At this year’s International Labour Conference (ILC) in Geneva, Switzerland, the importance of the informal sector to the global economy was given a major con­sideration. This is even as over 90 per cent of the workforce in Nigeria is recognized to op­erate in the informal sector of the economy. At the special event, the Director General of the Nigeria Employers Consultative As­sociation (NECA), Mr. Olusegun Oshinowo, admitted that the discussion was key to Nigeria bearing in mind the high unemploy­ment rate in country. His reservation, how­ever, was in the area of implementation. He also noted that NECA, as the umbrella body of employers of labour, has never hidden its support for the removal of subsidy on fuel. In this interview, Oshinowo speaks more on why subsidy on petroleum products should go and the issue of social security among others.
Excerpts:
Why NECA attended 2014 ILO
Well as you know, the conference has become a yearly ritual for us. I have been involved in this for over 15 years leading the employers’ delegation to Geneva. And as you well know, the Nigerian delegation is a tripartite one, comprising of the employers, workers and government. The topics discussed this year were quite of interest to us. For instance, the issue of employment is quite key to us as a country, given the high unemploy­ment rate in Nigeria. We expect each and every member of the delegates to show interest in the thrust of that discussion. The outcome of it should be of importance to government in driving policies and actions that will actually address the unemployment issue we are facing in Nigeria.
The second thing which is equally of great importance to us is the discussion on formalising the informal economy, particularly developing the informal economy which is quite huge and has not been streamlined. The fact is that some of the discussions we have heard, if we can implement the recommenda­tions made, it will go a long way in reducing the level of informalisation in the country. However, reducing informalisation has its own impact on economic growth and develop­ment. It equally has its own impact on the quality of work and on the revenue potential of government. It becomes easier for government to collect more taxes when enterprises migrate from the informal economy to the formal economy than the current situation which we have in Nigeria. For us not to miss out on these important issues, we are following up on the key issues raised so that the outcome will be useful to government in promoting socio-economic development.
Relevance
The issue of informal sector is actually key to the promotion of the socio-economic develop­ment of Nigeria. As you well know, over 90 per cent of the workforce in Nigeria operates in the informal sector. And if we were to reduce the incidence of poverty in Nigeria it is extremely important that we address our mind to the basic policy option we have to embrace that will encour­age transition of enterprises and workers from the informal sector to the formal sector
Well again, I will say this is not the first time that the ILO will be putting up issues and topics that are of interest to countries. But key to it is the disposition of those countries in taking the most important step, which is implementation and this is where we have been found really wanting over the years. We sincerely hope the situation will be different this time around.
Why ILO resolutions don’t work in Nigeria
There is a huge deficit of ex­hibition and implementation capability in our country in follow­ing up on some of these conclusions at international programmes and fora we have participated in. There isn’t that linkage between the outcomes of what we take home and the action of government in moving ahead. There is always that huge gap and that has to do with governance. There is nothing you can say about that other than the fact that it has to do with lack of governance. This is because if there is serious gover­nance on ground, those that have been sent to represent us in this Con­ference will submit their report to the government and the question is if we can have an action plan. There should be a mechanism whereby we can monitor how well the action plan has been implemented. The ILO cannot help us in doing that. It is a matter that we should look at.
Challenges facing women in informal sector
The interesting thing about the promotion of entrepreneur­ship, is actually what made us to move in that direction. We have a thousand and one enterprises in the country that are run by women that requires support. We are not talking of financial support, but on how they could embrace the basic process of principle and system that would enable their businesses to be competitive. And it is a very good success story for us because we started with just 10 members, but today, nationwide we can boast of about 800 members and we are still touching the issue on the periphery and the next phase of the evolution will be the introduction of a Micro Finance Bank. And before the end of the year, the women hope to intro­duce their own Micro Finance Bank which, to some extent will address the base of their financial challenges.
I must say that those businesses would be able to attract our quest into promoting women entrepre­neurship. It would be basically micro and small enterprises. Yes, you may want to say that some of them operate in the informal sector, but we still have so many other businesses that are not of development that they would be able to attract and so, there is still the big challenge of building up institution, or coming up with policy that would promote the formalization of the informal sector and remember that in the promotion or transition of the informal sector to the formal sector, there are a whole lot of other things that are linked to it.
The issue of promoting it, the issue of meeting the standard, the issue of transparency of government is the major challenge
ILO participation
My own basic worry in terms of the disposition of Nigeria in this kind of a topic at the interna­tional level is that the composition of our team does not seem to reflect the basic expertise that we need which would basically contribute to the debate because this is not a purely social issue, but there are economic dimension to it.
And I would have expected the Federal Government, in put­ting together a delegation, to get someone that is of micro-economic disposition that can easily under­stand all aspects of the subject from the Ministry of Finance. And when we talk about the delegation from the Ministry of Trade and Indus­try, somebody from the National Planning, and so it should not have been a straight jacket dominance of Ministry of Labour personnel. And in future, we should take note of that point that, in constituting our delegation to national programmes the theme and the topics that would be addressed should inform the composition of our team to be able to give meaningful and qualitative positions to the discussion.
On our own side, we do not have a problem because NECA delegation has an economist as part of our own team and the economist has been part of our discussion team on the transition of the informal sector to the formal sector. And from time to time, I do consult with the economist in order to get my per­spective and my contribution right on the debate.
Africa as global economic power
The point simply is that potentials is one actualizing potentials to reality is what matter. And based on the issue raised, yes Africa has the potentials but actual­izing thepotentials will depend on a number of factors. And those are the factors weexpect our governments to be paying attention to. First, the imperative for peace is important, because no matter how potentially rich you are, if you cannot guaran­tee the security and safety of your investment, then your potential will amount to absolutely nothing.
Secondly, infrastructure is key and we have huge deficit of infra­structure in Africa. Thirdly is the stability of ourgovernment in terms of consistent implementation of our economic and fiscal policy in the countries. These are the factors that must be put into considerations to make the realization of the potentials come into reality.
What of the skills, the manpower that we require to make the poten­tials work. And a good example in Nigeria is our auto policy. That is a wonderful, beautiful policy that has manpower implication. And if you want the car assembly plants to set up factories in Nigeria, where will the skills come from? Have we addressed the basic institutions that would provide the skills? And these are variables and parameters that we need to address that would actualize the potentials that we identified. And without them, then our potentials would amount to nothing.
Addressing Nigeria’s manpower challenges
I have had the course to travel by road to some key economic sectors in Nigeria. And when you take our road infrastructure as an ex­ample, it is a huge challenge moving products on our roads. That is one dimension of it and the other dimen­sion is in terms of complimentary system. And the question here is that can we count on our roads system, and the answer, of course, is no. And these are issues in Nigeria when it comes to transportation infrastruc­ture. And this is key when you want to promote industrial development.
Nigeria, of course, is the commer­cial capital of West Africa. But how can you travel to Ghana by road? And when you did, your experience is what you may not want to think about again. And if that is true for individual, you may want to think of what happens, when it comes to business.
I think it is better that we have to get our government to think of what to do because the government has beautiful document and beyond rhetoric, the real focus should be how well are we ready to translate our rhetoric into actions. I think the solution to this is our basic chal­lenges and beyond this, the issue of stable electricity supply is there because privatisation will not guar­antee stable electricity supply and you cannot expect the private sector operators, given the enormity of the deficit in the sector to be able to handle the deficit in short time. It is a medium and long-term project and government cannot simply wash its hands off the power sector because it has been privatized. Government still has a role to play.
Social protection
The debate on social protec­tion as discussed at the ILC conference, is a chicken and egg story. Yes, social protection is important because, to a large extent it would address your pervasive issue of poverty and raise income level of the less privileged and we have seen it work in Brazil, but you need the good fiscal space to be able to implement your social protection because it requires resources. Will the Federal Government able to fill the fiscal space that would support social protection? This is because employers are not prepared to add additional payment beyond their taxation. And that is the question that the Federal Government can readily answer because in some presenta­tions at the ILO, the condition is that Nigeria with other countries in the West African region can actually afford to support the social protec­tion floor. And it is not as if we did not have some semblance of social protection in Nigeria. But we need to harmonise these social protection scheme, integrate them and then back them up with appropriate fiscal support to make sure that it actually gets to the rural areas because the bulk of the population of Nigeria is in the rural areas and we cannot talk about social protection within the wage context. What we are talking of in terms of social protection is basically on the wage sector of our population, which actually account for less than 5 per cent of the work force. The question is that how will it trickle down to the non-wage sector, micro micro enterprises? How will it trickle down to them. That equally explains why pension does not really connect with those people because they are not in the wage sector. Pension is only workable within the wage context because we expect to have an employer where you have a deduction and an employee that will make his contribution. But in the informal sector, the employer some­times could be the employee. That’s the truth about it and that is what is called the own account worker. In such situation, the pension would not be attractive to it. So there is need to think of other social security ele­ments that will be attractive to those group of people, maybe the health insurance. But you have to ensure that the health insurance is acces­sible to him, if the pension cannot be accessible to him. What we still need to do really is to look at the various components of social protection. Some of the products may not be sale-able or connected with opera­tors in the informal sector, but some of them could like the issue of health insurance.
Akwa Ibom pension
Honestly speaking, it is as if our governors have gone bunker. Honestly we’ve gone to say it the way it should be. It’s nonsensi­cal. Governors really have issues. How do you justify that kind of action when probably 90 per cent of your population are in abject poverty. How do you justify it? It borders on insensitivity, honestly speaking and probably you might call it greed absolutely.
Fuel subsidy
We need to look at this issue holistically and from a more fundamental perspective. The most important thing here what is best for the Nigeria economy. And what is best for the Nigeria economy is that in one breadth, you cannot be extracting crude oil and in another breadth, you are importing refined petroleum product. No! Not in the interest of the economy. Because you pay for transportation to move it there. You pay for transportation to get it back. The value added should naturally lead to employment and spin up industries to flourish. That really is the fundamental. When you put in a place a policy framework that will ensure that we refine our petroleum products in order to add to them and create industries and generate employment for our people. For us that is quite key. If all of us can key in to that perspective, then the basic issue of how you are going to use subsidy to promote becomes a different issue. I will not really agree with the argument of remov­ing subsidy from fuel and then put subsidy in the other sectors. The key issue is that the current dispensation of subsidizing the product is not in the interest of our economy. So let’s embrace the policy framework that will make sure that we maximize the benefits from our God-given resources, the crude oil. We can then sit down and access how we can manage the resources accrued from it. We can decide whether we want to manage it from the perspective of giving subsidy to the disadvantaged sectors of the economy. And which are really the disadvantaged sector of the economy? It should be given to sector that has the potential to gener­ate more employment. It’s not even a question of saying, we are removing it from petroleum, we are putting it on electricity.
How can we use our excess resources to make sure that where we are going to move the excess resources will create employment, which is the key. We have almost 70 per cent of the population in the age bracket of 17- 35 and 50 per cent of them are unemployed. That is a big problem, so the utilization of the ex­cess resources must be employment and job-focused. That is the second leg of the argument and the issue. How do you now use that resources to make sure that jobs are created in the economy. I don’t have answer to that but we shouldn’t just jump to the conclusion that it should be electric­ity sector or the agricultural sector. We need to put down a thorough economic analysis as to how best deploy those excesses.

Informal sector’s strategic to poverty reduction – Oshinowo