Nigeria’s Tax System Does Not Encourage Business Growth

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The Chief Executive Officer of Interra Networks Mr. David Onu is one of the pioneers of the call centers in Nigeria. He spoke with Evelyn Okoruwa on the challenges facing businesses in Nigeria. Excerpts:

When did you open shop?

Our company is based in the USA. We kicked off operation in Nigeria in 2006. We found out that the country is more service oriented but the level of customer service has not improved. We decided to extend our services to others because it drastically reduced our cost.

What are the challenges you faced since you started?

We have experienced a number of challenges. Doing business in Nigeria is very difficult. It is very expensive. When we first came, the business we were into was new yet has so much potential for creating jobs and adding wealth to the economy.

So we applied for a pioneer certificate. A pioneer certificate is given to Telecoms Companies when they come, and it gives them a tax holiday for a few years so that their investments can grow. We actually got it but unfortunately till date since we got the approval, we’ve not enjoyed the benefit.

One of the biggest challenges facing business as a whole is taxation. The Nigerian taxing environment is not encouraging. It does not enable an organisation to grow.

Every agency of government is asking you for money, they don’t even know the basis they are asking for the money. Government is making efforts to watch this through the joint task force. Businesses that are adding valve to the economy should be encouraged.

Also there is the challenge of connectivity, I blame the government a little but I blame the telecoms companies more. Telecommunications around the world is not an essential commodity. The cost of deploying an internet service is very high. I use big, high speed pipes. Though I get it, it is not as good as it should be and the cost also is prohibitive.

To install what is called an E1 line which is basically 30 phone lines bundled together in the US is basically free. There you pay a monthly fee of $100 because they make their money from the tariff not the line. To put in an E1 line in Abuja is about N1.8m, and then you now pay the tariff on top of it.

Are you saying the business environment is not friendly?

It can be friendlier. It takes a lot of work to be successful as a business person in Nigeria. There are so many things designed to make you fail – the tax system and work ethics which are surmountable. These associated problems on business are what makes the cost expensive.

As a business person if you fathom all these challenges, when you are now pricing your product and services, you factor in all these factors. This is why, probably in Nigeria, the telecoms rates are the highest in the world.

The biggest employer of labour in Nigeria is the government, any country in the world that the government is the biggest employer of labour has a problem because it is not sustainable. If we were to organise the public sector the way it should be organised, half of the public sector will not exist because there are no jobs.

We do have a bloated civil service but the problem is inevitable because who else is hiring? How many businesses in Nigeria can actually employ more than 10,000 people even when we have a market of above N160 million people? If the business environment is friendlier more people will be able to invest.

We should have private companies that employ 20,000 to 30,000 people but we don’t. All stakeholders should sit together, we need to boost the private sector, boost the economy because they will be able to hire people and that pressure on government to pay wages will reduce.

How viable is the emergency call center?

Let me start by saying it is long overdue. The issue of emergency communication is a discussion in all parts of the world because emergencies can be health, security, fire and you must have a rapid response system to respond. I challenge you and tell you that half of the deaths we have in Nigeria would have been prevented if there was rapid response.

The amount of money we have wasted on loss in this country plus lives and properties because we don’t have any emergency communication is running to billions of dollars if not trillions in the last years. I always say every Nigerian has or have an access to a phone.

The way the emergency communication should work is central number plugged into police, plugged into fire and plugged into the emergency medical response services and in essence when the call comes in, there should be trained personnel behind the call that can respond or react, that will determine the level of the emergency, the type of emergency and they send a dispatch immediately.

For the police and fire service because they are better organised in terms of their central organisation, it might be easier, but I’m worried about the hospital services because every hospital is on its own. They don’t align to one structure. Those are questions that need to be addressed.

How do you think the emergency call center can be sustained?

In Nigeria we are good at starting things but sustainability is the problem. For it to really work we should have it at the 774 local government levels. Security is everybody’s business, not just government.

So because of that I think everybody has to pay for it, because this issue we are having about boko haram insurgency and insecurity in general is everybody’s problem. Lets be very frank, the reason some of these things happen is because there is no way to really get information across.

What sets Interra Networks apart from its competitors?

We stand out in quality and service deliveries. Like I said we don’t sell to companies, we provide solutions. We take our time to solve our clients problems, so service delivery is actually our forth.

With the experience you have so far, will you start off differently?

Of course there are certain things that I would do differently. We spend a lot of money on infrastructure, we were running at a loss but the good thing for us is that we have a long term investment but maybe I would not have started as big as I started.

Technology is still new in Nigeria, so maybe we would have done a little bit more in sensitising the market. I don’t have any regrets however, because regardless of any thing I see us adding valve.

Is there a bright future for outsourcing in Nigeria?

Absolutely, outsourcing has a huge opportunity and we are fortunate to partner with the World Bank to develop this whole outsourcing program. We have a programme called Access Nigeria, which is aimed at creating jobs in Nigeria. The goal of the program me is to train over 1,000 young people under the World Bank.

How do you relax?

I like things that challenge my brain. I play chess, scrabble. I do a lot of indoor games and I like to engage in healthy debate, national discussions on things bothering our economy. I’m also a good sports spectator.

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