Let Nigerian businesses breathe

Central Bank of Nigeria building

Nigeria continues to move in circles while staying in the same spot. Each time one thinks a problem is solved, another problem emerges or the same problem metamorphoses into something else. This is because the government hardly sees the end of a solution to a problem before moving on with another policy that could be counterproductive. During the campaign period toward the 2023 General Elections, we had issues with cash availability, petrol or fuel supply problems, and the perennial underserving of electricity. We seem to be back in the conundrum because the issues were not put to rest permanently.

The issue of cash availability has taken a deeper step. A large proportion of available cash, either directly from the bank cashier or through the Automated Teller Machine is an eyesore. It seems the Godwin Emefiele contract for new currencies to replace the old ones was truncated. The Central Bank of Nigeria managers seem not to realise that a domestic currency represents a symbol of a country. Both nationals and foreigners collect cash from either the bankers or the ATM for local transactions.

Recently at the Nnamdi Azikiwe Airport in Abuja, a foreigner collected cash from an ATM and the way she took the money when dispensed would make any Nigerian ashamed. She wanted to collect the cash with her hand but felt some powdery substance and quickly brought out a handkerchief to pick up the money. From my position at her back, I could see that the first N1,000 note had a transparent tape on it. I suspected that she wanted to collect more than the N5,000 the machine was programmed to dispense but was discouraged by the nature of the first tranche. I felt ashamed that the CBN could allow banks to push that kind of money to the public. But, that is the nature of the currencies being paid out everywhere. In other African countries that are cash-based, it is rare to see such dirty and mutilated currencies in circulation.

The other fact is that the machines do not dispense lower denominations of naira like N100 or N200, making it difficult to buy products with lower prices or get change for some fractional purchases. Money, in our economy, does not play, appropriately, the basic role of a unit of account or measure of value in real time but on paper. The absence of lower denominations of naira in currency and coins also invariably fuels inflation, as prices are adjusted to available denomination or customers lose their money in the hands of the sellers.

The CBN needs to withdraw all those dirty and torn notes from circulation, direct the banks to allow customers from “other banks” to withdraw more than N5,000 at any point of withdrawal, and introduce lower denominations of the currency in ATMs and physical withdrawals. One electronic media commentator jokingly said: “You put your money in the bank with ease, but withdrawal becomes problematic with rationing.” All these acts discourage the development of banking habits in the citizens and affect consumer purchases of goods and services.

On the shortage of fuel for seamless supply, the official information dished out is always contradictory, implying falsehood and unreliability. The Nigerian National Petroleum Company Ltd would first indicate that it had enough reserve to meet demand but later, as queues mount everywhere, the company would shift the blame to marketers as saboteurs. In the end, the whole thing would show that the stock has been depleted to the level it could not meet the demand; the marketers are owed money by the government which affects their ability to fund importation. In the nature of the market mechanism, shortages in supply must result in higher prices.

There were promises last year that the Port Harcourt refinery, after turn-around maintenance, would start production by January 2024 at the latest, while the Kaduna refinery could commence production before the middle of the year. There was muffed jubilation in December 2023 when we were informed that the Port Harcourt refinery was already being test run. This is May 2024 and nothing is being heard of either the Port Harcourt or Kaduna refinery from NNPC Ltd or the government. Nobody owes the public an explanation.

The inefficiency of the NNPC Ltd continues despite its transformation from a public outfit to a private concern. The inefficiency that killed the operations of all the refineries and the turn-around efforts has affected the supply of crude oil to private refineries. Nigeria, a country with crude oil, has to import crude oil, in addition to refined fuel importation, from the United States and elsewhere to meet the demands of local refineries! So, the country is importing refined fuel and crude oil, putting pressure on the naira in the exchange rate market with the currently noticed fluctuations in the value of naira.

The NNPCL should explain the problems being faced in crude oil production with its allies and the state of the refineries so that solutions can be provided. One thing we should realise is that the current refineries have gone beyond their productive lifespan and spending money on them is like creating wealth for the boys. None of the refineries was built 25 years ago and they cannot be run as if they have no expiry date. Even their technology has become archaic.

So, the truth is that NNPC Ltd, as a private company, should give us a new refinery with modern technology to compete with or complement the outputs from other private refineries. It must also work on increasing crude oil production to avoid the double jeopardy of importing crude oil and refined petroleum.

The electricity supply problem is becoming increasingly insurmountable. Despite all the recent reforms, the internal and external devils seem to have the upper hand. In running a business or government, we cannot ignore the problem of externalities in our planning. Talking about the effects of saboteurs in preventing the achievement of objectives connotes a lack of proper and adequate planning. Planners must envisage the roles to be played by competitors during the implementation of the plans and be prepared to overcome the challenges. The generation and distribution of electricity which Babatunde Fashola thought was not rocket science, before he ran the Ministry of Power, have turned out to be a science rocket.

Apart from the problems of free riders, including the government ministries and agencies, the electricity managers would have to contend with the nefarious activities of producers and distributors of generators in Nigeria and abroad; the suppliers of diesel to power the generators, the producers of batteries and other accessories for making the generators, the transporters of different shades, the financiers of the business who make profits by extending credits to the importers of alternative power production. They also have to battle with producers of various types of lamps and their accessories.

Presently, the battle clients have increased to those producing inverters, solar panels, and inverter batteries. This is apart from internal saboteurs who are heavily paid to make sure the public sector equipment and facilities are not working. Then those private individuals go about vandalising equipment and wires to eke out a living.

It is a gamut of problems and the above gives the impression that it should be difficult to solve these myriads of problems. There are consulting firms or outfits that specialise in strategic thinking to solve any or all problems. Local genuine and patriotic consulting outfits that cannot be compromised should be approached. How one recognises such outfits should be the problem of the government that registers and monitors businesses. One of the ways of solving part of the problems from the non-strategist point of view is to tactically or forcefully encourage the local production of some of the accessories of the alternative electricity generating materials. These include batteries, solar panels, lamps, et cetera.

The fact of the matter is that inadequate cash flow, shortage of fuel and epileptic electricity supply are choking Nigerians and Nigerian businesses. They are responsible for the high cost of production, high cost of living or low standard of living, continuous inflationary pressures, and the presently noticeable fall in life expectancy. If Nigerian businesses can produce at low costs and sell at correspondingly low prices, the consumers’ demand will rise, leading to higher profits and invariably more investments, output and employment generation. The route to industrial growth seems rough for now but strategic thinking and crisis resolution henceforth can change the trajectory.