As part of efforts to boost revenue, the federal government has been advised to concession major highways and railway lines in the country to both local and foreign private sector investors.
Analysts at FSDH Merchant Bank Limited gave the advice in their latest monthly economic report.
They also stressed the need for the federal government to involve the private sector to develop the transport network, saying that such partnership would help create jobs and also attract foreign capital into the sector and other related manufacturing sectors of the economy.
“We believe the above measures with the revolution going on in the agro-allied processing activities, and with partnering with the private sector to improve infrastructure, Nigeria will be out of the recession faster than expected,” the report added.
The Nigerian economy is in recession. The National Bureau of Statistics (NBS) recently revealed that the country’s gross domestic product (GDP) contracted by 2.06 per cent in the second quarter of 2016, compared to the negative growth of 0.36 per cent recorded in the first quarter of 2016.
A sectoral analysis of the real GDP showed that the mining and quarrying sector recorded the highest contraction in Q2 2016. This was on account of the drop in oil prices and the militancy activities in the oil producing region, which disrupted oil production. This was followed by the finance and electricity sectors. The weighted sectoral growth analysis, which relate the sector growth to the sector size shows that mining and quarrying contributed the highest to the contraction in Q2 2016. This was followed by real estate, finance, manufacturing and construction sectors. It is interesting to note that these non-oil sectors are related.
Nonetheless, the report urged government at all levels to pay the salaries of their workers, recommending that government should borrow to achieve this.
“This will also help increase the public debt in the short-term but it will also help to increase spending power, and lower firms’ inventories of finished goods. Consequently, the firms would employ more factors of production and pump money into the economy.
“In addition, there would be an increase in profits of firms, from which government can realise higher revenue in the form of taxes in the medium-to-long term; increase civil servants access to loans. The current purchasing power of civil servants has been depressed with the current rising inflation rate.
“Government can partner some Nigerian banks or CBN to extend loans to civil servants to boost consumption. Government will guarantee the loans and deduct monthly repayment at source,” the report added.
It also advised government to encourage investments in real estate by local and foreign firms. According to the report, government should also provide lands while it provides funds through the development partners.
The strategy will generate activities in the real estate, manufacturing, construction and finance sectors of the Nigerian economy. These sectors are also labour intensive and generate employment opportunities, with the capacity to increase the revenues of both the federal and state governments, it added.
But FSDH highlighted the causes of the economic contraction to include weak and declining consumers’ purchasing power on account of delayed payment of salaries; rising unemployment rate due to build-up of inventories and receivables; weak investment expenditure from firms and government; and vague economic policy direction.
The Governor of the Central Bank of Nigeria (CBN), Mr. Godwin Emefiele at the weekend assured the public that the economic recession will soon be over, given the strategic measures being put in place by the monetary and fiscal authorities to turn the economy around.
Speaking in Lagos during an interactive session with journalists Emefiele had stated that the “worst is over”, adding that the Nigerian economy was already on the path of recovery.
The governor equally reiterated his call for the federal government to partially sell some of its oil joint venture assets, saying that the proceeds from the sale, would go a long way in boosting Nigeria’s foreign reserves and reflating the economy through infrastructure projects.
Emefiele also expressed optimism that the liberalisation of the foreign exchange (FX) market was starting to pay off, revealing that the country had recorded $1billion capital inflows from foreign investors since the market took off almost three months ago.