CPPE Boss Decries Nigeria’s Economy As Country Clocks 62
Nigeria’s macroeconomic management framework continues to pose serious challenges to investors in the economy, the Founder/Chief Executive Officer (CEO) of Centre for the Promotion of Private Enterprise (CPPE), Muda Yusuf, has said.
He said this in a statement titled ‘CPPE Comments on Nigerian Economy at 62′.
According to Yusuf, Nigeria’s economic quagmire has been further compounded by the Russian-Ukraine war and the lingering effects of the covid-19 pandemic.
“The troubling macroeconomic situation have manifested in the following ways in recent years: weak and depreciating currency, high inflationary pressure, high and rising debt profile, exchange rate volatility, liquidity crisis in the foreign exchange market, increasing fiscal deficit, growing debt service burden, and the acceleration of money supply growth following the rising CBN financing of deficit,” he highlighted.
There are profound concerns around investment climate issues, high infrastructure deficit, cargo clearing challenges which have continued to worsen, high transaction cost at the ports, weak productivity in the real sector largely as a result of infrastructure conditions, regulatory challenges and policy inconsistency, he said.
“Persistent importation of petroleum products had continued to put pressure on foreign reserves and weaking the capacity of the CBN to support the forex market. Petroleum refineries have remained non-performing over the years.
“The fiscal position of the federal government and the states are very weak, characterised by high fiscal deficit, high and increasing debt profile and the associated debt service burden is a cause for concern,” the CPPE boss said.
Other concerns include the state of insecurity which continues to take its toll on the economy, especially on agricultural output and fueling food inflation and impacting the confidence of investors as well as the spate of oil theft and the associated leakages of government revenue, he noted.
However, the former Director General of the Lagos Chamber of Commerce and Industry (LCCI) noted that some sectors have significantly transformed over the past six decades, such as telecommunications, ICT and entertainment.
His words, “The number of telephone lines in the country today is over 200 million as against what obtained just over two decades ago when the country had a mere 300,000 lines, with just a handful of mobile telephone.
“Transactions on electronic payment platforms and POS, mobile transactions are in excess of one hundred trillion Naira annually.
“Nigerian music and films have gained amazing traction worldwide. This growth has come with massive job creation in the sector, especially for the youths.”
Nigeria’s economy has witnessed impactful private sector footprints, especially in the telecoms and ICT, aviation, transportation, education, health, print and electronic media among other sectors, the CPPE boss said.
He said urgent steps should be taken to ensure a better macroeconomic management framework to stabilise the exchange rate, eradicate the challenge of illiquidity in the foreign exchange market and stem the current depreciation of the Naira.
He said, “It is imperative to have urgent reforms in the foreign exchange market with greater focus on supply side strategy. There is a need to review the current disproportionate emphasis on demand management of the foreign exchange market. Most sectors are experiencing serious disruptions and dislocations because of the current foreign exchange policy regime.”
He also suggests strengthening strategies to attract private sector capital to complement government financing of infrastructure, reducing the level of debt financing, especially the reliance on commercial debt to fund government operations.
“Public debt, currently at N42.8 trillion is already at an unsustainable threshold,” he noted, maintaining that Nigeria could attract foreign exchange through a strategy of ensuring new investment opportunities to stimulate foreign capital inflows into the economy.
“We should be seeking more equity capital than debt capital,” he said, urging that a review of Nigeria’s trade policy is also needed to support investment growth and sustainability,” Yusuf said, adding that tax policy should support investment and not become a disincentive to it.
Calling for a greater emphasis on quality intelligence in the war against terrorism to mitigate investors’ confidence, he said the Petroleum Industry Act (PIA) should be accelerated in order to ensure the unlocking of the enormous value, particularly in the gas sector.
“There should be an immediate cessation of the impunity that has characterised the stealing of crude oil and the attacks on oil installations.
“Institutional reforms are necessary to ensure that the regulatory institutions have better disposition to support the growth of investment and focus less on the generation of revenue,” he said.
He asserted that the current obsession for revenue generation was hurting the international trade processes and impacting adversely on domestic and foreign investment.
“Therefore, the orientation of the Nigeria Custom Service, Nigerian Ports Authority, the shipping companies and the terminal operators and the security agencies at the ports need to change in favour of an investment friendly international trade processes,” Yusuf added.
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