Responsible, responsive leadership is key to economic growth, says Kunle Elebute

By Helen Oji   |   13 February 2017   |   4:02 am

Elebute

Kunle Elebute is the National Senior Partner, KPMG Nigeria, and Chairman, KPMG West Africa. He has over 35 years of professional experience advising clients in the public and private sectors in the sub-region. He spoke to journalists on how the 2017 World Economic Forum (WEF) can boost the nation’s governance structure, among others. Helen Oji was there.

What were your key take away from the just concluded World Economic Forum (WEF) in Davos, Switzerland?
This year’s theme was responsive and responsible leadership. The conclusions were around leadership in business and government, and leadership in general. This happened when there was a transition in the United States (U.S.) to the new president at one hand and another recent transition in the United Kingdom (U.K.).

Also, for the first time a Chinese Premier came to West and a lead to the fact that many people thought that perhaps this was China’s time or any of the big countries in the globe that was showing responsive and responsible leadership.

There was also turmoil in Africa. There were issues in The Gambia, but Ghana had a successful election. I think the topic was apt for global economy in one hand and for the African leadership on the other.

Secondly, the current leadership that we have around the globe has posed a lot of uncertainties as to where the global economy is going, because the U.S. Government (Trump), has so many different ideas he wants to throw out. With the U.K. leaving the European Union (EU) or brexit and possibly other countries would follow. If other countries followed, the EU would disintegrate and the purpose of the EU for 40 years, which was economic integration, would lose direction of its economic prosperity, which is why in Africa, you have the ECOWAS on one hand, and our own regional economy.

Southern Africa has its own, North America its own; all have grown back up economic integration. But by U.K. leaving the EU, does it mean that we are going to see a different type of prosperity or growth that does not have economic integration? This is because at Trump’s inauguration, he talked about America first before others. So many countries are saying to themselves; let us consider our own issues first before we consider others.

The global economy was helping each other to create economic integrations, including security forces. But now leaders are saying: we want to go first, ours first before others. It increases a lot of uncertainty. People do not know what the world would look like in 10 to 20 years, and this is responsive and responsible leadership.

Leadership that is responsive to the people, other countries and regions, and also issues like climate change would ensure that the global economy continues to prosper.

For instance, we have issues around the movement of refugees across the borders because they do not have homes. You have refugees moving across Europe because of unemployment and poverty in African countries. Again responsible leadership should take responsibility for those people, their livelihoods that would reduce poverty and hunger, and ensure that they get the right education and creating jobs.

The issue of putting ourselves first, ‘Nigeria first’, ‘Ghana first’ does it not pose a challenge to the development of each country?
Yes, it poses a challenge but we still have to look at it from different dimensions for the different countries because we are a developing country, there are so many things we have not done to ensure that our people even have a kind of living that render employment. People go to school today, finish from the university and there is no certainty that they will get a job.

If you do not have a job for example, there is no certainty of your livelihood. You have no power, water, and security of lives and property is not guaranteed.

One of the major challenges we have in Nigeria is lack of responsible leadership, what can we do to overcome this challenge?
When you have leadership that is not responsible coupled with the fact that government controls too many things, it is difficult for the environment to develop and evolve. For me, if government cannot run airport, they should concession it to those who can handle it; if government cannot run the refineries, petrochemical plants, pipelines, and power plants, they should just hand them over to the private sector. Whether they privatise or concession them, they would be run and managed properly, efficiently and profitable.

The business would make profit before it can make dividend for shareholders, they must pay tax. That tax goes to the government and from what is left you can declare dividend.

It is much more than dividend that government can get from such businesses because if government gave the enterprises to those who can handle them properly and profitable, they will get more revenues from tax. The banks that are still standing today are privately run, and listed on the Stock Exchange. One private bank alone pays more tax than all the dividends of all the government banks that I know of. Then government can focus on being responsible by providing good education, and quality healthcare.

Talking about the government and private sector, government is to provide infrastructure, do you think the private sector can succeed without adequate infrastructure?
Well, I can break down infrastructure into various components. There is power, transport and there is social infrastructure. Power infrastructure, we all know that electricity is not being delivered for all kinds of reasons. Transport infrastructure – rail, roads, airports and seaports; these types of infrastructure 30 to 40 years ago were run by government, globally, until the private sector came in with their capital and expertise.

If government is really serious and wants to accommodate the private sector, they need to show long-term commitment. We did the ports under Obasanjo’s regime then we stopped. Infrastructure development is a long term investment, and before anybody can commit his money into a 30 year construction of railway or a 20 year construction of airports, government should be seen as serious and committed.

So, the first step is for government to actually deliver on its promise, allow the private sector to take over some of its infrastructure because it cannot do all. In some countries, the private sector builds the prisons and government looks after the inmates. I think it would be difficult for us to have a responsible government because they are not being responsive; they are just trying to build everything and not achieving much result.

Infrastructure is more difficult and complex to compare because it is a much longer-term relationship between government and private parties.

Secondly, you need to attract the right capital to make it happen. In the port area, we would need that because port is not about the port alone but also the back end infrastructure of the port. We bring in containers and goods to the port; you are going to transfer those goods from the port to its final location. So what appears in most countries is that they have a railway line in the port that would transport the goods from the port, there are also highways for truck out. If you go to the Tin can port, there are many trucks waiting on the queue, they wait for weeks before they can load; is that the problem of the private port operator? No! It is just a government responsibility, or if government cannot do it, let it over to the private sector. So for the port, you have to do the whole chain, you build a railway, and you build the entire chain. The goods arrive in Nigeria and end in the destination in the official manner or for export as the case maybe. But unfortunately we have not gotten it right.

Is Nigeria actually recovering from recession or it is going to take a while?
Well, there are forecast about Nigeria to recover this year. I think part of the reason is that the oil price went down to as low as $30; it’s beginning to pick up now. Secondly, the boko haram issue seems to have been really taken care of. The issue we have now is the internally displaced persons (IDPs); they have also revealed that Nigeria has been able to resolve some of its internal challenges. The only pending matter is the Delta from the militants. They need to need to stop that also to ensure that there is constant production of oil. I think the Vice President was there in Warri before he came to Davos. If he gets the engagement right and production of oil is back that means we would have more dollars in circulation, we would have higher government revenue, increased liquidity, and most importantly, we would have good confidence in the economy. We need confidence in the economy to improve, not just only for foreign investors but domestic investors. As the confidence improves, there would be more economic activities and that leads to improved economic capacity.

Are there other issues deliberated at WEF that you think can help develop the economy and enhance KPMG business Nigeria?
If you pick two countries, country ‘A’ performs better than country ‘B’ because of responsive leadership; the higher the quality of governance in a country/company, the better for it.

How does it reflect on KPMG?
Clearly, if African countries are better governed it will attract more investment inflow, it will attract more resource activities, create more jobs and there will be more thriving businesses. KPMG services would be required to audit the company or to ensure they pay the right taxes or to consult or advice the business.

Our business thrives when the economy thrives. If the economy does not thrive, we would have challenges in being able to navigate the environment.

So I think the theme cuts across countries, companies and communities. Even in our small communities, if you do not have adequate government in the village, there would be chaos, anarchy. I know some towns in southwest Nigeria that haven’t had an Oba (King) for 20 years because they are in court.

What new things are you bringing in for stakeholders in the industry?
One of the key things we are focusing on is trying to ensure that we have much better leadership for our clients because what is important in our business is for us to have very strong leadership. When the economy was booming, these clients were using us and paying us for services, now these same clients have found it tough.

This is when we need to have much more conversation with our clients, look at how we are going to help them in the situation, understand their issues, helping them survive during this time.

One of the key things I have learnt is spending much more time in the marketplace and I encourage my partners also to do same as well and then it cascades all the way down to the lower level. Secondly, there are a number of strategic growth initiatives that are globally determined we believe is the best for our clients to have.

There are three areas we are focusing on Africa and Nigeria as well. Cyber security, because there are a lot of things that are being done today through the Internet, and technology and the security of the cyberspace is important for transactions to flow. Again, cyberspace is another way people are trying to perfect fraud.

In everything we do, we have so much data but we have to know how to use that data for ourselves or for our clients. If you are a bank for instance and you have been giving loans for so many years to so many sectors, if you go back to the data, you will see the sectors that were given loans that had gone bad. If there are sectors I gave loans to and they went bad, what do I need to do? Either I buy those sectors or I get them to improve by giving them more loans so they can perform.

The third area is infrastructure, because we feel that we have to factor where Africa has to be – whether it is power, transport or water infrastructure. Besides, there are a number of big initiatives; AfDB is spending $12 billion on infrastructure in the next five years. The U.S. power programme is $7 billion for the next five years and these funding are coming from various parts of the world to ensure that in the next five to 10 years, the power problem in Africa is solved.

We worked with a client that had a wind power plant in Cape Verde in east Africa and we merged wind together into a bigger business. These are the things that we have to bring to the table to be able to develop our economy and we give gifts that we have both in knowledge and skills. If you do not have locally, we have got global firms; we can bring such skills from Asia, Europe or South America into this market to help the market grow.

One of the issues in Lagos is population boom due to the crisis in the Northeast, what can government do to tackle migration that Lagos is facing currently?
That migration is also a function of regional disparity. Regional disparity comes because if you have better education in one region than the other, better standard of living, infrastructure, better livelihood, water and agriculture, human beings would migrate. Why is there migration from Africa to Western Europe, why do they cross the Saharan desert, why do people risk their lives to cross the Mediterranean Sea, for better livelihood? Why do people move from northeast Nigeria to Lagos, better livelihood? Why do people move even within southwest Nigeria to Lagos, it’s because of livelihood?

Governors in Lagos in the last 15 to 20 years have the sort of taxpayers’ money you need to get things done and deliver results. Every state has to do its own tax, every state will need to provide employment for the people, build infrastructure using taxpayer’s money to deliver results for them. How many states in Nigeria collect taxes and we can see results? How many states in Nigeria go to Abuja to collect money from the Federation Account and you can see the result? There are some states/cities where when you drive on one side of the road, you can’t see the road and upcoming traffic, because people dump refuse between the sides of the roads. Why? The local government chairman or state government there cannot collect the refuse.

But do you see refuse on the road in Lagos? No! Is somebody not collecting the refuse and cleaning the road? Are they not being paid, what money are they using to pay them? Tax payer’s money!




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