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Nat’l devt plan: FG wants N300trn from private sector but policies harsh

Private sector operators have raised concern over the Federal Government’s pronouncement that the sector would contribute N300 trillion to the National Development Plan, describing it as a tall order.

Clem Agba, minister of state for budget and national planning said on Wednesday that Nigeria would need as much as N350 trillion to execute its latest Medium-Term National Development Plan (2021-2025) and that the federal and state governments were expected to contribute a total of N50 trillion to the project, while the private sector was expected to shoulder N300 trillion.

“This is a tough call in light of the security challenges being faced. In addition, a lot of efforts are required to rejig the ease-of-doing-business and the Public-Private Partnership (PPP) laws to provide more comfort for the private investors,” said Ayodeji Ebo, head, retail investment, Chapel Hill Denham, adding that enforcement of contract remains a major concern to investors.

Nigeria’s Purchasing Manager Index (PMI) at below 50 points explains the weak momentum of economic recovery in the second quarter (Q2) 2021 when Q-o-Q growth is considered, according to Doyin Salami, chairman, Presidential Advisory Committee on the Economy, on the state of the economy.

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PMI is considered a perfect predictor of economic growth momentum in Nigeria, and across the globe. However, both manufacturing and non-manufacturing PMI remained in contraction territory of 46.6 and 44.8, respectively in July 2021.

This trend foreshadows a subdued growth outlook for full-year (FY) 2021, Salami said, adding that there is a need to strategically reposition sectors for growth, job creation, and poverty reduction.

Nigeria’s real Gross Domestic Product (GDP) Year-on-Year expanded by 5 percent in 2021Q2, mainly due to the base effect following the implementation of lockdown and restrictions in 2020Q2.

Salami said the deeper an economy contracted in 2020Q2, the higher it will grow in 2021Q2 and that in the third and fourth quarters of 2021, the base effect is expected to fade out. Hence, growth will be lower.

Nigeria’s total foreign investment inflows remain low. Investment inflows were $875 million in the second quarter of 2021, the lowest quarterly inflow since the first quarter (Q1) of 2016. Foreign Direct Investment (FDI) inflow into Nigeria has revolved around $1.0 billion in the last five years. FDI inflow in the second quarter of 2021 was $78 million, even lower than 2020 Q2. Key hurdles to Nigeria’s investment climate according to Salami include macroeconomic instability, policy inconsistency, and inadequate infrastructure.

Minister of state for budget and national planning said “If the right environment is created for the private sector to thrive, I know that this fund will not be a problem to them.”

Responding to the development, Uche Uwaleke, a professor in the department of banking and finance, Nasarawa State University, Keffi, said it was possible to realise the said amount but under a stable political and macroeconomic environment.

“The major risk I see in all these plans and projections is the change in administration that will happen in 2023. As you know, the constitution provides only 2 terms for the president,” Uwaleke said.

Salami called on State Houses of Assembly to establish legal frameworks to promote PPPs to aid infrastructure development in their states.

“Nigeria’s large infrastructure deficit cannot be covered by the government alone. Houses of Assembly must strengthen the legal and policy frameworks to attract private capital,” he said.

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