With a new administration expected to be sworn in on May 29, 2023, analysts speaks on their expectations from the incoming government in growing the Nigerian economy. Nume Ekeghe writes.
As electioneering activities begin to wind up in the country, elected officers are now saddled with the job of meeting up with their campaign promises and ensuring not just the welfare of Nigerians but also the growth and development of the country.
Chief of these is the president, who will for the next four years steer the wheel of the country. The candidate of the All Progressives Congress (APC), Bola Ahmed Tinubu had been declared the winner of the presidential election by the Independent National Electoral Commission (INEC).
With only a couple of months for the president-elect to commence the work he signed up for, analysts in the financial sector have begun to roll out their expectations for the new administration. To many, the Nigerian economy is in a stumbling and fragile state and in dire need of a new direction and the political transition offers a great opportunity to chart a new course.
Fiscal reforms
According to the Chief Executive Officer, Eczellon Capital, Diekola Onaolapo, there is a lot of economic headwinds that an incoming president would have to deal with; “so there is need for the president elect to assemble a solid team to manage the economy.
“Nigeria is particularly unique in the sense that in addition to economic issues, it also had its own socio-political issues that need to be dealt with. And these challenges are what the new president would have to face.
“He should be able to assemble a solid enough team to manage the economy because I think that’s one of the things that the country has not clearly enjoyed in recent times. I hope that one of the things that we will see in the incoming administration would be a good vision plan and then we have a competent team that can execute.”
The Former Chairman of the Federal Inland Revenue Service (FIRS) Ms. Ifueko Omoigui-Okauru had stressed the need for the incoming administration to focus on policies that would stimulate economic growth in the country.
Ifueko-Okauru while noting that the economy is at the heart of propelling a better quality of life for every Nigerian said, “Whatever we do must translate to a higher level of disposable income for everyone to live at the very minimum a decent life.
“So, if we do not focus on growing the economy, providing jobs, and ensuring that whatever we do truly translates, we’re not just discussing at a higher growth level, but truly translates to testimonials of the common man.
“Government can be such a huge enabler; government should build an enabling environment for the private sector to thrive. I say these things and I hesitate to say them because every time a government comes in, that is what we want. But it’s still what we want, and therefore, the appeal is to actually do it and give hope.”
Speaking further, she said: “Unfortunately, the elections have further divided us and it’s important that we really calibrate because a divided country cannot achieve as much as it could do when it comes together.”
On his part, the Chief Executive of Center for the Promotion of Private Enterprise (CPPE) Dr Muda Yusuf, said there is the need for the incoming government to establish quality economic governance consistent with tested economic principles and empirical evidence, and contextualized within socio-economic peculiarities, which according to him is critical for signaling and investors’ confidence.
He urged that the incoming president set up a “Transition Committee on the Economy to come with propositions of what needs to be done differently and ensure the delivery quick wins in the in the first one month of the administration. Technically sound economic team to give guidance and direction on general economic policy direction, policy conceptualization and urgent reforms.”
On fiscal reforms, Yusuf said there is need for the incoming government to reform the country’s tax regime to ensure efficiency in tax administration, reduce tax evasion and tax avoidance and eliminate multiple taxation.
Asides this, he called for the elimination of fuel subsidy which according to him can help the country to save an estimated N7 trillion annually.
He added that the elimination of foreign exchange subsidy would also unlock a minimum of N3 trillion revenue annually from the sale of CBN foreign exchange to the official foreign exchange window.
Yusuf also urged the incoming administration to “unlock more income from revenue generating agencies through enhanced efficiency of their operations, initiate budget reforms to ensure fiscal discipline, curb budget padding, curb duplication of projects and review the service wide votes to ensure transparency, ensure value for money in government expenditure and procurement and commit to reduction in the cost of governance.”
The President of the World Bank Group, Mr. David Malpass, speaking to THISDAY at the IMF/World bank annual meeting last year on Nigeria’s economic direction reiterated the need for Nigeria to gradually phase out petrol subsidy.
He said: “With regards to subsidies, to the extent that governments can have them be smaller meaning that if you’re putting a cap on gasoline prices, don’t make that a nominal cap in the local currency terms, but allow it to be reduced over time.
“So, the challenge for Nigeria is that the subsidies are so large that they undermine the revenues coming to the government from the state-owned oil company. Nigeria is actually in a concerning situation because the increase in the oil prices that occurred earlier this year actually ended up hurting the finances of Nigeria because of that large subsidy that’s provided.”
Furthermore, he restated that multiple exchange rates remains a challenge for Nigeria, saying it was hurting capital flows into the country as well as foreign direct investment. He called for ease in trade policies to avert Nigeria’s protectionist approach.
He added: “Some of the challenges in Nigeria that I’ve talked about and been involved with them for some time is the dual exchange rate or the multiple exchange rates that are used which makes it very hard to have capital flowing in an efficient way within the country.
Monetary reforms
On foreign exchange, he said there is a need for reform to unlock inflows of capital into the economy, reduce arbitrage in the foreign exchange market and improve transparency in the foreign exchange allocation as he said government need to, “ensure a market reflective exchange rate to eliminate the distortions in the foreign exchange ecosystem and ensure level playing field in foreign exchange transactions.”
The CPPE chief also called for the removal of impediments to markets mechanism in allocation of foreign exchange. This will boost inflows from Foreign Direct Investment [FDI], Foreign Portfolio Investment [FPI], Export Proceeds and Diaspora remittances.
For the banking system, he said the industry, “must be repositioned to play its fundamental role of financial intermediation for the benefit of investments in the economy. Some key regulatory instruments of the CBN should be interrogated to ensure their appropriateness and impact on the economy. The CRR regime is one of such policy instruments that would require a review. Current CRR of 32.5 per cent is one of the highest globally. It has serious implication for financial intermediation.
“The imperial and intimidating disposition of the current leadership of the CBN needs to be moderated in the interest of the development and stability of the financial system. The development finance operations in the economy have had some positive impact for a few beneficiaries in the real sector. But it needs to be streamlined to minimize loan losses and ensure effective targeting of deserving investors. There is need to ensure full compliance with the recent ruling of the Supreme Court on the currency redesign policy of the CBN.”
