The unification of the foreign exchange and removal of petrol subsidy are two government’s policies that have been described as game-changers in the short spell of this administration. The Chief Executive, Common Sense Group, Dr. Olumide Emmanuel, views these policies as a step in the right direction. Besides, he said policies have a gestation period before their positive effects become noticeable. In an interview with some reporters, Emmanuel, a wealth creation coach, maintains that petrol subsidy has always been a fraud. He gives economic and practical solutions to revamping the country’s economy as well as how Nigerians can survive. MUYIWA LUCAS was there.
The Federal Government’s unification of the naira as well as the removal of subsidy are two key policies that the President Tinubu Administration began with in its early days. Would you say these are a step in the right direction?
On these two policies, President Bola Tinubu has made the right decisions. But because of the peculiarities of Nigeria, they are decisions that cannot produce the intended results without other factors being considered. For instance, removing fuel subsidy is the right thing to do because we all know that fuel subsidy is a fraud, but the repercussion of the removal needs to be cushioned. So, there has to be a holistic review of the policy because removing subsidy when you have not yet put structures and systems in place to cushion the effect is going to have a negative impact. You see, if you look at what has happened since it was done, you discovered that people are bringing in their money. We have the highest inflow of foreign currency within the last one month and highest since the last 15 years. But the repercussion on the locals is negative. The reason we have those different market crises is more of corruption.That has not changed. So, while the policy is good, the reason people are getting dollars at N440 and going to round trip is because there is corruption, which has not changed in the system. So, while it is the right policy, the effect is negative, and will continue to be negative, until few things are put in place.These include the issue of corruption, productivity and, then, the issue of educating people because people are not knowledgeable, when a positive policy is made, because of the knowledge gap, people will not understand that there is a gestation cycle in policy implementation and actualisation.
When a policy is made, it will take sometimes six to eight months, or one year to two years for the effect to come. For instance, when the telecoms industry came to Nigeria, how much were we buying SIM cards, almost N30,000, but now it is almost free. How long did it take to go through that cycle? Almost 10 years. In the same way, removing subsidy is good but it will take at least two years for us see the effects because there are a lot of other things that have to be done. The same thing with this forex issue; the dollar may most likely get to a N1000 and British Pounds may get to N1,500. It will continue like that until it hits a ceiling, then it will begin to come down and, then, we will come back to status quo. For me, I will say that they will have to go through some two years for things to stabilise, that is if they do other things right.
What, then, are those things that have to be done for the policies to begin to have positive effects?
The challenge with Nigeria is that when we want to solve a problem, we always think monolithically. We think that this is the answer. Don’t forget that when the President made the remark that subsidy was gone, it was not planned for because it was not in his prepared speech. All they need to do is to do the other things. To say they should throw the policy away is unacceptable. They should not. The policy has come to stay. Whatever problem will happen, let it happen and we will solve it because if we go back, it will be more dangerous.
There are six other answers that must work pari-passu with that particular answer. For instance, if you are making announcements that we are removing subsidy on July 1, 2023, in the next 30 days before we enforce it, 33,000 buses would have been brought in. Every state would have taken a delivery of 1,000 buses each and anyone that is a student will be entitled to free bus rides. Senior citizens also entitled to bus rides forever. All civil servants in all states would be made to work for three days a week as a nationalistic vision. Minimum wage for workers will be increased to N75,000 with immediate effect. You are announcing a policy and the cushioning effect at the same time. Somebody is saying all the money they have been saving from subsidy they should give account of it. Truth is, they are not saving any money from subsidy. They are just reducing what they are borrowing. We are in a deep hole. And it will continue for baout two years and if things are done right, we can turn the situation around for good. We can, then, come out from the hole, move to ground zero and begin to look on how to continue. You know the problem, again. As they are removing the subsidy, has anybody been arrested since? Has anybody been jailed? You have to attack it frontally and block the leakages. Abroad, they would have arrested and jailed at least 60 people. That is how you change a system. As long as they are not prosecuting, we will just be going in circles.
Since the cushioning effects of these policies have not been put in place, what advice do you have for business owners?
What we are going through cannot be worse than what we experienced during the COVID-19 lockdown and if we could survive it, we will survive this one. What I would advise is that we should operate with COVID-19 mentality. I have a book entitled: How To Increase Your Value in the Market Place and one of the modules in the book is: Leading In Tough Times. I also have shared extensively how we can handle such situations. Business owners should ask themselves the following questions: Why do we exist as a company and what are we here to do? The telecoms companies are here to sell airtime, but many of them are doing other things like conducting seminars and bringing in foreigners to do the do training- are they a training company? Every organisation should go back to their core reason for existence so that you can remove the excesses.
If you are facing a tough time, first, go back to the basics. A lot of organisations over the years have brought a lot of things on board that were not part of the basics. Take, for instance, if you lodge in at a five star hotel, cost of gym and swimming pool would have been added to your bill, and you might not use these facilities throughout your stay there. Meanwhile, there are some cheaper hotels that are just bed and breakfast.
Another point is creativity. We, as a company, have been doing virtual work since 2014. Now, everybody is talking about virtual work. Everybody should be able to identify where they can cut costs. The only way to make money available is either to increase your income or reduce your expenditure, but people don’t always consider reducing expenditure. There are a lot of things that can be done. If you reduce work to three days a week, the work will always still be done. I have always said it, every developed nation on earth pays people per hour and not per month. We need to go back and revisit that. An average Nigerian worker, except in multinationals, where there are systems and structures, works only three to five hours a day.
At the individual levels, since some of these palliatives are not yet forthcoming, what are the survival strategies you will advise under the present situation?
One of the things we have not understood in this part of the world is that collaboration is the new competition. A lot of times we try to do things on a solo level and this has affected us. In the United Kingdom, people have cars but they don’t go out with them. They engage in carpooling. We should be thinking of the major things that cost us money, like shelter, feeding and transportation, and find ways to reduce them. When you look at shelter, you begin to think of how to live communally. In the U.K., you find three different people renting one-one room, sharing the kitchen, parlour and other amenities. They never knew each other anywhere. Why do you need a two-bedroom apartment as a single man that is not ready to marry in the next two or three years.
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On feeding, instead of going to the supermarket to shop for things that are too expensive, why not a few people coming together, pool money and go to places like Mile 12 market where food stuffs are sold in wholesale prices, then come back and share. Once we begin to think in that direction, it will help us. Then on transportation, why must I be driving and three or four spaces are empty in my car? If we live in the same neighbourhood, we can come together and use each other’s car on a weekly basis. And we begin to carpool. We have to survive anyhow. That is the way out, everybody needs to tighten their belts.
At times like these, people’s savings are being impacted. As a wealth creator, what do you think people can do to regain their balance?
The principle for wealth creation has never changed and will never. And as I have said over and over again, principles are universal. But application of these principles is personal, contextual and geographical. Savings is sacrosanct. You save to put money for your rest. One of the reasons you save is for eventuality, emergency and for a financial planning mechanism because everybody has to have six to eight months of their earnings saved up in cash. And, thereafter, you invest it into something that can be giving you returns. You cannot but sit down and face the reality. Your expenses will be higher while income will be stagnant. It is the time for family belt-tightening discussion. Once you are able to navigate all that, you are going to survive it because tough times never last but tough people do.
Can you shed more light on the monetary policy as well as power situation, especially considering that there are plans to increase tariff?
Let me talk about the issue of power. The hypocrisy of Nigerians is so amazing because we are already spending the money they are asking us to spend. Let us face the reality and say that the problem is not what they are asking us to pay. The problem is that we don’t trust the government. What they are asking us to pay is still cheaper than the generators we are using. Electricity is cheaper than fuelling generator. If they increase electricity tariff and make it competitive, after a gestation cycle, the tariff will crash.
One of the problems we have is that as long as the Distribution Companies (DisCos) are not in that realm of metering people, we will be losing more money. When everybody is metered, water will find its level. But let me also say this again, many of our policies cannot work independently. People say economics is a science. Economics is only a science in a sane economy. In Nigeria, many scientific laws have failed, even scientists know this.
Can you talk about trans-generational savings?
One of the assets of a nation is her foreign reserve, national asset and human capital. If your foreign reserve is not strong, you are not strong in the scheme of things. So, we need to save. One of the things that we need to save is all the recovered money that we are getting. Any time you discover new money that you didn’t plan for, just put it into savings. The late General Abacha is still paying us from the grave after over 20 years. All the loot from everywhere should be saved. Nigerian banks have billions of people’s money that are frozen and stolen in vaults. Look into the banking sector and fish out the money/accounts that are dormant. All the “Wonder Banks” that were closed, where is the money in them? You mop up everything and then you save it. You know these pension schemes that we are talking about is a fraud. Your money is just being devalued before your very eyes. By the time you are 70, and they give your pension of N30 million to you, you may not even be able to pay rent with it. Bring your pension and let us teach you how to make money with it.
