By Goddy Egene
Members of the organised private sector under the aegis Nigeria Employers Consultative Association (NECA), have called on the federal government to ensure focused, concerted and effective implementation of the all actions and initiatives contained in the Economic Recovery and Growth Plan(ERGP).
The President of NECA, Mr. Larry Ettah, who spoke on behalf members of the association on the state of the Nigerian economy in Lagos, commended the federal government on the release of the ERGP.
He said although this step should have come two earlier, the programme should be implemented forthwith.
Ettah said: “We appreciate the fact that the ERGP was produced through a process that involved consultations with the private sector and hope such consultative posture would be sustained. We share in the broad principles behind the plan – tackling constraints to growth, particularly fuel, power, unfriendly regulations, and foreign currency; leveraging the power of the private sector, promoting national cohesion and social inclusion and allowing markets to work…We urge government to ensure a focused, concerted and effective implementation of all the actions and initiatives contained in the ERGP so that the benefits may quickly accrue to the economy, businesses and citizens, and the nation as a whole.”
On foreign exchange issue, which has negatively affected many players in the economy, the NECA president, who is also the Managing Director of UAC of Nigeria Plc, recommended a floating exchange rate system to achieve a better deal. According to him, evidence from other economies was clear and compelling to the effect that floating exchange rate systems enable economies respond best to declines in the value of their exports and provide a natural adjustment mechanism to preserve foreign exchange reserves and change incentives and behaviour of economic actors.
He said Nigeria’s attempt at a fixed exchange rate system and administrative controls or rationing of scarce foreign currency had clearly failed and produced FX market arbitrage and “round-tripping,” corruption, multiple exchange rates and acted as a deterrence to investment.
“We commend the recent reforms adopted by the CBN based on the recommendation of the Acting President/National Economic Council and urge the CBN to take these reforms to the logical conclusion-a floating exchange rate system.
Comparing the Nigerian economy with those of Ghana, Saudi Arabia, Russia, Egypt, Norway and Indonesia, Ettah explained that the evidence from most of the countries, especially Saudi Arabia, Egypt, Indonesia and even Russia, indicated the most oil dependent economies have anchored their post-oil strategies on private capital and investment in oil and non-oil activities.
He said most investors were interested in the Nigerian economy, but that they had been deterred by lack of policy clarity and the confusion over FX.