Nigeria’s Minister of Industry, Trade and Investment Okechukwu Enelamah outlines how the government hopes to push the country forward, now that the recession is a distant memory.
Is there anything to be excited about in Nigeria’s IMF-predicted 2.1% growth other than rising oil prices?
The point with the 2.1% is that it signifies we have come out of the recession and we are headed somewhere. If we combine the reforms we are making in the structural economy with the rising oil prices then that combination will bode well for Nigeria and we will see growth come back. There are some very interesting things going on here at the moment.
Some have been critical about the amount Nigeria is borrowing to spend on things like infrastructure. How would you react?
We clearly would like to raise our revenue sustainably and deal with some of the debt service. Having said that, at this stage it’s important to invest in infrastructure. The most important point to make about debt is that if you are borrowing money for infrastructure some would argue it’s fine because infrastructure and project finance go hand in hand. This means you are financing your development and that development is a leading indicator of industrialisation and the economy’s diversification. One of the challenges to our economic diversification is our weak infrastructure and we need to strengthen that via debt.
Much has been said about the need for African countries to find better ways to domestically mobilise resources and capital. What is the best way to raise Nigeria’s revenue base through tax without spooking the private sector?
The first point to make about revenue is that the level of tax in Nigeria is at about 6% of GDP whereas most countries have very strong double digits. We certainly would like to double that in the short to medium term. That’s our plan. A major part of it is to look at forms of indirect taxation; not just things like your payroll. Frankly there are some clear-cut areas in which taxes can be raised, like excise duties on tobacco and spirits. We have been working with the industry to ensure that these tax hikes are handled in the right way.
What was behind Nigeria going up 24 places in teh 2018 Doing Business report?
It has been a deliberate strategy and vision. This government came in with a clear vision to focus on the enabling environment and make it easier to do business. The president launched and commissioned a council to take responsibility for precisely that. We planned to move by 20 places and we have moved by 24, so it’s the beginning of the journey and we still have along way to go.
Agriculture was a key-rallying cry during the recession to diversify the economy away from oil. Is there a danger that with rising oil prices diversification may take a back seat to easy money?
Not with this government and the reason is simple. First we have a government that understands the balance of agriculture in terms of food security. Second it’s part of our economic recovery and growth plan. If you look at agriculture in Nigeria it is not as mechanised as in the West so it is a major job creator.
The government is not actually focused on the oil price. We are using it as you need oil to get out of oil, to fund our budget and reduce deficits, but we certainly have no intention to stop supporting agriculture, industrialisation or the digital economy for that matter.
Nigeria’s petroleum import bill is huge – the same as the import of basic foodstuffs. When will we see Nigeria able to process its own raw materials?
Nigeria has talked for a long time about the importance of local production, local refining and adding value to petroleum products and even food for that matter.
The good thing is that there are a number of activities taking place notably by some of our leading industrialists like Dangote that will actually produce enough fuel and refined products that will serve the country and even excess for exports. So you can say that in the worst-case scenario we are two years away from self-sufficiency. Also we are trying to create the right enabling conditions, regulations and laws to encourage local investment, which is really what you need. Private sector investment not just government investment in the oil and gas downstream area is key.
The government itself in terms of its own refining capacity is now choosing to offer concessions to international oil companies who were involved in creating refineries in the first place, to make sure those refineries are better run and more efficient.
Where are investors seeing risk in Nigeria at the moment?
The things that matter to investors are currently going well like the availability of foreign exchange and the macro-economic policy environment. The risks are things like security. However, I think this government has done well. For instance, there was a time when it was not safe to go to Abuja. The recent attack by Boko Haram comes as an unwelcome development. Whether these are the last desperate acts of the group or they are reinforcing time will tell, but the government’s commitment to defeating Boko Haram is total.
Corruption also presents significant risk for those looking to invest in Nigeria. Why has Nigeria dropped 12 places in Transparency International’s corruption perception ranking?
The issue of governance and corruption has been a chronic problem. It was never going to be solved in a year. It’s not one of these things where people will give way without fighting back. Many of the people who are criticising the government and president for not fighting corruption enough are actually people who may be corrupt. Regardless, we need to stay focused and we certainly take the president at his word and are cleaning up our own system with a zero-tolerance approach.
Want to continue reading? Subscribe today.
You've read all your free articles for this month! Subscribe now to enjoy full access to our content.
£8.00 / month
Receive full unlimited access to our articles, opinions, podcasts and more.
£70.00 / year
Our best value offer - save £26 and gain access to all of our digital content for an entire year!