Comercio Partners Limited, an investment banking firm, has advised the new administration of President Bola Tinubu on policy measures needed to fast-track the nation’s economic growth including comprehensive policy reforms and improved governance.
Tosin Osunkoya, Co-Managing Partner Comercio Partners and CEO of the asset management subsidiary of the firm, gave this advice in a review of the Gross Domestic Product, GDP report for the first quarter, Q1 2023.
According to the National Bureau of Statistics, NBS, GDP growth dropped to 2.3 percent in the first quarter (Q1) of 2023 from 3.1 percent in Q1 2022, with the agric sector contracting for the first time in seven years by 0.90 percent during the quarter.
Noting that the decline in growth can be attributed to a combination of factors including naira scarcity during the period, volatility in global oil prices, inadequate infrastructure, and an uncertain business environment saddled with continuous and aggressive rate hikes from the nation’s apex bank, Osunkoya added that “The fact that Nigeria’s agricultural sector contracted for the first time in over seven years is undeniably concerning. Agriculture has long been a vital sector in Nigeria, providing a living for millions of people and contributing considerably to the country’s economy. This contraction raises serious concerns about the underlying drivers including the impact of insecurity, flooding, insufficient and misallocated intervention funds, and infrastructural setbacks.
Speaking further, Osunkoya said, “The latest GDP report emphasises the importance of comprehensive policy reforms and improved governance to address Nigeria’s economic challenges.
“It is crucial for the new government to create an environment conducive to business growth and investment. This involves implementing regulatory reforms, ensuring policy consistency, combating corruption, enhancing transparency, and strengthening institutions.”
Commenting on the 6 percent GDP growth target of the President, Osunkoya said: “I am confident that if resources are channelled properly, backed with unbiased economic policy reforms, the new government will be able to achieve and even surpass this growth target. To achieve this, the new administration should prioritize sectors such as the agricultural and services industries.
“While these sectors face unique obstacles as they grow, one key setback that must be addressed is insecurity. The new government must use all available resources to keep Nigeria safe from terrorism, banditry, and kidnapping. This will help strengthen the confidence of both foreign and domestic investors. No economy, business, and society can grow or develop in an unstable, chaotic environment.
Furthermore, it is very crucial at this point to examine the support mechanisms provided to farmers by both the monetary and fiscal authorities. Access to modern farming techniques, quality seeds, fertilizers, and adequate irrigation facilities are vital for enhancing productivity. Government policies should be designed to incentivize and empower farmers, ensuring they have the necessary resources and knowledge to succeed.
The phase-out of fuel subsidy needs to be addressed by the next administration as it is no longer sustainable. A revision of the monetary policy strategy to combat inflation would also be crucial. Despite the MPC raising rates by almost 700 basis points since April of last year to battle rising inflation, prices are still at a record high.
“As a result, it has become more challenging for manufacturers to obtain finance, slowing down corporate operations. Credit is essential for creating a standard economy because it promotes economic growth, makes investments easier, and supports consumer spending.
“By providing a stable and predictable business environment, Nigeria can attract domestic and foreign investments, fostering economic diversification and sustainable growth.
“The new administration must prioritize economic diversification, invest in critical infrastructure, promote entrepreneurship, stabilize interest, and exchange rates to create a conducive environment for businesses to thrive. By tackling these challenges head-on, Nigeria can unlock its vast potential, improve the livelihoods of its citizens, and achieve inclusive and sustainable economic development.”