By: HighCelebritySquard
Director General of the Lagos Chamber of Commerce and Industry (LCCI) Muda Yusuf is a renowned economist and also a private sector advocate. In this interview, he spoke on the potential roles and impact of Dangote Refinery and Fertilizer plants on Nigeria’s post-COVID-19 economic recovery agenda
The management of Dangote Industries Limited recently announced the completion of one of the biggest fertiliser plants in the world. The company is also on the verge of completing the world’s biggest single train refinery in Nigeria. How would the coming on stream of the two plants help in the country’s post-COVID-19 economic recession crisis? The Dangote Refinery is one of the best things that have happened to this country. Annually, we spend billions of dollars on the importation of petroleum products. In fact, the importation of petroleum product is the largest single product that puts the greatest pressure on our foreign reserves and also on government revenue. Therefore, the coming on stream of the Dangote refinery will save the Nigerian economy the trouble and agony of spending billions of dollars on the importation of petroleum products. The President of the Dangote Group, Alhaji Aliko Dangote is a leading proponent of self-reliance, economic diversification and backward integration. And he has demonstrated this conviction severally in practical terms. To build an economy that is sustainable and resilient, this is the way to go. Our current experience with this COVID-19 pandemic illustrates this fact even more graphically. We also commit huge foreign exchange to the importation of fertiliser annually. As a country with strong comparative advantage in agriculture, the setting up of this fertilizer plant will help to reposition the agricultural sector, enhance agricultural productivity, reduce the cost of fertilizer, as well as conserve foreign exchange. It is therefore a very important investment, which all Nigerians should be very proud of.
The President of Dangote Group, Aliko Dangote is leading private sector leaders, under the auspices of Coalition Against COVID-19 (CACOVID) to raise funds to tackle the spread of Coronavirus. How do you assess the importance of this coalition to the country?
The intervention of the private sector under the hospices of the Nigeria Private Sector Coalition Against COVID-19 is a laudable idea. It is a reflection of the commitment of the private sector to the ideals of business sustainability and corporate social responsibility. Businesses operate in a society, and the well-being of a business is dependent, to some extent, on the well-being of the society in which it operates. A business can only be as good and as stable as the community in which it is operating. Social stability is crucial for business sustainability. This private sector intervention is also significant because the federal government has serious funding limitations at this time. The COVID-19 pandemic is a major threat to humanity and demands that all hands must be on deck. I must also commend the leadership demonstrated by Alhaji Aliko Dangote in mobilising the private sector for this historic intervention. The coalition has so far raised over N25 billion to support the Federal Government’s efforts in the fight against COVID-19. What are the best ways to utilise this fund? The spending priorities of the money raised should be guided by a robust needs assessment as established by medical teams in the frontline of managing this pandemic. They know better what the gaps are and this should guide the targeting of expenditure. This approach will also make it possible to get better outcomes from these donations. It is not advisable, in my view, to hand over cash to the government or its agencies. It is much better to identify the critical needs and provide resources directly for the acquisition of the needed items -medications, food items and personal protective equipment (PPE). Delivery and execution of the intervention projects are much faster and efficient. There are many companies that are yet to signify interest in contributing to the private sector’s COVID-19 funding. What is your message to these companies? I will appeal to companies that have not joined the coalition train to please do so. They should take a cue from the private sector coalition led by Aliko Dangote. Any socially responsible organisation should be part of this fight against COVID-19. This is not just a philanthropic gesture; it is a matter that borders on business sustainability. The success of a business is not measured only in terms of the returns to shareholders; it is also assessed by the impact that the business makes on other stakeholders. One of these stakeholders is the society and the environment in which the business operates. We also need to understand and embrace the principle of total stakeholder management – recognising the importance of all stakeholders in a business. There has been a steady drop in the global crude oil prices. However, Nigeria depends on the revenue from crude oil to fund its 2020 budget. What role do you think the private sector can play in the post-COVID-19 economic recession? The role of the private sector in the economy is to commit quality resources into the process of wealth and value creation. This typically takes the form of making sustainable investments. Most of the socio-economic objectives of government are achieved through private sector contribution to government revenue [via the payment of taxes and import duty], job creation, poverty reduction and many more. All of these are key drivers of economic progress. The private sector also has a responsibility to offer advice to guide policy formulation in order to ensure quality outcomes from policy makers. The investors are in the best position to advise policy-makers on the appropriateness or otherwise of economic policies, from an empirical perspective. This could be in the area of monetary policy, trade policy, tariff policy, tax policy, energy policy and investment policy. The impact on policy outcomes would depend on how receptive the policy-makers are to public-private dialogue. It is obvious that the Federal Government would require the assistance of the private sector to successfully run the economy. What, in your own view, is required of the government to help these private companies to function in Nigeria? What is important for government to do is to provide the enabling environment for businesses to be able to rise to the occasion. It is businesses that will create the jobs, and through job creation reduce poverty; and by extension reduce social tension. So, it is very important at this time for government to provide the right kind of stimulus, economic stimulus to stabilise businesses after the lock down. Some aspects of this stimulus have already been unveiled by the Central Bank of Nigeria (CBN). But our expectation is that a lot more can be done. We expect some stimulus from the tax authorities, the commercial banks and the finance ministry through a review of import tariffs that could moderate the cost of production in the manufacturing sector. The federal government also has a responsibility to promote liquidity in the foreign exchange market by ensuring a liberal inflow of foreign exchange into the country. We should promote the ideals of a market-driven exchange rate in order to attract more foreign capital inflows into the economy and ensure improved liquidity in the foreign exchange market. Nigeria’s health sector is in a poor state. What do you think government should do to revive the nation’s health system? The biggest challenge to the Health sector in the Nigerian economy is the low level of investment in the sector. Government investment in the sector is one of the lowest you can find anywhere in the world. Public health facilities are in a parlous state and the health sector is daily suffering from brain drain, with our doctors and nurses going out of the country on daily basis. Therefore, there is need to scale up budgetary allocation to the health sector at all levels of government. The current level of budgetary provision for health is extremely low. Secondly, government should take urgent steps to ensure compulsory health insurance scheme in the country. All over the world, the funding of the health sector is dependent largely on health insurance as it generates a large pool of funds to support the health sector. The health insurance also will provide a more robust effective demand for health services. Currently, most of the health services enjoyed by the citizens are paid out of pocket and this has severely limited the effective demand for health care. Once effective demand is generated through the introduction of the health insurance, there will surely be a good supply side response from private investors who will invest in the health sector. This is something that we need to do very urgently to salvage our deteriorating health sector.
