Chief Executive Officer, Renaissance Capital, Mr. Igor Vayn, in this interview with our respondent, says the Nigerian economy will improve when the incoming administration takes over
What is your assessment of Nigeria’s investment status in view of the stress the economy is passing through today?
It depends on the direct foreign investment, companies coming into the country to build businesses for five to 10 years and the equity investors who would help in financing the existing companies here in Nigeria. The reforms we are actually talking about are reforms that would help easy of doing business in the country.
The World Bank ranking of Nigeria on the ease of doing business is at the bottom of the ladder. If you make starting business in Nigeria easy, that will help in the formation of new businesses and it will help foreign investors to deal with less paper work when they come here. It will also give opportunities to equity investors.
More companies will hope to invest in the country in future, so that is an example of positive change we can get and right now, there is interest in Nigeria. Everyone is now shifting focus from GEE, which is part of the Obama administration’s ‘Power Africa Programme’.
Now, there is a huge quest about investing in Nigeria. You see Gulf investors buying stakes in Nigerian banks and ETI as well. Also, Gulf investors are buying large stakes in property companies in Nigeria. All of these are in the last nine months, so with regards to the prospective of equity investors, there is a lot of interest. As to whether the incoming government will help the process, I suspect it will.
What is your advice to the incoming government on how it can get the economy back on its feet?
Your question is very fundamental and that question is appropriate for many countries. I believe when new the President gets into office and the new government is formed, I think there will be a high level of expectations from the whole country on what the government should do to make the country better. I don’t want to sound very Germanic. But the answer is to give people opportunities; to give people opportunities to build their own lives, build their own careers and their businesses and educate the people.
Certainly, the level of corruption must come down and the ability of people to start new enterprises, and small businesses should be enhanced. It should be a very easy process to begin with. The tax holidays and many other things which would help people jumpstart their businesses across the whole country and sectors should be encouraged, not just in the big cities. People should start doing what they feel they can do. Also, proper motivation and stimulation should be given to the financial system to help finance those activities.
So, essentially what I am saying is that the focus should not be only on huge infrastructure projects alone, it is extremely important and this is what the previous government did. Whether it was successful or not, we cannot give our own assessment but I believe that if the government starts spending more time on those smaller issues, there will be great success.
So what I am saying is not overburdening the process, but simplifying it will help tremendously. Because I believe that with Nigeria having the largest population in Africa, to overcome unemployment and poverty, you need to give the power to wide groups of people to help build barriers. So, if you ask me for a piece of advice for the incoming government, this is it.
Looking at the devaluation of the Naira and the interest of foreign investors in the country, if the equity market doesn’t rebound quickly, what negative impact would that have on the Nigerian economy? The depreciation of the Naira may not deter foreign investors from investing in Nigerian equities.
There are other factors that inform their investment decisions. You will notice that the stock market was shedding 10 per cent a day, during the presidential election, but immediately the result was announced that Wednesday, the market levelled up. Yes, you may feel that 10 per cent weakening of the currency but you can’t miss the 10 per cent in the stock price in a day, you can see outside the market to work up 20 to 25 per cent.
So, I don’t know the risk equity investors buying in the Nigerian stock market over the past months have faced, even they know that the currency might depreciate further. The second issue is that we are still waiting for the Central Bank to find alignment with the new government. The bank is hesitating about what it will do, what the fiscal policy will be, who the new ministers will be and what they would like to do.
So, I understand, in the market, it is like what happened there is constraining and we should know more in the next two weeks. Although, if you look at the issue on the scale from 1 to 10, definitely not going to be 1 – 10, is an issue, the currency depreciation just put investors into more comfort. But I would say, this is not the kind of issue which is not top on the agenda of the new government. This is my personal opinion.
Your major job are data and statistics collection and over the last couple of years the quality of data and statistics in Nigeria has been poor. For years we have been measuring growth based on GDP alone, but the real situation of the people does not reflect the recorded high growth rate. What is the way forward for Nigeria on data and statistics information?
I have been doing this job long enough to know the statistics of most countries around the world. Like Greece in the late 1990s, they would put out data and it was discovered years later that Greece was making up the data to a great extent. For instance, government spending on government debt.
These are some of the problems. I read a piece when I was in Europe saying they were expecting a crash in the economy within five years, but it took seven years. It was not a huge surprise because a lot was not right in government, so it is a problem for all of us.
Most of the time you work with the statistics you have and what we try to do is to cross-reference, trying to say how Nigeria looks relative to other countries. What about the power output?
It is not normal for a country as rich as Nigeria not to have electricity. May be, that is just the electricity problem for Nigeria. So, you can cross-reference to a large extent and it becomes a little bit of guess work. That is what I think a lot of people always face in emerging markets.
Your question is paramount all over the world even in countries like USA. When you look at their statistics and look at the real situation, we question what was used in the data collection or information gathering. Is it the correct one when you see that a number says so, zero per cent to one per cent infliction there and in reality people feel the pain of infliction. This is a developed world and there are still questions on their genuine economy.
Do we believe in the numbers they produce and questions in many other markets? That is why the work of the independent analysts, independent investment data analyst is important because it does cross references and uses different points to come to conclusion and to challenge the information being produced from suspicious sources. And this is a good comparative process if you wish to change the process.
At the end of the day, I believe that officials will look at the number produced by the independent analysts and do their cross references work. I believe that gradually we are going to see an improvement. What the Director General, National Bureau of Statistics, Dr. Yemi Kale, is doing is very impressive in Nigeria.
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