By Obinna Chima
The Partner, Audit Services, KPMG, Kabir Okunola has said that developing clear policies by government at all levels would help to stimulate government revenue in the country.
Okunola, who spoke at an audit committee seminar for members of the Nigerian Shareholders Solidarity Association (NSSA), by KPMG, also identified other key drivers to increased government revenue to include stable crude supply through proper management of the Niger Delta issue, sustained increased in the price of crude oil, increase in foreign direct investments, stable political environment as well as a successful election in 2019.
Speaking on the topic: “The Foreign Currency in Nigeria: Implications for Audit Committees/Shareholders,” he pointed out that while industry deposits growth had largely been on account of private sector deposits, it had grown by just four per cent as at last July, which was the slowest growth rate reported in the past six years
“Decline in private deposit driven largely by declining Gross Domestic Product (GDP) growth due to contraction of the oil sector. Nigeria’s GDP declined by -0.36 per cent and -2.06 per cent in first quarter and second quarter 2016 respectively.
“Outlook for deposit growth remains grim due to limited system liquidity given the continued reduction in foreign currency inflows from oil receipts.
“Decline in GDP largely driven by contraction of oil sector as Nigeria’s oil output declined by -20% from 2.11mbp in Q1 to 1.69 in Q2. As a result real growth in the oil sector was -17.48% in Q2 2016 compared to -2.96% in Q1 2016,” he explained.
Okunola, argued that Nigeria’s forex market is highly fragmented, saying that analysts had indicated that six sub-market rates exists presently.
“Supporting structures and regulatory posture are yet to align with the concept of liberalisation. Forex sourcing issues pose a major challenge to stability. Looking ahead it is imperative that CBN streamlines the forex market to a single platform to enhance transparency and price stability,” he said.
In his presentation titled: “Questions Shareholders Should Be Asking,” Director, Audit Services, Robert Araeb, urged audit members to always ask the right questions, and they should always remember the Companies and Allied Matter Act (CAMA) rights and responsibilities.
By Obinna Chima