Naira stabilisation requires intentional value-creation — Dr. Deji Adeshile
In this interview, LANRE SHODIMU discusses DR. DEJI ADESHILE, MD/CEO of Motherpearl Consulting Limited, a financial management expert with a notable track record in high-profile transactions, strategic planning, and research, on the Nigerian Government’s economic strategies.
Can you give us an overview of the Services and activities offered by Motherpearl Consulting Ltd?
Motherpearl Consulting Limited (“MCL”) (RC-1051980) is a Management Consulting Company incorporated in Nigeria. MCL is a project developer and the financial and management consulting arm of Adeshile Adedeji & Co.
MCL fosters sustainable development through strategic partnership and collaboration across business value chains — such as Education, Healthcare, Real Estate and Housing, Power and Energy, Transportation, Science and Technology, Agriculture, Solid Minerals, Trade, Sports, Tourism and Hospitality, among others.
The Company leads/ co-leads transaction advisory engagements that develop business cases, and financial models for private sector projects as well as for Public-Private Partnership (PPP) projects in sectors such as power and energy, agribusiness, telecommunications, broadcasting, and digital economy. Furthermore, the Company continuously aggregates commercial projects and arranges for financing.
Walk us through the notable successes that have kept your organisation at the cutting edge of accounting excellence.
MCL’s remarkable achievements are reflected in its vision. The vision is to be a financial and management consulting company of continuous value that builds legacy businesses for clients.
What is your frank appraisal of the administration’s financial and economic policy decisions in the last 12 months?
There is much to be desired. The economic indices do not reflect the economic realities of the average low-income household Nigerian. This is connected to the inherited economic circumstances from previous years.
The Central Bank has continued to hike Interest Rate in a bid to curb Inflation. What does this portend to businesses in the country?
Interest rate hikes directly means an increase in the cost of financing businesses in the country—especially for those businesses that demand bank loans to finance their operations. On the supply side (i.e. those with investible cash), the heightened rate motivates the supplier of finance to make available more funds to lend and ease the liquidity pressure. On the demand side (i.e. those willing to borrow), for an average business to survive, it means businesses will have to seek either cheaper sources of finances or financial instruments with costs below the CBN Monetary Policy Rate (MPR).
Why is there an apparent disconnect between the Fiscal and Monetary authorities in their efforts to stimulate economic expansion?
The perception that there is no synergy between the fiscal and monetary authorities to stimulate economic growth is because an average economic actor may look at a situation from its economic advantage. In an economic circumstance, there is usually a buy-side (demand) and the sell-side (supply) — each side will always seek a vantage position, but the fiscal and monetary authorities must always ensure economic equilibrium, all things being equal (including good governance).
Take for instance, on one hand, the recent increase in MPR by the CBN could be perceived as a lack of empathy for businesses demanding loan finance. Increased MPR has the multiplier effect of increasing the cost of operations and reducing the appetite for borrowing. On the other hand, those with investible cash are motivated to release the cash for on-lending to businesses because they would earn more.
Were the concurrent decisions to remove subsidy and float the Naira a harmful combination that should have been avoided?
I will discuss this from the standpoint of a market economy—where a willing buyer should interact with a willing seller. However, the key role of government should be to facilitate enforceable laws and regulations that support an improved enabling business environment.
Sometimes the citizens perceive that the government has so many funds to continuously support subsidies and augment the FOREX shortfall regime, but this is not the case, especially with the infrastructural financing gaps. For instance, look at the budget deficit, how should it be funded? Should the government go for more borrowing? Should they intensify the streamlined tax drive programme? Should they leverage more PPP for basic infrastructure financing programmes?
In what ways do you think the government’s efforts to stabilise the naira are proving ineffective?
The stabilisation of the Naira is a function of intentional value-creation economic activities by Nigerians. Within the context of development financing, the stabilisation of a nation’s currency is relative. The monetary authority has several monetary policy measures (e.g. expansionary, contractionary, moral suasion etc.) to deploy depending on the economic assessment and outcomes of a particular measure. What is important is that the government should deploy appropriate and research-based monetary policy measures that are responsive to an economic agenda at a particular point in time.
Right now, businesses need much liquidity to either scale or sustain operations and the government needs to deploy monetary policies that support access to finance through an improved enabling business environment.
Nigerians are in distress due to the economic situation. What do you think are the immediate and long-term solutions to address this challenge?
The immediate and sustainable solution on the part of the government is to be more innovative in financing and providing basic infrastructure that will further improve the economic situation of the average Nigerian.
On the part of the citizens, they need to be intentional in ensuring that the government is more transparent and accountable. This is contextualised as good governance. Businesses may start looking towards equity financiers (under a structured financing arrangement) as an urgent means of business financing considering increased MPR. Another option is to consider a business process re-engineering programme.
