A former independent non-executive director of Zenith Bank, managing director of APT Pensions Funds Manager Limited and currently the president, Abuja Chamber of Commerce and Industry (ACCI), Dr Al-Mujtaba Abubakar advises government on how to go about giving palliatives to Nigerians, speaks on the unification of the exchange rate, executive orders, among other things in this interview with DARE ADEKANMBI.
President Bola Tinubu recently signed four executive bills directing the suspension of certain taxes introduced at the twilight of the immediate past government. What is your take on the decision?
The Executive bills signed by His Excellency, President Bola Tinubu recently will bolster productive capacity of the Nigerian economy through increased production and lower cost of production. For instance, the suspension of the 5 per cent Excise Tax on Telecommunication services will make mobile communication rates for consumers cheaper and affordable.
The taxes have only been suspended and not cancelled outright, which means they could still be introduced at some point in the future. What advice for the Federal Government in this regard?
Yes, the taxes have been suspended in line with the Act which provides for a 90-day window for the implementation of taxes. I am also glad that a committee, headed by Taiwo Oyedele of PwC, has been set up to take a second look at tax administration in Nigeria with a view to harmonizing taxes. I look forward to the outcome and recommendations from the committee.
The monetary decision of FG to unify the FX window has been interpreted to mean various things, including further devaluation of the naira. How helpful do you think this will be to the economy, particularly manufacturers and businesses which rely on raw materials from abroad?
Let me begin by saying that the intention of the dual exchange which hitherto operated in Nigeria was good but its practicality was accompanied with corruption and all kinds of distortions. And arising from this, the current administration deemed it necessary to harmonize the exchange rate. It is important to state that the unification of the FX was long overdue as the arbitrage associated with the dual exchange caused distortions for international businesses operating in Nigeria that need to repatriate their profits and difficulty in accessing FX by manufacturers as well as importers of inputs for their operations. With the unification of the FX, arbitrage is abolished and the real value of the Naira is established. And to this end, it will attract foreign direct investments into the country, resulting in economic growth and availability of FX
Following the removal of petrol subsidy and the attendant hardship it has brought, a lot of companies and even sub-national governments have been adapting to three-day work week from the normal five days. How sustainable is this strategy? Is there any other means you would like to suggest to these companies?
In addition to the rotation adopted by both the public and private organizations, government should invest the hitherto funds that would have been used to service subsidy in procuring large buses that uses Compressed Natural Gas (CNG). This is in addition to possible increase in disposal income of the workers by granting some form of tax exemptions
FG’s approved request to the parliament for N500bn as palliatives has sparked a fresh row in the polity. Some are saying such decision had no meaningful impact when implemented by the immediate past government of Muhammadu Buhari. Another set of Nigerians are saying it is not only the poorest of the poor that are facing untold hardship, but everybody. What will be your advice to government on this initiative?
Yes, distributing N8,000 to the poorest of the poor may seem good but it is not sustainable. What I would suggest to the government is to use the palliatives to provide subsidy on some essential food items as well as support the businesses of those who may be adversely affected, that is the poorest of the poor.
Don’t business owners/manufacturers deserve some form of palliatives too or is the tax holiday enough for them?
Yes, they do but the challenge would be how to determine who needs what and how much, when we consider the lack of adequate data. However, government can engage key business platforms, i.e. NACCIMA, MAN, OPS, to obtain data that may be used to conduct the need assessment of businesses that deserve some palliatives. It is pertinent to state here that there exist palliatives for businesses operating in Nigeria in the form of lower interest rates on credit facilities. The Central Bank of Nigeria, Bank of Industries, NEXIM all have credit windows that businesses can access at interest rates which are lower than what is obtainable in commercial banks.
Are there fears of job losses in the private sector following these policies of the Federal Government?
Job losses are inevitable when you have economic reforms but it is for the short-run. However, if government is able to come up with sound strategies and sustain its economic policies with integrity and consistency, more jobs may be created in the long run.
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