Nigeria Employers’ Consultative Association (NECA) has urged the Federal Government to diversify its earnings away from the volatility of crude oil, stating that Covid-19 has further underscored the urgent need to diversify government sources of foreign exchange earnings.
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According to NECA, there must be a strong will to diversify the non-oil economy, as revenue from non-oil sector is more stable than the oil revenue.
However, in the quest to reduce the rising debt profile and conserve funds for developmental purposes, NECA has urged the Federal Government to sell-off or concession moribund assets.
It also believed that the government should fast-track the full deregulation of the downstream oil sector (as there is no better time than now) and channel the proceeds into funding developmental projects and financing annual budget deficits.
“We solicit for a new dispensation, where the fiscal authorities would strive towards easing off deficit budgeting and endeavour to maintain deficit within the three percent level threshold stipulated in the Fiscal Responsibility Act, 2007 over the coming years,” said Taiwo Adeniyi, the acting president of NECA.
Adeniyi stated this at the 63rd Annual General Meeting (AGM) of NECA in Lagos, Tuesday, where he opined that the year under review has been a uniquely challenging year due chiefly to the outbreak of the novel coronavirus with ravaging impact on the globe.
According to Adeniyi, the sudden outbreak of Covid-19 pandemic created global economic, social, health, environmental, and humanitarian challenges with a devastating impact on businesses across the globe.
A sharp indicator of the economic impact of Covid-19 on businesses is the performance of the first quarter of 2020 which was the least growth rate in over a year.
The GDP grew by 1.87 percent (year-on-year) in real terms, while it witnessed an average growth of 1.9 percent and 2.2 percent in 2018 and 2019 respectively.
“Prior to the outbreak of the Covid-19 pandemic, the Nigerian economy had witnessed tepid domestic growth, constrained fiscal space, low foreign and domestic investments, declining foreign reserves, which, in addition to other factors made the economy disproportionately vulnerable to the twin shocks of declining crude oil price and a health crisis,” Adeniyi stated.
According to him, the last decade has been the most challenging for businesses in Nigeria. “In the past three years, the operating environment in Nigeria has been variously described as -“challenging”, “unpredictable”, “unfriendly” “non-competitive” and “unstable” for businesses,” said Adeniyi.
The Nigerian economy continues to struggle in real GDP growth since coming out of recession in the second quarter of 2017. The GDP has remained below desirable targets (growing below population growth rate of 3.2 percent), despite 12 consecutive quarters of positive growth, averaging 1.87 percent from the second quarter of 2017 to the first quarter of 2020.
