Alhaji Razak Jaiyeola is the 54th President, Institute of Chartered Accountants of Nigeria (ICAN). In this interview, Jaiyeola appraises the recent National Bureau of Statistics (NBS) report, warns against continued adoption of multiple exchange rates as well as signing into the African Continental Trade Agreement (AfCTA).
In the latest National Bureau of Statistics (NBS) report, it was reported that the nation’s population is growing by 3% while the GDP is declining. What are the implications of this?
A high population growth is a concern, not just in Nigeria, but globally because of the challenges it presents to the countries. The population growth in Nigeria is a phenomenon that is likely to continue unabated especially in the short run. With a population growth only in the short term, there’s no serious problems are envisaged. But if the trend is of a continuous nature, then there is cause for worry.
For instance, according to www.populationpyramid.net <http://www.populationpyramid.net>, in 1960, the population of the UK was 52 million while that of Nigeria was 46 million, by 2015 the UK was 62 million while Nigeria was 185 million and by 2070, Nigeria will be 550 million while the UK will be only 80 million! This means that over a period of 110 years, Nigeria will add over 500 million to her population whilst the UK would add only 30 million and the UK was coming from a higher base.
The implications of a declining GDP and a rising population are so clear to be a closed book to anybody. The implications are simply misery and hunger of a level that can only be likened to what obtains in a war situation. There will be unemployment at a level much more serious than it is now, infrastructure will dilapidate due to over-stressing and all other normal services that government ought to provide would be greatly and negatively affected and in short supply. The situation would be as described because the growth is due to birth and not immigration. Consequently, until the new additions attain 18 years of age or thereabout, they would not be in a position to contribute to GDP growth.
The Central Bank of Nigeria (CBN) has been operating multiplicity forex rates. What is your opinion on this especially on its impact for the foreign investors?
Though the rates had been stable and there is liquidity ease across the market which helps to an extent. But a situation where you have about 15 or thereabout rates is not good for the economy. The wide gap between CBN N305 rate and other rates of N360 creates undue arbitrage and cause transparency issues. It also affects forex supply in the case of transfers and card transactions are being traded at N305. In a country, the currency exchange rate is of critical importance because it determines the country’s level of economic wellbeing. Exchange is seriously watched because of its central importance and sometimes the government manipulates the economy through the exchange rates. This is possible notwithstanding that many variable-interest rate, public debt, current deficit, political stability among others affect exchange rates. I believe the multiple forex rates operating in Nigeria might not be the best as it could lead to some abuses. Multiple exchange rates have the potential to speak on uncertainties in the minds of foreign investors. This is a fact we cannot ignore in continuing to maintain the multiple forex rate regime.
The Africa Continental Free Trade Agreement has been a burner issue for sometime now, on whether the Federal Government should sign it or not. What is your association’s stand on this?
The African Continental Trade Agreement (AfCTA) is a trade agreement designed to create a single market to ensure the movement of goods and services among African Union member states. As at today, the president has not signed the agreement. I believe it is not a deliberate refusal but refusal based on some fundamental issues surrounding the way we operate in Nigeria. Nigeria is a large market, no doubt but what is worth doing at all is worth doing well. On whether the government should sign or not, opinion is divided. Some argue that the government should sign so that we do not become late comers in the scheme. Currently, 44 out of the 55 member states have signed and only 22 countries are required to sign the agreement if it is to be effective. The question is: where does the balance of advantage lie in whether to sign or not to sign. As a country, we are net importers of every and anything importable. We are not competing efficiently, neither are we technologically mature. The agreement shall be an opportunity of other African countries to take advantage of our population and inefficiency to dump goods of manners and quality on us. This is particularly possible due to our unbridled taste for imported goods. To enable the country benefit from the agreement, there is the need to first of all revisit our decaying infrastructure and other necessary developmental issues such as condusive environment for manufacturing. As of today, it was reported that electricity supply for instance, has dwindled to less than 3000MW. Kidnapping, wanton killings and political rascality have become pastime. What type of trade agreement would a reasonable country be signing under such conditions? I caution that until we put our house in order, develop our export market potential, signing the agreement may not be auspicious and expedient. China and Russia put their houses in order before they signed the World Trade Organization Partnership in 2000. Nigeria signed the agreement in 1995 and what has been the outcome compared to Russia and China that signed much later! Finally, my take on this is, first thing, first.
What is ICAN’s position on ECOWAS Trade Liberalisation Scheme?
This scheme is ECOWAS’ operational tool for promoting the West African region as a Free Trade. Nigeria is a signatory to the scheme. ICAN supports the scheme. The major problem is that administration of the scheme should be moved from Ministry of Foreign Affairs to the Ministry of Trade, Industries and Investments to remove the bottlenecks suffered by exporters.
The ECOWAS Trade Liberalisation Scheme which was established to enable outfits in member states to move goods within the ECOWAS sub-region freely without having to pay duties and levies is a good initiative. However, there are still some misgivings about the worthwhileness of the scheme since many challenges are associated with it from the perspective of some stakeholders. This perception may not be unconnected with the low level of awareness of the scheme by the supposedly stakeholder of the scheme. There are accusations of delays in obtaining Certificate of Origin (CoO), inordinate refusal of some customs officials to honour valid documents such as CoO among others. Some of the stakeholders do not even know their rights especially when challenged by some custom officials. Nonetheless, a number of businesses from Nigeria are enjoying the scheme. The only issue is that only big organizations are currently able to take advantage of the scheme. It is, therefore, imperative that all those concerned with running the ETLS should ensure that not only big businesses benefit from the scheme but all other businesses should be brought into the fold for the full benefit of the programme to be realized.
Recently, you raised alarm over a parallel association calling for registration of members, can you throw more light on this?
I did not raise any alarm but only raised the consciousness of the people to the ill-advisedness of having multiple professional accounting bodies purporting to be rendering services for which they do not have the required training or competence. The issue of the forensic and investigation bill has become a household matter and the stance of the institute on it has been laid bare at different fora. The summary of the matter is that the bill is not auspicious for a number of reasons. Forensic and investigative audit is a special area of practice of accountancy that describes engagements resulting from actual or anticipated disputes. The promoters of the bill have not got what it takes to render the service. Besides, there is no skill gap they hope to fill. Over the years, qualified ICAN members have been practising forensic and investigative accounting and auditing creditably. More importantly, the functions and responsibilities in the proposed Bills for Chartered Institute of Forensic and Investigative Auditors in Nigeria and Chartered Institute of Forensic Accountants of Nigeria are already contained in the 1965 Act that established ICAN. It is also to be noted that since 2009, ICAN established 7 faculties which are specialist knowledge areas in response to global best practices and business dynamics and Audit, Investigation and Forensic Accounting is one of the faculties. The Audit, Investigation and Forensic Accounting Faculty provides specialist certification courses and issue certificates to qualified members as evidence of expertise and authority to practise their specialized skills. Forensic Accountants trained by ICAN are awarded Certified Forensic Accountants of Nigeria (CFAN) certificates. Holders of CFAN certificate are rendering value-adding services to their diverse clienteles. The Forensic Accounting curriculum is carefully drawn to ensure that, to be a forensic accountant, one must necessarily be a qualified chartered accountant, be certain of technical competence and preserved professional integrity.
From the foregoing, Forensic Accounting is adequately covered within the scope of the training that ICAN provides and therefore, the quest for a separate institute for just Forensic Accounting is totally uncalled for. There is therefore no knowledge or professional gap that the proposed body would fill. Whatever perceived lacuna that this bill seeks to fill has been adequately covered within the scope of services that ICAN members render. Consequently, the need for the establishment of a Chartered Institute of Forensic and Investigative Auditors in Nigeria does not arise at all.
It is also laughable that the bill is secretly criminalizing anybody practising forensic accounting without being a member of the proposed institute. As I noted earlier, ICAN members have been practising forensic accounting for several years.
Now the 2019 general elections is nearby, do you foresee economic stability in the process?
Elections in Nigeria are not precisely what they are like in other settings. In Nigeria, elections are volatile and odious, largely because ideological issues do not form the foundation of the political parties. That means election periods in Nigeria are as uncertain as the waves of the sea. If that is the case, and realizing that economic issues derive strength from political atmosphere, it would then be difficult to suggest that there could be economic stability in 2019. There would certainly be more money in circulation but not to the right sectors that have the potential and capacity to create value and wealth for the nation. A high volume of cash in a system irresponsibly deployed cannot give rise to any economic stability. So, I do not foresee any economic stability during the 2019 election year. This is going to be tough except the politicians behave responsibly and allow our institutions to work as effective as they should be.
