Mr. Tunde Popoola is the Managing Director of CRC Credit Bureau Limited. In this interview with COMFORT OGBONNA, he explains what the Federal Government needs to do to get the country out of recession and calls for overall management of Foreign Exchange regime.
What are credit bureaus companies doing differently now to boost businesses in Nigeria?
A lot of emphasis has been focused on what we call business to business. We are in business and we are servicing businesses, which are basically financial institutions and other lenders. We have looked inwards and see how we can do business with the consumers, how we can service individuals and consumers and retailers in the Nigerian economy.
And what we give to people is information so that they can take informed decision. And so, rather than just giving this information, producing products that give this information to only the financial institutions and big companies, we define products that would be of interest to borrowers themselves, who then want to use our products to first of all pre- review themselves before they put themselves to borrowing and we believe that every individual will be interested in the way the information is treated in the financial institutions. So, we have what we call the credit monitors and the credit alerts. With credit monitors, you can subscribe to it as an individual and every month you get like a statement that shows you your overall position and the performances of your loans and advances.
We have the monitor that alerts you once there is a transaction on your account; we believe that these are products that are very important to the consumers. What this does is that it makes the consumers to be conscious of the transactions that place in their various accounts and the way those transactions are been treated by the lenders. It also assists them to be able to package themselves in readiness for new transactions so that they are not caught unawares on information we do not know exists about them. These are two broad areas of the products we have developed.
So far, how has the year gone?
We are currently in 2017, and I think there has been some level of stability in the way the economy is going, unlike last year; we have not had any incident of vandalism or militancy in the Niger Delta. We have seen some gradual increase in the price of crude oil at the international market. So, if Nigeria can get more revenues, more foreign exchange earnings from oil, if they are able to get up to maybe $50 or $60 dollar per barrel and we able to do our 2.2 million barrels per day without destructions, that would help to move Nigeria out of recession because we will begin to have foreign exchange that has become so scare.
That also will help government to fund it’s over N7 trillion budgets, so there is hope that things will get better this year. The challenges we have had in the past has been majorly three, the first one is the decline in the price of crude oil, the second one is the decline in the quantity that we are able to produce because of the militancy issue in the Niger Delta and of course the third one is rising inflation. So, when you combine foreign exchange challenges with inflation and increase in price level, it causes a lot of problems for a lot of people. I think the challenges we will still have will include the fact that more businesses will still not have access to foreign exchange and as long as there is inflation, the price level will still go high, therefore making poverty level to still remain as high as it has always been.
The other issue is that once companies are not producing, then even the revenues that are coming to the government in terms of taxes will no longer be there. So, these are issues that take time before they go away. We have witnessed all of these in 2015 and 2016 and they cannot be wished away, we have to work ourselves out it consciously and strategically and unless we do that, there is still going to be a lot of issues.
What is expected?
What is expected is that once government can have a lot of conversation and dialogue and gets the Niger Delta to be peaceful and we can have the maximum that we can have obtained from crude oil in terms of the number of barrels per day, we are a member of OPEC, if we can get the quantity right, we will begin to see some improvement in our foreign reserve and in the last two months you can see that the foreign reserves have started moving up again. In just one month, I think there was almost an accretion of about three billion dollars, that’s a sign of some positive things. So government needs to have that serious engagement in the Niger Delta to ensure that they calm nerves and there is peace in that part of the country to reduce interruptions in the production of oil.
How do you see businesses generally this year?
Businesses generally this year gradually would be moving out of recession if government is able to move out of recession and if government is able to implement its budgets based on what they plan to do. Government intends to borrow some amount, and they have confirmed to us that there was an over subscription of the 1 billion Eurobond that was floated at the international market, that is a sign in confidence in the Nigerian economy, it is also a sign of the fact that there is some believe about the future of the Nigerian economy. So this trust need to now founded into businesses and so we expect that more companies will come back, we expect that there would be profitability in some companies that have recorded losses in the last two years and this would lead to reduction in level of mass retrenchment that we are seeing and closure of factories and businesses that we witnessed, especially in 2016.
For that to happen, government on its own has to make sure that the issue of foreign exchange is addressed. So, if we can have some level of stability in the foreign exchange market, that can help to get foreign exchange to more businesses and for more transaction which businesses need to be able to function and then remain in the market. That is very important. The second important thing is the issue relating to management of fiscal policy, there must be this collaboration between fiscal and monetary policy. So these two policies are very important if we really want to get out of the woods. We have almost two or three types of FX rates in Nigeria, there is no economy that can be very successful based on that, and this is in the hands of the government.
There must be a streamlining of this to make sure that the rate of FX is known and it is predictable. Multiple rates do not confer any good indication of a serious government. For me personally, I think the rate we are seeing in the market now, over N500 per dollar is an artificial rate. The naira is not as bad as it is but because there is no direction as to the policy of the government to FX, because there are so many different prices people are trying to take advantage of the fact that there is no clear cut robust management of the FX market and as long as we give opportunity for that, people will take advantage of that, that’s one area that government need to really address, and if they address this and there is some level of opportunity for naira to come to its normal market value and allowed to be driven by market forces to a large extent, that can engender confidence by the international community and we can have foreign direct invests to grow the Nigerian economy. If we have direct foreign flow, people can come back and continue to invest in this country, and we have earnings from our FX and oil going up as well, that would help the economy to grow.
And I think those are the two major areas that the government would have to focus on.