? I will think tax incentives will be the first for you to present to them because if we're looking at loans right now, loans are not very they're not very attractive. Look at the rates, the MPC have recently increased the rates and that's like too high. If you're going to a bank right now to go and collect loans for your business, you know what it is, it probably will have increased maybe to from 10 percent or more. And then if you maybe leave the banks that you want to go to digital land us to go and collect that money, you probably will get it even much higher. So loans are not looking very attractive at the moment, even though banks are willing to give right now, because when you have higher interest rates, it means that banks get to make more money. But those who are going to collect it will start thinking about their books. How do I pay back if I collect a loan at this percentage? You know, so I think for small businesses right now, what they will be looking at is if you can reduce some of the taxes, perhaps, because there's a lot. There's a lot of taxes that they're paying. You know, for instance, look at the telecom sector. The telecom sector pays about over 40 taxes, 40 different taxes, over 40 different taxes. And you look at how how effective are these at these numbers? How how do they impact the books of the telecom sector? It is a lot for them. You know, if you're not an MTA and if you're not an Airtel, you probably are down on your knees every day, trying to make ends meet. Now, think about an SME that is paying maybe about 10 taxes or every day. It is it is a lot. And then add that to the fact that they also have to provide their own electricity. Add that to the fact that they also have to provide every other thing. They have to provide a health care for themselves that will provide every social amenities, because right now, government isn't providing much for for many people, you know. So I think it's time that we start thinking about how do we taxes for me remains number one, not loans, maybe in time when the economy starts getting better, the loan, the interest rate will reduce and then the market can come back, you know, to to make the demands for loans. But right now, loans are not very attractive. So taxes for me will be where to start from. OK. The Commons and Industry Correspondence Association of Nigeria's chairman said that even though the government said the inflation rate is slightly above 20 percent, that is just official. But the real issue is that the inflation is above 40 percent. Are you also thinking the same way? Actually, KPMG had had an estimation like that, that the inflation has gone even higher than what is being stated, you know, and there is there is some sense in that if you go on the streets, you'll find that the cost of many items have gone up. OK, food, for instance, have have skyrocketed and it will even be higher if we also impute the current realities where people are having to buy people are having to buy petrol at 600 Naira to 700 Naira from from about 185 Naira, you know. So if we're going to calculate what the inflation rate is going to be in the next few months or even quarter, we're going to find that the inflation rate is going to be a lot higher than it is. And again, this is pressure. This is this is just on the people because at the end of the day to the people that bear the brunt of all of these inflation happening. So what do we do to bring palliatives? What do we do to help people survive this period? Because somebody said, OK, he's going to pass away. I don't I don't actually think it's going to go away. You know, I think unless the unless we get back to the point of production where we are producing what we are eating, where the exports trade is unbalanced with is is at par with import trade. Then I don't think inflation is going to come down. It will come down if we increase production. But it is up to the government. We are waiting for them to see what they're going to do. First of all, who are they going to appoint? Because the quality of the team that they have would determine the extent of productivity we're going to have. OK, let's take a final one now. One of the other things that the Naseema talked about is private sector driven economy. We have seen that a lot of people say government has no business doing business, even though we've also seen that somewhere in China, China is doing well, even when the government or the state controls a lot of things. So how far can the economy be left in the hands of private entrepreneurs to drive the economy? How far can they leave? The private partnership is good. Running a private sector driven economy is good. But how far can the government hands off to make the economy to put the economy in the hands of the private individuals and make it work? I think that if we're going to use what happens in China and maybe compare to Nigeria, we'll probably not get the best picture because what applies in one country may not apply in another one. And Nigeria is a very big example on that. Saudi Arabia, for instance, have run a state company that runs their oil sector. And we've seen how Aramco has successfully positioned the Saudi economy on oil and they have made a lot of progress on that. But in our case, the reverse has been the case. We have seen with evidence that the Nigerian government, whether it's from a passenger, whether it's from a passenger to Yara Dua, to Goodluck Jonathan, to Buhari and even to, I'm not sure it's going to be different with the current government. So that's why the sentiment is let the government focus on making policies on creating the right environment for businesses to try and leave private sector to do business the way it's supposed to be done. We have seen evidence with the way the refineries were run. OK, we have four refineries and every year we make budgets that we tell ourselves we want to refurbish, we want to rehabilitate, whatever synonym they want to choose in a particular year. But at the end of the day, we don't see any results from that, from the projections. Currently, they said that the Port Harcourt refinery is is near completion. We we wait to see what what they have done. You know, if it comes mainstream, that would be nice. But I also insist that if you wanted to run efficiently, give it to a private sector player to run it. A government for me in Nigeria does not have any business running any business. All they should just focus on is make the right policies, bring things, bring the right people, create the right structures, create the right teams and create the right environment. Then businesses will try even up to building roads. If you create the right environment, you will find that you you find private sector players that will come and tell you, look, we want to help you build this road. But then this is how these are the conditions and you can negotiate it and you don't even to build the roads with your money. You can supervise it. You can you can be there, you know, just like we're doing say with the refinery, he's building the refinery and we have a 20 percent stake from it. So whatever he's going to make, whatever profits he is going to make, our 20 percent stake guarantees that we make money as well. So that should be the way forward of running business in Nigeria. If your government stick to your job of just creating the policies, allow private sector to do what they're supposed to do. So I think it's actually very important with the new government, it is the same thing. Don't try to be the minister of petroleum when you are the president. Bring somebody who can run the industry and who knows how to hands off and just make the policies so that the industry can try. Don't try to be the minister of petroleum. It's a disaster waiting to happen. So I'm expecting that these current administration has lessons and is going to make the right amends. So is everyone's expectations actually? That's a good way to a good place to land and wrap up this segment. I'd like to thank you, Frank, for coming on the show and giving us your perspective to what is happening and lending a voice to what Nassima said. Thank you so much for being a part of our program. Thank you so much. Thank you. Yeah, Frank Leanya there on the program today. Frank Leanya is a technology and media news editor at Business Day. He's been talking with us on what Nassima said, the challenge to move on SMEs and private sector driven economy. We do hope that our economy will grow in lifts and bounds. And then the fear that is in every heart of a Nigerian will no longer be there. Good luck to the president administration. OK, we'll take a break now when we return. We'll be talking to our third guest. Stay with us.