Govt must invest in infrastructure to spur growth- Emeka Okeke
While the economic analysts have projected that the Nigerian economy is on track to recovery, the Chief Executive Officer of Mediafuse Dentsu Aegis Network, Emeka Okeke, is not too impressed. He tells JOSEPH EKENG in this interview he is worried that the economy still remains at the subsistent level because government has refused to invest adequately in the development of critical infrastructure that can drive investment.
Excerpts:
What are the issues defining the media sector in this recession period?
They are data and technology, skill sets, cost pricing and return on investment – how are we connecting to people? Are we connecting efficiently are we connecting effectively or are we connecting efficiently and effectively in the light of a recession and dwindling resources and budget going down?
But these issues have always been around, so how are they going to be different in a recession or post-recession period?
These issues have been around for some time, but because we had so much money in the system so people were not taking them seriously. But with the recession, it’s now becoming more of what have you got to offer to stay in business. Are you investing in the right tools? Are you investing in the right people in terms of resources? Are you also driving innovation? What proportion of your revenue are you ready to put in research and development, in technology that will unleash productivity? The question is more daunting now than ever before.
In the face of what you have explained, has there been any radical change in consumer behaviour to justify that level of shift?
Yes. What is driving the change is disposable income. In a recession you have less to spend; you struggle with opportunity cost of giving up one item to acquire the other. Therefore, if you look at consumer behaviour from commodity acquisition, you’ll find out that two years ago more people visited the malls to buy things. This means that they were ready to buy for the price tag on the commodity. Today, we have more corner shops and a lot more people and house wives tend to buy from the malams on the road side. It’s not just about disposable incomes; it’s about economy packs and being able to afford those things. And then back to communications, are we therefore communicating in such a way that we follow that consumer behaviour and consumer trend? Of course again, technology has put choice in the hands of the consumer. It is no more a geographical but a virtual world. Let me ask for instance, why do you think Woolworth failed in Nigeria? They were not price sensitive to the Nigerian people and the Nigerian culture or world view. To that extent, people who will go to Woolworth to buy have access to what Woolworth sell their clothes elsewhere in the world, so they compared prices to see whether it made sense or not. They (Woolworth) didn’t do their homework. They assumed that being the biggest African economy that people would just jump at them, not knowing that the economic pressure had set in and people now have fewer cash.
It seems the government is making steps to rescue the economy from recession. An economy rescue plan has just been launched, the budget has been signed and a couple of executive orders have followed. Are you excited about the impending change?
It doesn’t excite me! What we are doing is applying Vaseline on water and when you do that, the water and Vaseline goes separate ways. The problem we have is that our economy is still very much an extractive economy. Extractive from the point of view of taking our natural deposits and selling them, then we buy finished product of those raw materials at an exorbitant price level. The question now is, how do we then migrate our economy to a service economy and then to a manufacturing economy? You cannot leap-frog this without investing in the right framework which is infrastructure. It is only infrastructure that will encourage brands like Peugeot and Volkswagen to come back to Nigeria and raise employment to the double digit that we all expect. Today there is nothing like middle class. It’s either you are extremely rich or extremely poor. I don’t know what the government is doing that is why I say it doesn’t excite me. All the stories about recovery are all about recovery which is not enough to encourage investment. We are still at the very subsistent level of economic practice and development. It will take a bold leadership to structure the country in a way to attract the kind of investment that we need.
Over N2trilion has been committed to capital project in the 2017 budget and that is more than we have ever had.
Convert that to US dollar. And how much of that is internally generated revenue? And how much of that is going to be borrowed fund from the International Monetary Fund (IMF) or World Bank which of course does not come free? How much of that is tied to the sale of crude oil? When you get those answers then you begin to tell yourself the truth. Are they going to invest part of that money into energy production and will that lead to lower energy prices for businesses? How many kilometres of road are they going to fix? What are their plans for education and hospitals? Unless we break this down and have a conversation on how these can impact on the lives of the common man, then it’s all like applying Vaseline to water.
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