Dissecting the 10-Point Economic Roadmap

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Olaseni Durojaiye examines aspects of the 10-point economic road map recently released by the federal government and presents the views of analysts

Expectedly, the release of a 10-point economic roadmap recently by the Minister of Finance, Mrs. Kemi Adeosun, has expectedly begun to generate comments and reactions from operators in the different sectors of the economy, especially as it relates to its expected impact on the economy. Discourse on the roadmap is particularly centered on how it will bridge infrastructure deficit that has been identified as a drawback to economic activities and fast track the economy.

Highpoints of the document include the admission that the drivers of inflation in the economy are structural and a statement of intent of the government to focus on infrastructure, particularly power, rail and road infrastructure. The admission is in sync with opinions of operators in the economy, analysts and economists alike.

However, beyond infrastructure, operators in the different sectors of the economy also point at government policy as another encumbrance to doing business and lamented high cost of doing business in the country. Their argument is reflected in the country’s ranking on various ease of doing business indexes, including that of the World Bank.

Interestingly and to underscore its intention to plug holes identified in fiscal policies, some months ago, the federal government set up a committee tasked with improving ease of doing business in the country. The Presidential Committee on Ease of Doing Business is headed by a former Senior Partner and Head of Nigeria operations at KPMG professional services, Seyi Bickersteth, while a former Prime Minister of Georgia, Niki Giulari, reputed for significantly turning around the economy of Georgia, was engaged as a consultant.

Another interesting area was the decision of the Federal Government to revisit the policy of excluding 41 items from assessing foreign exchange from the official market. The policy was devised by the Central Bank of Nigeria ((CBN) and part of the initial policy to manage the FX challenge in the country. Besides that, it has generated so much debate as many operators in the real sector including the Lagos Chamber of Commerce and Industry, and the Manufacturers Association of Nigeria (MAN) have repeatedly called for a review of the 41 items arguing that some of the items were inputs needed to run the production lines.

Review of 41 Banned Items
Expectedly, the roadmap has been generating reactions from stakeholders drawn from different sectors of the economy even as some see the roadmap as “workable”, while some viewed it as a welcome development for the economy arguing that it demonstrated the government’s intention to align both ‘fiscal and monetary’ policies for the good of the economy.

Director of Corporate Finance, BGL Capital, Olufemi Ademola, welcomed the decision to review the 41 items and reiterated the argument that the policy was an indirect way of encouraging FX trading in the parallel market. According to him, the decision was borne out of the reluctance of the CBN to let go of the Naira and not about banning the importation of the items.

In an interview with THISDAY, Ademola stated that, “It doesn’t make any sense to exclude those items from accessing foreign exchange from the official market. The decision is not about banning the importation of those items; it is just because the CBN was not ready to let go the Naira.

“The implication is that the policy is increasing activities in the black market; if you say they can’t buy FX in the interbank market, which is the biggest market, you’re pushing them to the black market and by so doing increasing activities in that space and by so doing widening spread. If the policy is that everybody should go to the parallel market, they won’t go to the black market and that will reduce activities in the black market,” he argued.

The Director General of the Lagos Chamber of Commerce and Industry (LCCI), Muda Yusuf, also toed similar line, arguing that the roadmap “was a good one if it is followed through” adding that the issue of fiscal policies are better handled by fiscal authorities.

Yusuf, a long standing advocate of a review of the policy, noted that, “The road map is a good one if it is followed through; it is the right thing to do. The issue of import and export is purely a trade matter which ideally should be by fiscal authorities.
“The issue of trade policy should be subject of a very serious study based on benefits to the country or economy concerned and, I think fiscal authorities understand that study better. It is not a good thing if fiscal and monetary policies are not in tandem together. CBN should manage monetary issues, the foreign exchange matters, ensuring adequate liquidity in the system.

“The roadmap and President Muhammadu Buhari’s budget presentation speech to the National Assembly noted the need for an alignment in both fiscal and monetary policies for a better operating environment for businesses and the economy as a whole. When you’re talking of trade policy, it is very important that the FX policy is in tandem with trade policy; the administrative allocation of FX is not in tandem with trade policy.

Roadmap on Infrastructure
Ademola welcomed the idea of Road Trust Fund which the minister alluded to as one of the ways by which the government intends to tackle road infrastructure deficit in the country.

In his reaction to THISDAY enquiry, Ademola noted that the option of “tolling is workable” and “not difficult to achieve” and argued that “government (needs) to get the buy-in of the public”.

“One of the problems in the country is that many of the services that we see as social services are actually economic. If you look at the power sector, the operators there want to inject capital into the sector to improve services offerings….
“Toll gates are not new; it happens everywhere in the world, but Nigerians may kick against the idea of tolling existing road. There is nothing wrong with tolling the Lagos Ibadan Expressway. The challenge could be the people. The populace could kick against tolling existing roads; they could say the private sector investors should go and build new roads and toll it.

“The government being a ‘socialist government’ may not want to force it on the people. However, tolling is workable; it is a question of the government selling the idea to the people. Government needs to let the populace know that it doesn’t have the money to put in for the required road infrastructure, it’s not difficult to achieve, but government need to get the buy-in of all stakeholders,” he concluded.