High interest rate inimical to economic growth —Ibadan chamber president

Sir Sola Abodunrin, President of the Ibadan Chamber of Commerce, Industry, Mines and Agriculture (ICCIMA), in this interview with Sulaimon Olanrewaju, speaks on the economy as well as how to change the nation’s development narrative, among other issues.


What are the effects of the COVID-19 pandemic on the economy?

The COVID-19 pandemic has affected the Nigerian economy adversely. According to the World Bank, COVID-19 would likely result in a contraction of the GDP by 3.2 per cent. On the other hand, the International Monetary Fund (IMF) has projected a 5.4 per cent contraction of the economy as a result of the pandemic. Even the Minister of Finance, Budget and National Planning has also projected a worst case scenario of 8.9 per cent negative growth of the economy in 2020 as a result of the pandemic.

The fact is that the pandemic has already dealt a serious blow to the economy. By the almost total ban on festivities, religious activities and closure of hotels, people in the brewery industry, soft drinks, poultry etc are in a terribly bad shape. Most of them are likely to record huge losses at the end of this year. There is no gainsaying that it would be a very tough year for the economy and the people of the country. Already, inflation is rising, some companies have laid off their staff while others have reduced salaries. The consolation is that it is not just about our country but the whole world. As the government begins the relaxation of the lock down, it is expected that the economy will begin to pick up.


How can the government revamp the economy in spite of the pandemic?

The government should arrange bailout for industries that are adversely affected by this economic lockdown occasioned by the pandemic. Industries cannot survive this for too long without going bankrupt.

Government has to pump in a lot of money to reflate the economy. The Central Bank says it is giving N50billion loan to small and medium scale industries. This has been on since April. Action on this must be expedited. Time is of essence in business. This exercise should not be marred by unnecessary bureaucracy. The economy cannot wait; action must be taken in earnest.


What should the government do about the budget?

The President has just signed the revised 2020 budget. As a result of the pandemic and the crash of crude oil price in the global market, the executive sought to reduce the 2020 budget from N10.6 trillion to N10.5 trillion. However, the lawmakers increased the budget to N10.8 billion, which is higher than the initial approved budget in December 2019.

But I think the government at this point should be thinking of reducing the expenses of governance. We should not be borrowing money to finance recurrent expenditure. Now that oil prices are falling badly, it is imperative for us to diversify the economy from oil to other areas like agriculture and mining. Nigerians must produce what we eat. It is important for us to be self-reliant. There should be drastic reduction in importation, particularly some items that are not useful to the economy like second hand clothing. We have to produce what we consume.


What should government do to help businesses?

As I said earlier, the government should bail out some critical businesses. Look at the agricultural area, government should build silos to take care of the post-harvest losses that may arise from the farmers.

Where loans have been taken at very high interest rates, government has to come in to negotiate the interest to single digits. The high interest rate system in Nigeria is inimical to the growth of the real sector. The government has to look into this if it is seriously committed to achieving real economic growth.

While it is heartening that the CBN’s intervention is about helping companies with salary payment, but salary is just about 15 per cent of all expenses of companies. There are other fixed and overhead expenses incurred by companies. Government has to bail out industries if they do not want massive retrenchment of people.


What’s your view on the reopening of the economy?

It is good that the government has agreed to reopen the economy. We cannot lockdown the economy forever, if we want to avoid a total collapse of the economy. It is good that the airlines are back and the restriction on interstate travels has been lifted. Economic activities of production, buying and selling must continue. We should not allow this to go to a halt. Farmers must be producing and bringing their produce to the market for food security.

However, it is important to note that we cannot because of reopening the economy throw caution to the wind, we still have to go about conducting our businesses carefully to avoid spreading the COVID-19 virus.


What are the lessons learnt from this COVID-19 pandemic?

This COVID-19 pandemic has given us a lot of lessons. We have seen that our health sector has to be revitalized. Nigeria must be self-reliant, importation has to be limited to capital items and raw materials that are not available locally.

Private enterprises must seize the opportunity that the COVID-19 has brought. Goods that are usually imported massively have to be produced locally. To do this, government has to provide the enabling environment for businesses to thrive. Power situation has to be solved. Government at all levels must see the private sector as a partner in progress. Incentives must be given to some industries to thrive.

Our governments must be industry-friendly to the private sector as the biggest employer of labour in the country.


You came in as president of the chamber earlier in the year. What are your plans for the chamber?

Ibadan Chamber of Commerce, Industry, Mines and Agriculture was the fourth chamber to be established in Nigeria after Lagos, Kano and Port Harcourt. But this prime position has been lost over the years. My mission is to regain this position and put back Ibadan Chamber to its rightful place among chambers of commerce in Nigeria.

We will improve our membership strength by an extra 30 per cent in 2020. For many years, trade fair has been forgotten in the South Western part of Nigeria apart from Lagos. We will ensure that our administration brings back trade fair to Ibadan before April 2021.

A lot of our small and medium scale entrepreneurs who are in business lack the sufficient business knowledge to succeed. To correct this, we shall establish a training unit where small and medium scale industrialists will be trained in the nitty-gritty of business with the objective of making them succeed in business.


What are the challenges you face as a chamber?

There are many challenges; one of these is insufficient membership. A lot of companies that are supposed to be members are not yet members. Even those that are members do not see what they are gaining from being members. Consequently, we are determined to repackage the chamber in such a way as to make it attractive to both the existing members and new ones. Business groups like the Pharmaceutical, Hotel and Events Centers groups that are not currently in the chamber will be brought in.


When you think of chamber of industry in Nigeria, the ICCIMA does not readily come to mind. why is this so?

Unfortunately this is true. As I noted earlier, though Ibadan Chamber of Commerce, Industry, Mines and Agriculture was the fourth to be established in the country, we have over the years allowed others to overtake us. But we are working hard to change that narrative. One of the major tasks before the current leadership of the chamber is to make ICCIMA a reference point in the country. Through a lot of activities that we will be doing at the chamber, we will bring ICCIMA back to the consciousness of the majority of Nigerians. We will be reviewing the economy on a quarterly basis and make a good publicity of it. Through this we shall be availing the government and the private sector operators the benefit of the varied expertise in the chamber so that the economy can work better for the generality of businesses and the people. We will also participate in the legislative activities in Oyo State and ensure that we give our views on any matter that affects industry, commerce and agriculture in the state and Nigeria in general.



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