PRESS CONFERENCE- 1st Quarter 2018

PRESS CONFERENCE ADDRESSED BY MR LARRY E. ETTAH, PRESIDENT OF NIGERIA EMPLOYERS’ CONSULTATIVE ASSOCIATION (NECA) ON 1ST MARCH, 2018

PROTOCOLS
It is my pleasure to welcome you ladies and gentlemen once again to this press conference on behalf of NECA. We have just finished our Governing Council meeting and we wish to brief you on some of our deliberations. First of all, let me make a few remarks on the global economy.

GLOBAL ECONOMIC OVERVIEW
The International Monetary Fund (IMF) projected in its World Economic Outlook released in January 2018, that the global economy would expand by 3.9% in 2018, continuing the trajectory towards economic rebound recorded in 2016 (3.2%) and 2017 (estimated at 3.7%). Advanced economies are expected to grow at a combined 2.3% with the largest economy in that category, the US being the star performer at 2.7% GDP growth. On the other hand, emerging and developing economies are projected to grow at 4.9% with China and India expected to lead at 6.6% and 7.4% respectively.

Oil and commodity prices continued to rise, with oil prices reaching around $70 per barrel in January 2018 before declining slightly to $65 in recent weeks. This rebound in oil prices contributed to Nigeria’s exit from recession with full year GDP data just released by the NBS showing that the Nigeria economy grew by an annualised 0.83% in 2017, squarely in line with the IMF’s prior forecast.

OVERVIEW OF THE NIGERIAN SITUATION AND OUR CONCERNS
The New Lagos State Land Use Charge Law
In its bid to increase its internally generated revenue and expansion of its tax base, the Lagos State Government (“LSG”) recently repealed its 2001 Land Use Charge Law, and replaced the 2001 Law with a new Land Use Charge Law, 2018. The LSG also extended the period for the payment of all annual Land Use Charge (“LUC”) Demand Notices for 2018, to Saturday, April 14th, 2018.

The latter is to enable Property Owners and affected Occupiers take the option of enjoying the discounts available for the prompt and early payment of LUC invoices.

While we commend Governor Akinwunmi Ambode of Lagos State for all his good works in Lagos, which is a model for good governance, he, however, has to realize that sensitivity and humanness is a critical part of governance. The recent amendment of the land use charge law is a classic case of insensitivity, alienation and gross disregard of the current state of wellbeing of both corporate and residents.

In reality, the new law will expect property owners in Lagos State to pay at the very minimum a monstrous, appalling and callous increase of over 200 per cent and in some instances over 500 per cent in Land Use Charge. It is not as if the income of a property owner has gone up significantly to justify this outrageous law. Moreso, the real estate sector continues to wallow in deep recession with high vacancy rates. How on earth would any decent authority increase taxes overnight by over 200 to 500 percent when in reality Government should be doing more to stimulate the Sector to come out of recession? To compound matters, there is a repugnant and odious penalty payment ranging between 125-200 percent, if payment is not made between April and August.

The law also contains the following obnoxious provisions:
Penalties for default in paying the LUC within the period specified in the Demand Notice attracts the following penalties: –
(a) 25% penalty on the LUC Demand Notice Rate not paid between 45 to 75 calendar days;

(b) 50% penalty on the LUC Demand Notice Rate not paid between 75 to 105 calendar days; and

(c) 100% penalty on the LUC Demand Notice Rate not paid between 105 to 135 calendar days.

Where the LUC Demand Notice is not settled after 135 days of the Tax Payer’s receipt of the Demand Notice, the Lagos State Government is authorised by the LUCL to appoint a Temporary Receiver/Manager to administer the Property until all the outstanding taxes, penalties and administrative charges are paid.

Basing the Annual Land Use Charge Rate on the Market Value of a Property is an inequitable form of Taxation as the Owner of the Property is not as a matter of fact, receiving the market value of the property on an annual basis.

Using the Market Value of a Property to assess its LUC on an annual basis is also deemed to amount to a subtle form of double taxation as Capital Gains Tax is paid every time the Property is sold or bought.

The OPS finds this law intolerable and brutish. It will do everything legal and legitimate including social resistance to challenge this unfair and unjustifiable law. We put the Governor on notice that this law in its current form is not acceptable and the OPS will fight this law by social resistance and any other legitimate means at its disposal to get the government to ameliorate the harsh impact of the abhorrent law on residents.

We believe in the context of a democracy that it is important that truth be spoken to power. We hope the Government will not be obdurate and see reason as to why this law is unfair as it is insufferable.
Delayed National Budget

We have observed and it appears to have become a tradition in this democratic dispensation for the budget to be unduly delayed thereby plunging the economy into a state of inertia, particularly in the first quarter of the year. In December 2016, the President presented the 2017 Appropriation Bill to the National Assembly. However, the National Assembly did not pass the bill until May 11, 2017, almost six months after it was presented. We recollect that President Muhammadu Buhari presented the 2018 budget to our Legislators in November, 2017.

As at today, there exists an uncomfortable silence from the Executives and National Assembly on the passage of the Budget. This recurrent delay in the passage of national budgets calls for serious attention as it is capable of slowing down the development of our nation, more the 2018 Budget was supposed to address the significant issues of infrastructure investment and Employment generation.
We wish to appeal to both the legislative and executive arms of government to mutually agree on a time frame that would ensure that the budget for the following year is passed into law before the end of every current fiscal year. The 2018 Budget should be speedily passed into law.

Partial Reconstitution of Boards of MDAs and Non Confirmation of Nominee to the Monetary Policy Committee (MPC)
We commend the Government for the constitution and re-constitution of some Boards of Parastatals and Agencies, albeit very late. This lateness and outright non reconstitution of some other Boards portends danger for good governance with negative image for the Country. Of greater concern to Businesses is the non-reconstitution of critical Boards such as the NSITF, NHIS, PENCOM, CBN, SEC, among others. We had expected government to have set up the Boards by now. The absence of Boards for the parastatals is one awful legacy of the military regime that should be discarded without further delay.

We are worried about the non-confirmation of nominees to the Monetary Policy Committee (MPC) by the National Assembly. This critical Committee has been unable to meet because it could not form a quorum as stipulated in the CBN Act 2007. We believe that the country’s monetary policy should not be left to run on auto-pilot as the outcome of the deliberation of the MPC is important to the sustainable economic growth and development of our country
Recurring Fuel Scarcity and Fraudulent Subsidy Regime
Like a sore that has refused to heal, the recurrent issue of fuel scarcity has reared up its ugly head again.

We are where we are today because government has not been faithful to the deregulation of the PMS market of the downstream sector of the oil and gas. Let us ponder and ask ourselves where the non-deregulation of the petroleum sector has led our economy:
continued dependence on off shore sources for petroleum products,
perennial shortage of petroleum products,
flourishing black market where Nigerians pay an amount way above market rate for petroleum products,
loss of manpower as a result of endless hours spent at filling stations,
massive and unimaginable corruption in the management of the subsidy dispensation, etc

There is no question about the fact that the subsidy regime has returned and now under the management of NNPC. This is not the way forward. The time has come for government to choose economic imperative over political expediency by allowing the pump price to reflect the reality of the market thereby creating the enabling environment for uninterrupted supplies of the product and the needed investment that will ensure self reliant domestic production.
The Federal Competition and Consumer Protection Bill: Surreptitious Insertion of a Tax of 0.5 Percentage of Profit on Business to fund a new Commission/Agency

At the last count, we have over 55 Taxes and levies of all sorts imposed on enterprises by the Local Governments, State Governments and the Federal Government. In fact, this is just a conservative estimate. The question is how will businesses grow and create jobs under this inclement fiscal framework. The truth is that enterprises and businesses are being unwittingly strangulated by a hostile, unfriendly and very unreasonable tax and levy regime. The unfortunate thing is that the trend has continued as evidenced from the recent Federal Competition and Consumer Protection Bill submitted by the National Assembly to the President for His Excellency’s assent. Some retrogressive forces have gone behind the stakeholders after the public hearing on the bill to insert a 0.5% tax on companies to fund the establishment of a planned Commission/Agency that will undertake responsibilities under the law.

We urge Mr. President, in the interest of this economy and sustainable development of Nigeria, to withhold assent to the Federal Competition and Consumer Protection Bill 2016. The Bill should be sent back to the National Assembly for proper procedural compliance.
We also appeal that Businesses should not be strangulated out of existence through multiple taxes and levies from the three tiers of Government.

CONCLUSION
I would end this address by urging the federal and state governments to remain focused on ensuring broad-based economic recovery that will ensure improved economic activity across most economic sectors, develop business friendly-laws and policies, ensure the continuous existence of businesses by avoiding inconsistencies in policies, boost employment, improve corporate and firm performance and reduce poverty and unemployment. Only then can we truly positively impact on ordinary Nigerians.

Thank you very much.

Larry E. Ettah
President, NECA