BY ENYERIBE EJIOGU (enyeribee@yahoo.com)
For more than 100 days, the Nigerian nation has been in holding pattern like an aircraft hovering around an airport, waiting to receive clearance from the control tower before the pilot can initiate final approach, to land. Expectedly, this has taken a toll on economic activities such that corporate chief executives have put major investment decisions on hold, waiting for the President to announce details of his policy directions. While the wait continues, heads of small-to-medium scale enterprises are contending with other headaches, one of which is the hindrance posed by the issue of certificate of occupancy, which state governors are holding so tightly to and in the process hindering economic development in their states as entrepreneurs find it difficult to access funding support from financial institutions, to invest in new commercial and industrial projects. In this interview, Chancellor of the Akpabiosm Centre for Leadership Development, Pastor Bassey James, bares his mind on this and other relevant issues.
Excerpts…
When President Muhammadu Buhari ran for office, he talked consistently about security, corruption and economy. What is your general assessment of his administration so far?
In terms of security, President Buhari has given a clear direction, in that he is squarely dealing with the issue of Boko Haram. We are happy that there is re-alignment; the relocation of the army headquarters to Borno State has contributed to the substantial successes recorded by the military in the war to defeat Boko Haram. I felt so proud of our Armed Forces on the day that the national flag was hoisted again in Gamboru, Borno State, which had been under the control of the insurgents for over four years. I am also happy that Boko Haram has been extensively dislodged from Sambisa forest and the other strongholds from which they coordinated and launched their attacks. Now they have been put in disarray. I believe the military will soon defeat the insurgents completely. Many of them are already surrendering. In a nutshell, there is proper direction. I think we should commend President Buhari and the Armed Forces.
Regarding the economy, I would say it is too early to begin to critically assess the performance of the president in terms of the economy. Certainly, some of the decisions he has taken are good. For the instance, the Treasury Single Account initiative will make it much easier to track government revenue and expenditure. It is now easier to trace the cashflow of the MDAs (ministries, departments and agencies) of the federal government.
Until the TSA initiative was commenced, the banks were not doing any real banking; they were just acting as revenue collectors for the government agencies. They were not bothered about lending to companies and firms that desperately needed funds for projects. The banks were just happy earning commissions from servicing the MDAs and using the income to build elegant corporate buildings and displaying flamboyance. With the withdrawal of MDA funds, the banks must now go back to the drawing board, to fashion out creative banking strategies that would help to grow the economy, energise new investments in the productive and real sector of the economy. All over the world, banks help small-to-medium scale companies to drive the economy through new ventures and projects. Cumulatively, SMEs constitute the largest employers of labour. When you find new businesses starting up or existing ones going into new ventures, new job opportunities are created. But here in Nigeria, the banks are reluctant to fund new ventures, even when the ideas are bankable projects. The banks always insist on stringent conditions that 99.99% of the entrepreneurs would not be able to meet. New investments are at the leading edge of creating new job opportunities.
Again, I must note the fact that President Buhari’s delay in announcing his cabinet and unveiling the full economic agenda of his administration has created stagnation in the system because companies are not taking any major investment decisions. Everybody is in waiting mode like aircraft circling the outer perimeters of the airspace around an airport, waiting for clearance from the control tower before the pilot will make the final approach to land. I just hope the president will not keep the nation waiting much longer.
A moment ago, you mentioned that banks in Nigeria do not grant loans to SMEs and they often impose very stringent requirements. Given the ‘Change’ mantra of the Buhari administration, is the time not ripe to review the issue of land administration, particularly as it concerns the issuance of certificate of occupancy, which the banks demand as a major requirement in matters relating to loans for SMEs?
You have hit the nail on the head. In fact, President Buhari should make this a key issue to be addressed by his administration. The Federal and state governments must necessarily address this issue because it is a major factor hindering the growth of the economy, because entrepreneurs find it extremely difficult to obtain certificate of occupancy (C-of-O). The issuance of C-of-O has been over-politicised. A person can acquire land legitimately and spend years without obtaining C-of-O from the government.
If you have a project and land, and you go to the bank to seek a loan, the first thing the bank would ask for is the C-of-O. Without C-of-O, banks cannot give you credit if you want to use your land as collateral. The non-issuance of C-of-O is hindering job creation because it is preventing entrepreneurs from embarking on commercial and industrial projects. I think the President should convene a summit of all state governors to fashion out a way forward. I completely fail to see why a person must not be able to obtain C-of-O within one year of paying necessary fees to the relevant land management agencies in the states.
Nigerians are eager to invest in growing the economy, they are willing to support President Buhari to succeed in revamping the economy, entrepreneurs want to invest in new projects, but they need C-of-O. So President Buhari should lead the crusade to convince governors to fast track the issuance of certificate of occupancy to qualified Nigerians so that new things can begin to happen in the economy. That brings me to the issue of the Land Use Act, which is embedded in the Constitution.
The inclusion of the Land Use Act in the constitution by the then Olusegun Obasanjo military regime in the 1979 Constitution was an anti-people act. I do not understand why the government should own the land in my village – land that God gave us. In view of what we have seen over the last 30 years or so, in the way state governments have handled the issue of land administration, I want to appeal that President Buhari and the Eight National Assembly should look at the Land Use Act again, and see how they can encourage the state governments to make the issuance of certificate of occupancy less cumbersome. Issuance of this important document should not take more than three months.
For us to do what we are doing in Akwa Ibom State, I had to sell my properties to raise money to start the project. Then I visited three banks to solicit financial support to develop the next phase of the initiative, which will include shops, mini-hotel for participants in the intellectual seminars and conference we will hold at the centre, etc. Nigerians are very enterprising, they have capacity for entrepreneurial strides, but we don’t have the encouragement of the government and the banking industry. Because there is so much free money around government, people are not willing to engage in the rigour of creating and managing commercial or industrial enterprises. I am praying that President Muhammadu Buhari will tighten the spigot of free money coming from politics and government so that Nigerians can concentrate on building commercial and industrial enterprises that will grow the economy and create numerous jobs. China, Indonesia, Korea and the other Asian Tigers are not better than us. Nigerians travel out of the country and engage in business activities, you see them doing very well. I have friends who own mini-factories in China and Indonesia. How come they are able to succeed overseas, but do not do well at home? The simple reason is that the Nigerian environment is hostile to business and to a large extent stifles entrepreneurship. I earnestly hope that President Buhari will rise to the occasion to de-emphasize politics and encourage the Nigerian spirit of enterprise to blossom in the country and contribute to the change he is trying hard to birth in Nigeria.
I want to commend him for setting a direction by compelling all MDAs of the federal government to adopt the Treasury Single Account initiative. This has stopped the banks from accessing free, cheap funds from the government. They must now begin to seek ways to do creative banking that will really lead to new investments in the small-to-medium scale sub-sector of the economy. For example, the Lagos State Government during the tenure of former Governor Babatunbde Raji Fashola re-engineered the agriculture value chain in the state. In the process, it unleashed a revolution that has drawn young graduates into different aspects of agriculture. It created a funding scheme whereby it gave loans to cooperatives of graduates, who successfully completed its training programme. Each cooperative, which must have 20 members, was given N100 million and plots of land in agricultural settlements. The government also gave each member of the cooperative certificate of sub-lease on land the government had acquired for agricultural and agro-industrial processing. With the title document, the members of the cooperatives can access funds from banks to expand their business. Today, what is the result? Lagos State farmers under the scheme are now producing and processing a range of agricultural foodstuff and crops for local consumption and export. High quality cassava flour produced under the scheme is in high demand by the major Nigerian millers producing composite flour (wheat and cassava flour) such as Honeywell, Flour Mills of Nigeria and others. Reputable hotels queue to buy catfish produced under the Lagos State Agricultural Value Chain. The question to ask is, what made the difference? The government gave the graduates title to the land, provided the seed capital and gave them a sense of ownership. This greatly motivated them to produce. The banks are now courting this new class of entrepreneurs who are creating new jobs and wealth.
Now going back to President Buhari, I think the government and by extension the Governor of the Central Bank of Nigeria, should begin to demand that banks provide a quarterly analysis of their credit disbursement to the various critical groupings of SMEs in different sub-sectors. The CBN should ensure that banks are actually supporting job creation by way of financing new projects by SMEs. Any bank that does not give loans for SME industrial projects has no reason to continue operating in the Nigerian economy. When banks give loans to SMEs, they should closely monitor the utilization of the facility to prevent default and ensure repayment. Banks should drive the economy through proper credit administration.
At the level of the state, given that Nigeria is a federation and the federal government cannot dictate to states, I want to suggest that state governments should ascertain from the banks what they will specifically do for the state in exchange for the huge deposits made by state governments. What I mean is this: if a state government deposits N20 billion in a bank, then it must first of all find out how the bank will support SMEs to create employment in the state. This will make banks begin to think creatively and work hard for the huge deposits made by state governments. The interest paid on N20 billion can create a lot of jobs.
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