James Emejo in Abuja
Founder of Stanbic IBTC Bank Plc, Mr. Atedo Peterside, has expressed regrets on the persistent economic challenges bedeviling Nigeria over the past 25 years.
In his anniversary speech delivered at the summit dinner of the 25th Nigerian Economic Summit with the theme: ‘Nigeria 2050: Shifting Gears’, he expressed disappointment that though some progress had been made, “some of the exact same economic issues and problems that plagued Nigeria” from the maiden edition of the summit in 1993 “are still being debated here 25 years after.”
He further criticised some of the macroeconomic policies implemented by the monetary and fiscal authorities, adding that the country currently leads the world in two appalling statistics which includes the largest number of school-age children out of primary school which he estimated at 10.5 million children and the total number of persons living in extreme poverty totaling about 90 million.
“It was not so in 1993,” he said.
Peterside also blamed the Central Bank of Nigeria (CBN) for “compounding the situation by embarking on forex policies which caused investors to take both fright and flight at the same time.
“The inevitable outcome was an economic recession. It was only after CBN succumbed to pressure in early 2017 to allow a Nafex exchange rate, where all business units and individuals could buy and sell forex freely at a market-determined exchange rate of N360/$1 approx., that supply bottlenecks slowly disappeared and the economy limped out of recession.
“The Nigerian economy is however still largely stagnant, and so the weak GDP growth rates which fall below the approximate three percent population growth rate does not call for celebration.”
He added: “With high inflation rates in the 11 per cent range, which CBN appears to have accepted as being the norm, investors now fear stagflation. Compare and contrast this with Ivory Coast and Senegal, which held inflation below two per cent and grew GDP in excess of seven per cent in 2018.”
The IBTC founder noted that Nigeria had failed to achieve six per cent GDP growth largely because it had scared away foreign investors who would have helped realise the target.
He, however, said: “It is not too late for President Muhammadu Buhari’s government and our National Assembly to borrow a cue from Mozambique and learn how to enact laws that provide clarity and reduce uncertainty for investors in the oil and gas sector as well as other sectors.
“So, why is Nigeria unable to achieve GDP growth rates of six per cent and above which are currently the norm in several sub-Saharan Africa economies? The obvious answer is that we appear to have frightened most investors (local and foreign) away, and they will not come back any time soon until we correct the structural dysfunction that frightened them away in the first place.”
According to him, “Investors appear to have concluded that the Nigerian economy is rigged against all except the very well-connected, and they are right. By definition, the well-connected investors are few and so our investment/GDP ratio is likely to remain low until we make it possible for all other investors (Nigerian and foreign) to come back and partake in the task of baking a bigger cake on the basis of a level playing field.”
In his presentation titled: ‘Shared Responsibility: Building and Sustaining a Strong Economic Future for Nigeria’, Peterside said the federal government had lost fiscal viability because it lacked the courage to trim personnel overheads on account of a bloated headcount in the public sector.
“Will 98 per cent of the population continue to suffer so that less than two per cent, which makes up the bloated public sector, maintain their lifestyles? The same federal government endorsed a largely unaffordable minimum wage and presses on with ‘populist’ subsidies which are largely cornered by the rich.
“The government revenues as a percentage of GDP are exceedingly low at 6 per cent approximately, yet all that the private sector does is to resist any attempt to increase indirect taxes or price products such as petrol and electricity on the basis of full cost recovery. Even the recent inevitable decision to introduce toll gates on our roads has been met by private sector resistance,” he said.