“Nigerians should be worried about access to credit, not increased debt.”
Ajibade Fasina is a managing partner at Kreston Pedabo. In this interview with Kingsley Jeremiah, Mr. Ajibade discusses the debt situation, subsidies and deregulation of the downstream sector of the oil industry, poor compliance with accounting standards by state governments, the many steps his organization has taken, etc. , talks about the critical issues facing the Nigerian economy. He has contributed to national development for the past 25 years.
What do you think about the country’s debt situation? Should Nigerians be worried about it?
National debt is a common challenge around the world, with many countries experiencing significant outstanding payments as a percentage of GDP. Nigeria’s ratio currently hovers around 37%, approaching the government’s standard of 40%. But it is not the debt itself that is of greatest concern, but the purpose behind these loans. Borrowed funds are positive investments if they are used to build infrastructure that stimulates economic growth, boosts GDP, and increases per capita income.
Rather than dwelling on the growing debt situation, Nigerians should shift their focus to assessing the level of investment in infrastructure and industrial development. Although the new government appears to have talented people, the public needs to closely monitor its economic direction. Supporting government efforts includes fulfilling civic responsibilities such as paying taxes and being actively involved in policy-making through national and state legislatures.
The Institute of Chartered Accountants of Nigeria recently announced that as of October 2023, out of the 36 states and the Federal Capital Territory (FCT) in Nigeria, ICAN has rated it as ‘excellent’ in terms of state compliance with audit regulations. reported only three states. What is the cause? What do I need to do to improve compliance?
States will do better in terms of transparency, adequate accountability, enforcement of codes of ethics, implementation of whistleblower policies and protection of whistleblowers, regular reporting of state affairs and finances, and adherence to the rule of law. There is a need. I have been working with several state government finance departments for a long time. We were engaged to train and provide basic accounting procedures to all staff working in state finance departments across local governments and state departments. It took about 2 months.
We have prepared a presentation that this minimum level of account is required to work in the finance department. We were shocked to find that we had no knowledge of accounting, not even basic double entry to know where revenue was received and where it was spent. So I had to change my training program. We started with the basics. That’s a challenge for us.
That gap exists because they are the people who are supposed to account for government revenues and expenditures. I wouldn’t say it was intentional. Because I know they have a Treasurer and an Auditor General who are also supposed to ensure that proper records are kept at all levels.
The ongoing war between Ukraine and Russia is often blamed for exacerbating the country’s already existing economic challenges due to the coronavirus pandemic. One of the key issues is energy and subsidies. Questions remain about deregulation of the downstream oil industry, but how do you think the subsidy issue can be addressed?
A key aspect of public financial management is transparency, which helps build trust in government and ensure the effectiveness of government spending. Certainly, governments should implement well-thought-out mitigation measures to cushion the impact of economic hardship due to subsidy removal, but most of the savings should be invested in public infrastructure development and social security. It is. Increase local refining capacity to meet fuel demand.
There is introduction of CNG option by the government. Sustainability of planning is very important. The CNG option brings peace of mind to people and provides a cheaper alternative. I think it’s cheaper for the government than PMS.
Therefore, government efforts to secure alternatives will help transition from fuel use to cheaper and more sustainable gas. What I’m concerned about is how the government will maintain this plan. This is not the first time the company has announced its intention to transition to gasoline-powered vehicles. If you have to set up the infrastructure, the costs can be quite significant.
I don’t think the government has enough money to maintain all of that, but anything that ensures the average person’s daily life is cheaper is a good thing, as long as the government can maintain it.
Can you give us an overview of Pedabo’s operational profile and what we can tell you about its track record over the past 25 years?
Pedabo operates in the Professional Services Industry (PSI) and has earned a reputation as one of the top professional services compared to accounting firms in Nigeria over the past two decades. The services we provide include: audit and assurance services, tax compliance and advisory services, secretarial and insolvency services, transactional and financial advisory, strategic and operational consulting and human capital consulting.
With physical offices in Lagos and Abuja, we operate a boundaryless model that leverages the essence of technology to serve clients around the world. With approximately 170 professionals, we are proud of the tenacity, passion, dedication, and intelligence of our human resources, which enable us to provide superior service to our customers in a variety of industries and sectors.
Growing from a young company of two partners and one employee to a company with 10 partners and over 170 employees is a major accomplishment. We have also accumulated significant experience and expertise by working with large organizations, multinational corporations and listed companies as trusted advisors and consultants. We are proud to be an indigenous brand that has grown to compete with all the international brands operating in Nigeria. These are major achievements that we are very proud of.
You have transitioned from a Morrison Global member firm to joining the Creston Global Network. Could you elaborate on the benefits this change will bring for your company and Nigeria, especially in terms of promoting the global presence of indigenous businesses?
Yes, that’s right. Our journey has taken us from being an independent company to joining a global consortium and, more recently, joining a global network of companies.
Morrison Global is an association of companies in the professional services sector, and while that association has allowed us to network and collaborate with other companies within the association in light of our strategy, we have We believe that participation will give us more credibility. Leverage our expertise and position us as a global company (global view, local context) with the ability to serve you geographically. We believe that over the next 25 years our company will make significant leaps forward and become a leading company in providing superior service to our clients, and we are working towards that goal.
At Network, I aim to leverage network partners to assist my clients as they expand their business across borders, without me having to be physically present in those countries. Similarly, when partners wish to invest in Nigeria, I am positioned as their primary point of contact to ensure they receive the same quality of service as their international clients.
My vision for the growth of the company has always been centered around becoming Nigeria’s leading professional. I aim for our firm to be the premier professional service provider from Nigeria and to be able to provide quality services internationally. Our goal is to join the 50-year-old Crestin network and grow with them, helping them build a globally recognized professional services firm. I am optimistic that we will reach this milestone within the next 25 years.
Given the current economic challenges in the country, how can the measures you are taking be scaled up to support businesses and benefit the national economy?
The private sector is the backbone of every economy, and advising the organizations that make up that sector to stay open and profitable is a great service not only to those organizations but also to the economy. , we are fully committed to this. Do this continuously.
From tax to audit to advisory, what do you think are the common mistakes that hinder Nigerian businesses from achieving their goals?
The mistakes we have identified are numerous, among them poor record-keeping, poor corporate governance, poor systems and controls, and concentration risk (when processes are built around individuals). And so on. If these corporate issues are resolved, the organization will be better able to achieve its goals.
The Small Business Owners Association of Nigeria recently announced that about 7.8 million small and medium enterprises have closed down in the country in the past two years. What can new management consulting services, including customized solutions in strategy, human resources, and operations for small and medium-sized businesses do to reverse this trend, given the importance of these businesses to economic development and job creation? Or?
Governments need to develop policies that make credit readily available and provide subsidies and low-interest loans to help small and medium-sized enterprises scale up, while organizations ensure business stability and growth. You also need to have the right systems in place to do so.
Considering global trends, what do you think is the future of accounting in Nigeria?
Accounting is here to stay and will continue to improve. Technologies such as Al and blockchain have a lot of potential to be leveraged in the short and long term, and Pedabo is positioned to champion many innovations and best practices in the space in the coming years.
Accounting is becoming borderless, as most countries, except perhaps the United States, now use one regulation for preparing financial statements.
This will allow you to receive financial statements prepared in Nigeria in the UK, and the application process for filing them in Nigeria will be the same as in the UK. Therefore, reporting coordination has opened borders and made it easier for accountants to work anywhere. Then, with cloud reporting, for example, some of my colleagues decided to study abroad but didn’t want to lose their jobs locally. They still work for the company, but from the UK. That’s because your files are stored in the cloud. This means you can access your work anywhere in the world. Technology has made our activities much easier, more competitive, and more rewarding.
However, there are issues regarding gaps in the system. As technology advances, individuals are looking to identify and exploit these gaps. Collusion and inadequate safeguards contribute to this problem.
To address these issues, companies are implementing checks and balances, and the Financial Reporting Board has introduced guidelines for external consultants to evaluate internal controls. This ensures that the financial statements are accurate. Regulators are focused on bridging gaps to instill confidence in the system. In Nigeria, emphasis is placed on preventing falsified reports, with regulators insisting that signed reports are accurate and verifiable to increase confidence in the system.
Nigeria is considering a tax reform that would reduce the number of taxes imposed by the federal and state governments from more than 60 to less than 10. What do you think about this plan?
This is a welcome development, as multiple taxes are not only a major hindrance for most businesses, but also undermine governments’ efforts to expand their revenue base. Two of the criteria for taxation are certainty and convenience. This allows people to be aware of all taxes that apply to them and makes compliance easier.
Nigeria’s tax system has not been able to effectively demonstrate these attributes recently, so a successful restructuring of the system to achieve this is in the best interests of businesses and the economy as a whole.
Source: guardian.ng