 The organised private sector of Nigeria comprising of the Manufacturers Association of Nigeria and the Nigerian Employers Consultative Association, among others, have expressed its opposition to any attempts by the federal government and other tiers of government to introduce new taxes or levies. The Ministry of Finance, budgeted national budgets, Mrs Zainab Ahmad, had said the ministry is closely studying the possibility of introducing new taxes, tariffs and levies as part of measures to shore up government revenue. Wel, joining us to discuss this is financial analyst Richard Inoyu and managing partner Viral Business Consulting Ltd. I'm Kim Joseph Palmer. Thank you very much, Mr Palmer, for joining us. Thank you so much, Mary. Nice to see you. Great. So, when it comes to taxation, we know that the different ways of taxing the system. I mean, just recently, Lagos and River State governments were fighting the federal government on VATs and here we are. The government is trying to shore up its revenue and the Manufacturers Association of Nigeria are saying that this might destroy the already crippling economy of the country and might lead to job losses. Can you put a picture to us for someone who's involved in business? Okay, I'll start by saying that I understand where the government is coming from. I mean, as we speak, Nigeria had lowest revenues at the 115 countries. Nigeria was no 115. And that means in terms of spending capacity, Nigeria came second to the last 115. So I understand the price job to improve revenues. In fact, where it's going, if Nigeria doesn't do something drastic by 2021, you will find out that total revenues to the States is certainly going to decline drastically. And of course, we know what the ripple effect will be. So do we need more revenue? The answer is yes. The question is how? How should Nigeria shore up its revenue? As a business person, I already understand the challenge. You know, and I can tell you the truth. A tuba of yarn. I found good prices. Last time I checked, it was about 70 to 150 naira at Aram, Nassra, Oah, and Jopistar. That's if tuba of yarn will probably be at 500 naira to several naira in Portugal or Lagos. What that means is, I mean, when you want to ask yourself, you will say, okay, so what happened? How did something that was just 70 naira become 500 naira? The answer is there are so many hidden costs to every business in Nigeria. To pick up business, where I look for how to provide his own water, his own electricity, and maybe other opportunities that are provided. So that tuba of yarn became 500 naira because it went through a process where indirect taxation, thereby to what I call the corruption value chain, again, you find out that apart from the registered government taxes and levies they have to pay, there's also the issue of people who have put themselves as gatekeepers in the process, middlemen. And then when the yarn gets to us, it comes at 500 naira. Now, the truth is for almost every goose or service produced in Nigeria, they are direct and indirect costs. And I can tell you that every business functions along three lines. One, to improve effectiveness. So you produce, say you produce one more vegetable oil. If you can meet your targets, and you know this, I want to produce 50 litres of 50 tons vegetable oil daily for manufacturing companies to do that. If I can do that, I will be effective. And if I can do that with an optimal utilization of resources, then I'll be efficient. If I can combine the gains of effectiveness and efficiency over time, then I can see that it will be sustainable. So the question is this. When we talk of efficiency, we're talking about resource utilization. How do we make our businesses perform within the context of the economy? Well, talking about the context of the economy, let's go back to the basics. You made mention while you were trying to describe the business environment in Nigeria, you talked about the average business person being a government to himself. Getting your own light, paying for your own water, sometimes upgrading the road to your business area. Does this not also point to a failure of governance at certain levels, which has led to the fact that we have these hidden costs, this problems that we're facing every single day, whether it is light. I mean, I know that businesses, I was listening to the radio the other day and seven parts of Lagos were complaining that they were going to have to, that I think the power holding company was going to take their light for about 18 hours. And this was the time that they needed the light the most to do their businesses, and that they might also be on the losing end. So if the government has failed to produce or provide these things for these businesses to thrive, and then they're still trying to tighten the belts of these business owners to pay more taxes, does it really make sense? I completely agree with you. I mean, in another life, I was the head of a manufacturing number of things. And I'm telling you that my greatest nightmare is not to have government light. I mean, we had Sarah Transformers running, we had the 33kba transformer, we had all that 11kba, our sixth 11kba transformer there. Not getting government light, and we have not even getting gas, because when running on gas, produce our power. And I've done the numbers, and for me, the cheapest source of power from any manufacturing concern is the one we get from the utilities, from government. So when we can even get it, you can imagine how much cost. If you are trying to run an average boiler in a manufacturing plant, and you come with your diesel fuel to run it. Honestly, in under an hour or so, you've gone up all that diesel. And you probably won't be able to transfer that cost to the consumer, because market forces and all that, you know, things come to bed when you are doing appropriate pricing of your products. So if the market says, oh, a ton of vegetable oil is $700,000, and you are producing because of your input costs. You know, you are not fortunate enough to get enough power. And you had to go on diesel, or you made this at that point, your gas was not going to run right, so you didn't use gas. You find out that the additive cost might make it almost impossible for you to make it profit. And people do make negative balances on this kind of issues. So you know completely, talking to me, you are preaching to the choir here. And the standard that I know, that I said government does something drastic, but some key things. This solution, and really, I must let you know that I'm underlying the position of the United Arab Emirates Centre. Do I know that government is facing a difficult situation? Yes. Do I understand that if they don't do something urgent and drastic next year? Yes. And that could include issues like the issue of PMS and we will remove the subsidy or not. That's a nice story. That could also mean cutting down the cost of doing business. Because if, I mean, every business, I mean look at it from a very important point. The only way, the simple three most basic ways of business, and government is a business to grow there, ready with this one, increase your number of sales, you sell more items, you know, you get it out. Two, you increase your profit margins. And finally, if you're not increasing the number of sales, you're not increasing your profit margins, then what are you trying to do? You reduce your cost. So if government is not getting enough revenue, and of course it cannot do more in terms of sales, you know, for the crude oil and all that sort of income, it cannot increase the margins it gets for some of these things because there's something to grow back from petition and pricing. How about the last option? Reduce the cost of governance. So why don't we try that? And that's a sore point. Every time we talk about reduction of the cost of governance, it seems to be an issue. There's no political will to do that. Exactly. And then, and I'm wondering why continuously seem like a slave driver for businesses who are barely struggling to survive. I'd like to even quote someone from the MAN, which is the Manufacturers Association of Nigeria, who said that doing this will mean that it would be counterproductive for businesses. He said, according to him, he said he will further stifle the already burdened businesses, most of whom currently operate at less than 50% capacity utilization. Let's not forget that even normal jobs, even many companies, private companies, are now paying 50% salaries, some are paying 85% salaries. And he went ahead to say it would further lead to an upsurge in unemployment. And with its attendance, socioeconomic consequences, knowing that the more idle hands we have, the more devil's workshops will be opening across the country. I already have a lot to deal with in terms of Banditry and Boko Haram. Absolutely. He's completely correct. Such an action has a bit of stazil effect across. I mean, like a cancer is going to go around to every look and cranny of Nigeria and put pressures on Nigerians. Let me tell you something. I'm starting to like people manually, seriously worried. The truth of the matter is that when you see manufacturing concerns, the impression is that, oh my goodness, all this facility here and everything, they make tons and billions and now, do they make a lot of turnover? But what are the margins? Remember I was talking to you about what are the margins? They are called fast-moving consumers because typically they want to move that quickly to the market. So the margins are not fantastic. If you put more pressure on the margins, what is incentive to do the business? I expect that some business will simply close down. Honestly, and when they close down, what are going to be so right? What is going to happen to jobs? Will really back it and really move that Nigeria is not operating in the best security climate. I was in Medigree sometime back when another happened. I had a meeting with Chamber of Commerce and they felt strangulated by so many things. In a place where insurgency, the private sector has borne the brunt of it, because there are businesses that are targeted by the insurgents and so on. This seems to be nothing to have them come out. We do know that about 90% of businesses, they keep driving for every economy. 6 million micro-small-amidians per enterprise who should be able to galvanize the economy. So when you come up with policies that will strangle it there and lead to job losses, then what are we saying? Are we saying we do not understand the challenges? The government does understand the challenges. I know they know this, they don't live in another country. The truth of the matter is that if the government is interested in actually and agreeing to find new innovative ways to improve revenue, but you cannot ask businesses who are already over-bored if you can provide the right infrastructure. What have you done? You have created better margins for them. They don't need to buy diesel anymore. They don't need to get alternative power sources. For every manufacturing business, the major problem is power. So if you can do that and provide good infrastructure for a load to the cost of the fees that they need to run their plants, drops. Then you have created a new margin where you can now say, okay, I have created a new environment for you. So on the basis of that, I don't need to leave your tax. That could make sense. When you see people who are already over-bored, honestly, I don't know what the idea is coming from, but I think it's not the best of ideas. Finally, let's talk about the fact that we are mostly a consumer country than a producing country, I beg your pardon. In terms of our imports and our exports, we import more to eat than exporting to make money. What do you as a business person think is the problem aside from the fact that the enabling environment is not there for us? But then what happened to the big industries that we had, the reviving of these industries? I mean, take a look at the Ajakuta Steel and several other big government facilities that have just literally been laying fallow. There have been a lot of questions as to why we have just somewhat become comfortable with just producing oil and selling at a benchmark, which again, let's not kid ourselves. We will not be there forever. Countries are moving to green energy and gas, but we're still here talking about crude oil and depending solely on it. Whatever happened to other aspects of growing the country, I mean, agriculture is one side, which we continuously pay lip service to. We have not really addressed the issue of agriculture. But then what about manufacturers and of course industries that we used to have that are now somewhat marbond? Thank you, Maria. To this, let me start by saying something a bit positive. Since 2015, for the very first time, Nigeria's economy is growing faster than the population growth rate. Populatio growth is about 22.5% to 2.7%, but a contestant in general, the economy in Q3 of this year to greater than 4.03%. So, which means we're hoping that things will change. But you see, if you don't fix certain things, then at best we'll be having very untrammeled growth. We'll grow, but the issues around it tell me, what grows the economy? We talked about the issue of balance of trade. I mean, how much are we exporting and how much are we increasing? How do we stop the millions of Nigeria from consuming foreign goods? I mean, one of the things I've heard some people talk about and it makes a lot of sense to me is the concept of import substitution. You say, okay, we're buying a lot of tissue paper from London. Why don't we create a capacity for people to produce a look at it? We buy our wines and spirits from social place. Why don't we create a capacity to do that? I strongly believe in a selective delinking from the global economy. And until Nigeria comes to that realisation, they will learn to tighten our belt and say, oh, we can do that with a lot of things that we do. And then not only do we cut down on the consumption, we act as if, how do we produce? And then government provides incentives and guarantees and help people produce. If I know that the government, I mean, anyway you say this, they open the borders, they bring a good chunk of the vegetable oil consumed in Nigeria country as a known fact. But where does the rice come from? The good chunk of the rice comes from all the borders too. So the question becomes, how do we grow our economy with a lot of issues? How do we manage the borders better? How do we reestablish trade unions and learn how to channel things through them? Why don't I have it in for my borders and start for our purpose? So finally, is it that we cannot or is it that we don't know how to? This is where my confusion is. Is it that the government cannot do it? No, it cannot do it. I'm telling you that I and you, we are definitely not smarter than government, extracurricate technocrats who see all these things. But again, it's always the political side to some of these angles. If we say, we'll stop in party institutions or whatever, there is a political imperative for that. So can we have the government that will say beyond the politics Nigeria first? Beyond my cronies and my political supporters Nigeria first? Perhaps if we can get someone who will sit down and you can't make any omlet that you are breaking some eggs. That's the honest truth. If we can reject our thoughts and get people in government and governance to buy the bullet and do the writing, perhaps there will be some blame out of that at the end of the time. Well, OK. Joseph Palmer is the managing partner of Viral Business Consortium Limited. Thank you so much for speaking with us. Apologies. We could not get Richard Inoeo to join us. Thank you so much once again. Thank you so much. Thank you all for staying with us. It's been Plus Politics and Plus TV Africa. I'm Marianna Cymru. Thank you for watching. Have a good evening.