- NECA’s focus on productivity rather than taxation for revenue drive is heartening
As Nigeria truly ready for the challenges posed by the ratification of the African Continental Free Trade Agreement (AfCFTA) on July 7? Last week, the Nigeria Employers’ Consultative Association (NECA) added its voice to the growing chorus on what measures needed to be taken to ensure that the country not only gets it right by the policy, but benefits maximally from it. To NECA, the Federal Government needs “to reassess its strategies and tailor its policies and reforms towards a radical industrialisation”.
In the words of its director-general, Timothy Olawale, the only sustainable option for national development is the promotion of production and productivity-induced policies focused on the rapid development of our industrial base. Chiding the Federal Government for consistently taking “the lazy path of tax increases that stifle and further burden businesses rather than the ingenious way of promoting and stimulating production,” NECA called for radical far-reaching policies like the abolition of the Value Added Tax (VAT) on sundry items like real estate sales, financial services and domestic airline ticket sales, including abolishing capital gain tax on sales of shares and import duty on spare parts. To these, the director-general also adds the “reduction of VAT on small traders to three per cent, abolition of import duty on machinery and raw materials” while calling for measures “to stimulate production and create wealth for the nation and its citizenry”.
We couldn’t agree more with NECA on its call for “radical industrialisation”. While the crisis of de-industrialisation goes unabated, we have consistently called for a fresh thinking and strategies to arrest the deluge under which a good number of the nation’s erstwhile vibrant factories have had to draw shutters on their operations in addition to extraordinary measures to give the sector a big boost. With the July 7 ratification by Nigeria of the agreement ushering a continent-wide free trade area, a fierce urgency has now been added to the call.
Unfortunately, the question of whether the issues underlying the continental free trade agreement have been addressed to any appreciable degree has remained unanswered. We are talking of fears long acknowledged by the Federal Government itself, evidenced by its initial reluctance to sign the agreement on March 21, 2018, in Kigali, Rwanda, when the instrument was first presented. The expert body empanelled subsequently by President Muhammadu Buhari to examine the country’s position vis-à-vis the agreement had in recommending that “Nigeria should consider joining the AfCFTA, nonetheless warned that the agreement is fraught with “major risks,” including smuggling and deliberate labelling of products made outside the continent as made in Africa.
It bears stating that NECA has not said anything that other stakeholders have not said. Forced to contend with the plague of antediluvian infrastructure and the uncurbed activities of smugglers along the nation’s ill-policed border posts which continue to render businesses challenging and non-competitive, they have merely resorted to the familiar call on the government in the hope that the exigencies dictated by the country’s ratification of AfCFTA this time would get her to listen.
With AfCFTA, the luxury of indifference would seem over. To the extent that the concerns of NECA approximate those of every Nigerian who, although wants to see Nigeria assume its rightful position as leader and industrial power house of the continent have reasons to worry that AfCFTA could become another plague without adequate preparations, we expect the Federal Government to swing into action.
We expect continuous engagement with NECA and other stakeholders with a view to addressing their concerns as indeed other issues that leave indigenous businesses terribly disadvantaged. While a closer look at those fiscal policies which the body considers as injurious to their aspirations for possible remediation would definitely be in order, it is clear that only an aggressive pursuit of the infrastructure imperative can secure the foundation for the nation’s industrial quest. Taken together, they offer the surest guarantees that our membership of AfCFTA will not plumb the country further down the de-industrialisation route.