Mr Otu Hughes, the Chief Investment Officer at Honeywell Group Limited (HGL), has called on the Federal Government to give the private sector clarity on forex.
Speaking to Nairametrics on the sideline of the 28th Nigerian Economic Summit currently held in Abuja, Hughes argued that Nigeria’s multiple exchange rate regime is problematic for investors.
According to him, if the government could give clarity on forex access, availability and rates, then the private sector can work around the situation.
Excerpts…
NAIRAMETRICS: What measures can the federal and state governments take to stimulate increased private investment?
Otu Hughes: I think for several private investors, the key issues are macro – what does inflation look like, what is the policy around forex both availability and access? Those are two key issues for investors, both local and foreign.
If the federal government can harmonise some of those things, try to harmonise the forex situation, and give people some clarity because it’s challenging when there is no clarity in the availability of forex to be able to do your business.
And at the same time, to work on the inflation to bring that down better, this begins to create some of the right enabling environment for people to be able to invest in. Create the right level environment at the macro level, once you create the right environment, everybody benefits.
NAIRAMETRICS: What challenges do you foresee in this regard, and how can the government forestall them?
Otu Hughes: Inflation is a global problem currently and a huge part of the food inflation comes from the war. That red basket, the region which produces a lot of the greens, is at war and it’s constraining how much is coming out of that area. Looks like there is some allowance for shipment out of the area, hopefully, that is going to help in bringing inflation down.
The floods haven’t helped a lot, this year locally, which will hurt the local production of food. We are gonna have to balance some of those things and the government will have to support some of the poor in that regard.
On the Forex, we have to improve our supply, there is only so much we can do on the demand side because we still need to import stuff to develop our economy. it’s not everything that we can produce locally.
If we can improve supply, hopefully, the government can work around solving some of these issues with oil production as there is theft going on there. improving supply could potentially be helped with some of these matters.
NAIRAMETRICS: In which sectors of the Nigerian economy has Honeywell Group invested? And what do these investments mean for key industry players?
Otu Hughes: That is the beauty of the Honeywell group, over the past 50 years we’ve invested in the food business, financial services, construction, oil and gas services, power, and real estate, we are diverse and one of our core strength is being able to find opportunities even when others don’t see them and being willing to take that risk to go into areas people are not.
Going into an area that people are not, meaning you are taking the risk people are willing to take. We have done that and we will continue to do that, we are local, we are indigenous, and this is our home so we have to continue to invest at home.
NAIRAMETRICS: What roles can private sector actors like Honeywell Group play in policy formulation for accelerated economic growth?
Otu Hughes: It starts with forums like this NESG forum where private companies over time have contributed to some of the policy formations of the government and keep on interacting with the government.
Government sits on one side of the table and the private sector sits on the other. We need each other to make things work.
What we do at Honeywell, we are continuously engaged in government dialogue because lots of our businesses have an element of government.
There is no business that does not have an element of government in it whether at the state level or federal level. We understand that, so we continue that dialogue, we continue the education, where is necessary, we provide research and information when it is necessary so that the government also understands some of the things we are doing and we can now find the best way to help grow the economy.
Some of these things take time but then if you don’t engage you are never going to get to that result. You have to understand that you don’t engage on Monday and get results on Tuesday. Some of these things take time.
NAIRAMETRICS: Has there been any govt policy that has restricted your investments?
Otu Hughes: Governments have a lot of policies that could delay or have an effect on different investment ideas, not all of them are intentional because policies get put in place to deal with certain situations and then new situations come up and then that policy now looks like it’s a hindrance.
One of the classic examples is the policies around the capitalization for banks, you roll up those policies and then you have fintechs coming up, and the question is, are they banks? And what new policies do you have to put in place for those and you have to put in place new policies for them?
This thing happens that’s where I go back talking about this dialogue with the government whereby as these new things are coming up where you see these constraints, you sit with the government and you talk to them
About some of the things you are seeing here and you think X policy doesn’t work well with Y situation, let us look at the way to make government get what you want, the right protection, the right framework for everybody and businesses are also able to operate and so it’s a dialogue.
NAIRAMETRICS: What do you think the government should prioritise?
Otu Hughes: Give the private sector clarity on Forex, give us clarity on forex both on access, availability, and rates because once that clarity is in place, we can all work around it.