NESG expresses worry over poor state of Nigeria’s economy

The Nigerian Economic Summit Group (NESG), a private sector-led think-tank and policy advocacy group that promotes sustainable growth and the development of the Nigerian economy, has expressed worry over the poor state of the Nigerian economy.

NESG is concerned about some distortions in the liquidity and interest rate management of Nigeria’s financial system which has resulted in rate distortions, causing grave disadvantage to domestic investors and pensioners.

This, the Group said will occasion major disincentives to savings and investments and a disadvantage to Nigerian pensioners and long term savers, stressing that the country needs to mobilise domestic savings and investments as it seeks to attract foreign investment.

NESG while raising this concern in an article titled: “Matters of Urgent Attention” said Nigeria should be careful not to initiate policies that appear to discriminate against or discourage domestic savings and investors while policies making average Nigerians poorer by the day should not be encouraged.

The NESG noted with grave concern the rising level of poverty, unemployment, and underemployment in the country which is predominant among young people and has been exacerbated by the impact of COVID-19 and the slump in commodity prices.

It said while efforts at creating short-term jobs across the country are commendable, a lot more effort must be channeled towards re-skilling, retooling, and reviewing the school curriculum, and a focused approach to vocational studies must also be undertaken.

The Group also expressed concerns over the nation’s resort to borrowing (either domestic or international), and quantitative easing by the monetary authorities to fund the large deficit which has now been made worse by the impact of the COVID-19 pandemic.

“Since these specific actions are not sustainable in the medium to long term, the Group urges the government to urgently, consider a strong communications strategy that engages the people and prepares them for tougher times ahead whilst the current reforms take effect. The current business as a usual disposition is not sustainable.

“The NESG notes the frequent expression by the government to work with the private sector in nation-building efforts, but observes that a lot more work needs to be done on both sides to obtain the best benefits of such collaboration. It is therefore important that concrete steps must be taken to address the mutual distrust and build institutions that work regardless of persons”, it advised.

Read also: NESG draws attention to Nigeria’s low-interest-rate environment

The group urged the Federal Government to expedite actions at re-opening the country’s closed borders given its negative impact on trade and employment, noting that Nigeria’s work in the Economic Community of West African States (ECOWAS) should not be limited to security and diplomacy, but must also effectively harness trade opportunities within the sub-region.

They also called on the government to ratify the African Continental Free Trade Agreement (AfCFTA), so that Nigeria can move to full membership status and take its rightful place in subsequent negotiation rounds.

The group expressed firm belief that with the necessary infrastructure, the Nigerian economy, and the Nigerian people, with their innovative capacity, hard work, and creativity, will be one of the greatest beneficiaries of African and West African free trade.

The NESG acknowledged the expected far-reaching positive impact of the recently enacted Companies and Allied Matters Act (CAMA) 2020 on businesses especially the Micro, Small, and Medium Enterprises (MSMEs) if well implemented.

It, however, noted the issues being raised by some stakeholders about the provisions of certain sections of the Act and urged all concerned to follow due process in seeking review such that the many proactive provisions in the law that would facilitate the ease of doing business, provide efficient corporate structures and a stable/certain business climate are not drowned out but are well communicated, optimized and implemented.

“The NESG noted the nation’s huge exposure to the vagaries of oil price fluctuations and emphasizes the need for a better structured and effective diversification of the economy. However, the NESG is not oblivious to the continuing crucial role of the Oil and Gas sector in our economy.

“Accordingly, we applaud the work now being done by the Presidency to see to the quick passage of the Petroleum Industry Bill (PIB) and urge further stakeholder consultations so that the resultant law will create the required enabling environment for investment flows, reserves enhancement, technology transfer and utilization efficiency”, the group said.

The NESG commended the government’s actions at deregulating fuel and electricity prices and urged that proper policies, processes and procedures be put in place, to ensure that all the reforms (beyond price deregulation) necessary to facilitate the smooth functioning of both the fuel and electricity markets are effectively and conclusively implemented.

“The NESG expresses its concern about the high level of insecurity across the country and its impact on the business environment and investment flows, which has contributed massively to the current food crisis, unemployment, poverty, increasing community clashes, rising bloodshed and the absence of peace and tranquillity in the land. Therefore, we again join the call by all well-meaning Nigerians, for Government to critically re-evaluate our security architecture and take all necessary actions to assure and safeguard the safety of all Nigerian citizens and residents.

“The NESG commends Government’s efforts on infrastructural developments across the country and respectfully advises that given the enormity of financial resources required to meet our largely decayed infrastructural stock, many more options should be explored to attract private sector capital and involvement. However, such options and alternatives must always be subject to clear rules, open, transparent, following due process, and the enshrinement of the sanctity of contracts.

“The Group acknowledges government efforts at reopening the eastern port and urges that the rail link between Onne and Port Harcourt, should be given urgent attention so as to avoid replicating the Apapa Port experience. In the same light we wish to call for urgent solutions to the Apapa Port congestion, and other difficulties in effecting prompt and efficient export and import of goods. The Seaport is an economic lifeline critical for the diversification of the Nigerian economy.

“The NESG notes the evolving developmental roles of central banks around the world especially as it concerns resource allocations. However, such allocative roles must be undertaken in a very open, transparent, and fair manner. The Group expresses serious concerns about how the Central Bank of Nigeria (CBN) has carried on the business of foreign exchange transactions, loan disbursements (intervention funds), and price fixings without appropriate policy clarity”, it added.

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