The present administration had at its inception last year embarked on policy reforms including the removal of fuel subsidy and the unification of the foreign exchange rates. These two policy actions have seen the country struggle with hyperinflation and instability in the foreign exchange market.
NECA said major policy shifts undertaken by the government in 2023 and the adverse impacts they had across various sectors, are having terrible effects on businesses and the national economy.
President and Chairman of Council, NECA, Mr Taiwo Adeniyi, at the 67th Annual General Meeting, AGM, of the Association held in Lagos, lamented that the combination of fuel subsidy removal, and exchange rate liberalization have significantly created market distortions and increased the cost of doing business, leading to a contraction in business activities since mid-2023.
He said: “It is no longer a secret that private businesses in the economy are beset with innumerable challenges, pushing many to the realm of mere subsistence.
“A good number of these private businesses continue to exist due to sheer determination and doggedness of the owners and investors, who are committed to supporting the economy.
‘’We commend the Federal Government for its various policies aimed at improving the operating environment and for establishing the Presidential Committee on Fiscal Policy and Tax Reforms.
“As we await the committee’s report, we believe the recommendations will be business-centric and given quick implementation attention by government.”
Notwithstanding the ongoing support by the government, Adeniyi listed six key concerns of businesses including the high cost of doing business due to depreciation in the value of the naira, increased Customs forex rate for clearing of cargoes, business-antagonistic regulations, proliferation of provocative taxes/levies and oversight functions of the National Assembly.
He said: “Private businesses are struggling with high production costs due to increased import bills for foreign inputs and raw materials. Before the liberalization of the forex regime, N460 was exchanged for US$ in the official market and about N750/US$ in the parallel market.
“After the policy, the exchange rate soared to N1600/US$, significantly raising import costs for the private sector. To address these challenges, we urge the Federal Government to review the current forex liberalization policy and adopt a more guided forex management procedure that supports domestic production.
“The upward review of Customs rate for cargo clearance to N1,413/US$ from N952/US$ in February 2024 has severely impacted businesses. These increases depleted the working capital of businesses, increased cost of production and drove up commodity prices, while also reducing household purchasing power.
“It has also contributed ominously to the general contraction of private businesses in the economy. Therefore, we urge the government to embark more on policies that are not only pro-business but also drive production and ensure job creation.
“In recent times, we have witnessed a proliferation of unfriendly and unjustifiable regulations aimed at organized businesses. It is our firm believe that regulations are meant to promote businesses and not to stifle them.
“Some of the recent regulations have become a source of shock and distraction to organized businesses, even though some of them were eventually suspended. For instance, the recent ban on alcoholic beverages in small packs by the National Agency for Food and Drug Administration and Control (NAFDAC), caused significant anxiety in the sector before being suspended after lengthy engagement with the government.
“We, therefore, urge the government to always conduct exhaustive consultation with private sector stakeholders on policy issues and act in the overall interest of the country within the prevailing circumstances.
“In recent times, we have observed several new taxes being imposed on private businesses by the Federal Government agencies. While we have witnessed the introduction of new taxes and levies, we commend government’s bold initiative of inaugurating the Taiwo Oyedele led Presidential Committee on Fiscal and Tax Reforms.
“It is hoped that the recommendations of the presidential committee will usher in a new dawn in tax administration in Nigeria.
“For over 10 years, we have witnessed the incessant invitation of organized businesses by different committees of the National Assembly on issues within the purview of the executive arm of government.
“Constitutionally, the National Assembly’s oversight function does not extend to private businesses. This responsibility lies with the ministries, departments, and agencies, MDAs, of the government.
“These invitations have caused significant distress to businesses, consuming time and resources. Although NECA has ongoing litigation on the dimension of the exercise of the oversight function with the Supreme Court, we urge the committees of the National Assembly to exercise their oversight responsibilities within the confines of the constitution.”
Reacting, the Manufacturers Association of Nigeria, MAN, also identified foreign exchange (FX) volatility, inadequate power supply and high inflation as some of the topmost challenges they encountered in their operations in the first quarter of 2024 (Q1’24).
This, according to it, led to a further surge in production and distribution costs by 20.7 per cent within the period.
MAN based its position on the response of chief executive officers in the manufacturing sector on a survey it carried out.
The Manufacturers CEO Confidence Index (MCCI), Q1’24 survey report stated: “The list of manufacturers’ challenges include unstable and high exchange rate/scarcity of FX; inadequate power supply/frequent power outages; high inflation/high operating cost (of raw materials, labour, equipment and maintenance); high cost of energy (petrol, diesel, gas); high and multiple taxes, charges and levies, among others.”
Director General of MAN, Segun Ajayi-Kadir, said: “The subdued performance of the sector is attributed to some ongoing harsh economic reforms that have compounded the long-standing challenges confronting the sector.
‘’This is confirmed by the finding of this report which reveals that forex scarcity, inadequate power supply, high inflation, rising energy cost, multiple taxation, policy inconsistency, exorbitant interest rate, poor infrastructure and high logistics costs are the top ten challenges depressing productivity in the sector.
“MAN expects government to frontally address insecurity, improve electricity supply, promote fiscal sustainability, and ensure policy consistency.’’
Similarly, the Director General, Nigerian Association of Chambers of Commerce Industry Mines and Agriculture, NACCIMA, Sola Obadimu, said: “The cost of doing business continues to rise almost on a daily basis.
“That’s neither healthy for business operations nor planning. Due to rising interest rates, MSMEs may not have the financial capacity to borrow. Large businesses may also prefer to downsize rather than borrow at current rates.
“With decreasing production due to high cost of funds, unemployment may worsen with the possibility of an increase in crime rates. Unfortunately, in the midst of all these, there seems to be a deliberate effort to aggressively pursue tax drive policies.
“Certainly, there is a need for an improvement in public finance management to ameliorate the harsh economic environment.”
Meanwhile, in his goodwill message at the NECA AGM, President of Nigeria Labour Congress (NLC), Joe Ajaero, solicited the support of NECA for a better wage for workers, saying it was not about figure but the value of money.
Ajaero said: “Fair wages are not just a matter of social justice; they are also instrumental in boosting worker’s productivity and, consequently, the bottom line for employers. Enhanced purchasing power among workers will lead to increased consumption, thereby addressing the concerns of rising inventories in warehouses.
“We have advocated from the beginning of our engagement on the national minimum wage fixing exercise for the need to put more money in the hands of workers. We made this case on the understanding that it will help our businesses and rev up the economy.
“We had strongly believed that your organization would have been one with us and would have seen that we are actually making a great case for the survival of your businesses. We do not have any interest in crippling our businesses because you cannot cut your nose to spite your face.
“It is on this premise that we urge members of NECA to join us in the quest for a national minimum wage that will eliminate deep poverty from the lives of workers; wages that will not increase the number of the working poor and amount to a starvation wage for Nigerian workers is what we should all push for.
“The only way to break the present consumer resistance is to increase the wages of workers and that speaks to the policy of government that seeks to reflate the economy. It is not by giving handouts or reducing Nigerians to beggars who must queue at the various charity parks before they can eat.
“We must join hands to stop this collective slide into the pit. We must save our businesses by saving workers. N250,000 as national minimum wage is already a steep consideration by Nigerian workers.
As we are speaking now, the House of Representatives and the Senate are meeting to make sure they decentralize wage.
“We all know that wage in International Labour Organisation, ILO, is a national law and Nigeria will not be an exception. We will also demand that the wages of political officeholders and others are brought under minimum wage.
“You cannot be in the Senate and you are under minimum wage and not legislate for a better wage We should know your wage, we should know what you are earning. If you are a governor, you have security vote that is unaccounted for. If you have excess funds, you will not know that people are suffering.
“But if everybody is brought under the minimum wage, even if the governors want to create level 18, 19, or 20 for them, they all should come under the wage system. That is the only way it is going to work.
“If it is possible, both the House of Representatives and the Senate should be on part-time basis.
“Let it be based on professional callings. If you are a lawyer, a doctor, you have a business or profession of your own. If they meet three times a week, then the remaining days in the week, you go on with your businesses because the money being spent at the National Assembly is unimaginable. ‘’Unless we address this, the country will continue to go down and the gap between the rich and poor will continue to widen.
Later, in a chat with journalists after his remarks, Ajaero warned that should the governors and members of the National Assembly succeed in deregulating the minimum wage, Organised labour would shut the country for one month.
He Insisted that by the International Labour Organization, ILO, Convention 131 ratified by Nigeria, minimum wage is a national issue, warning that organised labour would not accept a situation where governors, working with the members of the National Assembly, imposed slave wage and poverty on workers and Nigerians.
“As we are here, a joint committee of the Senate, the House of Representatives, and the Judiciary are meeting. They have decided to remove section 34 from the Exclusive legislative list to the concurrent list so that state governors can determine what to pay you and so that there will be no minimum wage again.
“You cannot decide what you should earn. The very moment the House of Representatives and the Senate come up with such a law that will not benefit Nigerian workers, they will be their drivers and gatemen, and there will be no movement for one month.
“We cannot accept any situation where the governors and the National Assembly members will foist a slave wage on workers and force poverty on the citizens. Organised ‘labour will not accept it,” Ajaero said. (Vanguard)