Adewuyi: Governments Must Prioritise Support for SMEs

The Institute of Chartered Accountants of Nigeria recently elected Mrs. Onome Adewuyi as its 56th President. In her acceptance speech and inaugural address, Adewuyi had promised to partner with the

government to redefine national values, economic priorities and resource utilisation strategies in order to lift a lot of citizens out of poverty. In this interview, she shed more light about her plans for the institute and also spoke about developments in the economy. Obinna Chima provides the excerpts:

You were recently elected President of ICAN, what are the programmes that ICAN under your leadership intends to achieve?

The Institute’s plan of action for this Presidential Year has been well articulated in my inaugural/acceptance speech under the theme: ‘Repositioning ICAN for Greater Visibility. During the year, the institute will focus more on its unique selling points: the integrity of its examinations, the technical quality of its members and commitment to the public interest. Given the disruptive nature of the current Covid-19, the institute will leverage technology to continue to provide topnotch services to its diverse stakeholders. As planned, the institute’s syllabi will be reviewed to produce future-ready chartered accountants while the mode of examinations will gradually transit to Computer-based testing in line with global best practices. To enhance the quality of professional practices especially by small and medium-sized practices (SMPs) in the country, capacity building initiatives will be organised while Guidance Notes will be issued to further assist them to tide over technical practice matters. The institute will also partner with the government to redefine national values, economic priorities and resource utilisation strategies in order to accelerate the pace of national growth and development. Above all, the Council under my leadership will ensure strategic relevance and visibility of ICAN in public sector governance; embark on aggressive advocacy and thought-leadership; and defend the ICAN Act.

But you have just a year to lead the institute, how do you hope to achieve all these programmes within the period?

The institute has well-structured processes for evolving and implementing programmes such as I have listed. It has over 30 standing committees with well-defined terms of reference while the Council is the governing body that provides the policy directions. Each of these programmes will be assigned to the relevant committee chaired by a Council member. The Council will ensure that these well thought-out programmes are adequately resourced and implemented. As chairman of Council, I will exercise oversight on these committees to ensure that they efficiently deliver on their assigned responsibilities. With the usual support of our Secretariat, made up of professionals and seasoned technocrats, I have no doubt that these programmes will be successfully implemented. Indeed, with this structured institutional arrangement and the impressive track record of the Institute, we are confident that our dream to reposition ICAN for greater visibility is achievable. Let me add that, over the years, we have enjoyed the support of our stakeholders including the Big 4 accounting firms, the three arms of government, the various agencies of government, our international partners such as the International Federation of Accountants and Chartered Accountant Worldwide as well as development finance institutions like the World Bank and the Department for International Development (DFID). We would leverage the rich relationships with these bodies to achieve the programmes for the year.

These days we notice that fresh graduates in accountancy prefer to take foreign professional exams unlike in the past whereby everybody wanted to write ICAN exams. Does it mean that ICAN’s relevance in the economy is dwindling?

Let me note that your observation is not a true reflection of the reality. Over the years, the number of students writing ICAN exams has continued to grow because of the market acceptability of our products arising from the value they bring to their diverse engagements. Our market share is expanding. The point must, however, be made that the preference for foreign accounting professional certificates, you alluded to, is not so much about the quality of ICAN certificate but the state of the Nigerian economy. Many youths are desirous of migrating to other jurisdictions for greener pasture. These youths believe, rightly or wrongly, that equipping themselves with professional certificates of the countries they are migrating to, would enhance their prospects of securing jobs in such climes. This is not peculiar to ICAN certificates but it cuts across all professions. As you are aware, the ICAN qualification is a global qualification. As a founding and active member of IFAC, the global body that regulates accountancy profession in 130 countries of the world, our standards, practices and certification processes are benchmarked on global best practices. The ICAN certificate is therefore of equal standard with its foreign counterparts. Indeed, our syllabus aligns with the requirements of the International Educational Standards & Guidelines issued by International Accounting Education Standards Board (IAESB). Besides being one of the largest Professional Accountancy Organisations in Africa, ICAN has entered into Reciprocity Agreements with ICAG, ICAEW and CIMA. This is another testimonial to the quality of our certificate. It is no gainsaying the fact that the Institute’s certificate is the toast of all employers both in the public and private sectors of the economy. Presently, we conduct examinations in UK and Cameroon and have district societies in Canada, USA, Malaysia, UK and Cameroon.

So, what are those things that set ICAN apart from other professional bodies that also have to do with accounting?

Although these are numerous, let me mention a few. Firstly, the Integrity of the ICAN examinations. Since the Institute took over the conduct its examinations from ICAEW in 1974, its processes have never been compromised. It is the only professional body with such reputation in Nigeria. Secondly, the technical competence of its members. ICAN members are engaged in all sectors of the national and global economy adding value to wealth creation through efficient resource management. As champions of integrity, they discharge their responsibilities professionally, ethically and in the public interest. Thirdly, its time-tested, trusted, rancour-free succession processes. As you are aware, annually, the Council elects its flag-bearer through a resilient system that has served the Institute’s well since it was established in 1965. I am a proud product of this seamless process. The political class should learn to take a cue from this system. Fourthly, as part of its contributions to Public Financial Management, the Institute recently launched the ICAN Accountability Index (ICAN AI). This is a template for assessing the level of accountability and transparency in resource generation and utilisation by the Federal and State governments. Our Institute is the only body global that has developed this initiative. Indeed, with our permission, IFAC has adopted this for use in other countries. Also, since 1965 when the Institute was established, it has trained and certified over 50,000 chartered accountants from its internally generated revenue. It does not receive subvention from the government. It is a self-financing professional body. The over 50,000 members of the Institute are our ambassadors across every facet of the Nigerian economy.

What is your assessment of manner in which the federal government has responded to the coronavirus so far?

The Covid-19 which started basically as a health challenge has now spread to other sectors. Today, its negative impacts on people and economies of nations have become very profound. As we grapple with its disruptive effects, we must acknowledge the resilience demonstrated so far by the country. Although the nation has not yet succeeded in flattening the curve, the various initiatives designed both to contain the spread of the disease and cushion its effects on the economy are commendable. However, as we acknowledge the efforts of the federal government, through its Presidential Task Force on COVID-19, the relevant agencies of government and the dedication of all frontline workers, more attention needs to be focused, in the short term, on the modalities for the distribution of palliatives to the poor and vulnerable, many of whom have not been reached. This lapse has belied not only commitment to social security initiatives but also made adherence to the various health protocols difficult. The inefficiency in the distribution process should be frontally addressed if the intended objective is to be achieved. Secondly, a critical fallout of Covid-19, is the poor state of the nation’s health care facilities. This shortcoming significantly impaired the capacity of the nation both to accelerate the rate of tests and also adequately accommodate affected citizens in isolation centres. Going forward, the percentage of the budget allocation to the health sector should be markedly enhanced. Only a healthy citizenry can be productive. Thirdly, many entities, especially in the small and medium scale enterprises (SMEs) space need to be financially supported with interest free loans for the informal sector of the economy to rev up again. The SMEs contribute about 50 per cent to the GDP. Thus, they hold the key to the economic recovery of the nation. The government must place greater premium on this sector to achieve a quick exit from the inevitable recession which would occur. In the long term, the issue of economic sustainability should and has rightly taken the front burner with the proactive inauguration of the Economic Sustainability Committee (ESC) by President Muhammadu Buhari, GCFR. As an institute, we urge the government to engage more with critical stakeholders in order to further enrich the draft report before it is approved. In addition, deliberate efforts should be made to adequately resource the various initiatives and monitor their implementation to achieve desired results. It is common knowledge that the nation has never been short of ideas or plans. Implementation has always been a challenge. There is need to change this narrative.

Are there policies or measures the government ought to have taken that you feel they have not done?

As I noted earlier, Covid-19 is not just a health challenge, it also has economic and social dimensions. Therefore, there is the need for government to adopt a more robust collaborative approach to the containment measures. There is no better time than now for players in the public and private sectors of the economy to wage a collective war against the impact of the pandemic in the country. The intensity of the liaison with many sub-national governments needs to be improved. Furthermore, as the government is striving to save the lives of the citizenry, deliberate efforts should also be made to save their livelihoods as antidote to unemployment, hunger, crime and criminality. As survival strategies, many corporate entities may be constrained to lay off their staff with negative implications for aggregate demand, savings and investments. To preclude them from taking this route, the Ministry of Industry, Trade and Investment, the Central Bank of Nigeria and Development banks should engage the Organised Private Sector to accurately determine areas where support would be most desirable and effective. The nation can take a cue from the UK COVID-19 job retention scheme for staff of SMEs to protect jobs. Staff furloughing, in this manner, appears inevitable and should be considered and extended to critical sectors.

Has the pandemic in any way affected financial reporting?

The pandemic is disrupting every aspect of business activities including financial reporting by entities. In fact, within two weeks, the Financial Reporting Council of Nigeria (FRCN) issued two different but mutually reinforcing guidelines for preparers of financial reports. This shows the extent of the impact of the pandemic on financial reporting. There have been issues around transparency and disclosure. The FRCN has now mandated preparers of financial reports to disclose the principal risks and uncertainties that they face because of Covid-19 outbreak in their interim reports. There are also other issues of concern in preparing financial reports including going concern of an entity as a result of the pandemic, changes in expected credit losses for loans and other financial assets.

What is your outlook for the second half of the year?

As the global economy battles the Covid-19 pandemic, it may take a long time before many economies return to full capacity operations. For us as a nation, the first half of the year appears to have been lost to the crisis as economic activities have largely been put on hold. Without pre-empting the National Bureau of Statistics, we expect to hear that the nation recorded two quarters of negative growths during the first half of the year. In other words, recession may have set in as evidenced not only by the sharp decline in the recent FAAC allocations to tiers of government but also, by the general decline in economic activities. Therefore, we look forward with cautious optimism at the second half of the year as the easing of lockdown progresses. We hope that the fiscal and monetary incentives announced by the government and CBN will be scrupulously implemented to avert possible negative growths in the third and fourth quarters. Given the current situation in the oil market, the nation’s revenue will be seriously challenged. It is, in this respect, that we urged the government to revisit the proportion of the budget devoted to debt servicing. We need resources to oil the local economy. Thus the nation should seek debt moratorium from its debtors. Put simply the growth trajectory in the country in the second half of the year would remain slow and poor. All hands must be on deck to preclude the economy from sliding into a depression. We urge all actors in the economic value chain to resolve to demonstrate uncommon commitment to implementing the various growth strategies as contained in the draft Economic Sustainability Plan.