Economic experts have charged the incoming administration to embrace strategies aimed at tackling Nigeria’s debt overhang for economic growth and development.
They spoke at the American Business Council (ABC) Economic Update with the theme: “Nigeria’s Debt Overhang and Strategies to Create Economic Growth” in Lagos.
Yemi Kale, the Chief Economist, KPMG said focus must be on the Consumption, Investment, Government Expenditure, Exports and Imports (CIGXM) economic indices to fully harness the potential of the country’s economy.
Kale said under the CIGXM, Nigeria must begin to boost consumer purchasing power, enhance ease of doing business, provide the right infrastructure, increase public investment and enact fund usage transparency.
Kale noted that regaining confidence in the domestic and foreign markets is extremely important because the country just passed through a heavily contested and disputed election where the President-Elect did not enjoy majority support, thus the need for policies that will bring the country together.
He said there is a need to harmonise FX rates to ensure there is clarity in the market and also ensure the cabinet is made up of round pegs in round holes.
He said the cabinet members of the incoming government must be given the needed support to perform because technocrats cannot function if they are not given room to function.
Kale said subsidy has to go because it has been a big problem that is not benefiting the poor as claimed.
The Ex-Statistician General also said the government must stay away from doing business by allowing the private sector to thrive.
He cited an example with the government-owned refineries which the government is still keeping despite the fact that money is being spent to pay the workers and keep the refineries afloat.
He said the government need to cut wastage because Nigeria does not need over 200 agencies that do not impact the economy, adding that government can save a lot of money by removing several wasteful spending.
At the panel session, Dapo Olagunju, managing director of JP Morgan Nigeria, said Nigeria’s FX market has the CBN rate and the black-market rate, adding that the queue at the Central Bank forces businesses to go to the black market.
“International investors do not mind if the CBN rate is N400 or N700 because there are people who know how to manage risk, but they mind government interference and ambiguity of monetary policy. Between 2008 and 2014, the CBN participation in the FX market was about 20 percent because every other person was coming to the market but now due to the subsidy there is this huge queue at the CBN,” he said.
Olagunju said Nigeria needs to unify the exchange rates, which requires the CBN to be more orthodox in the monetary policy choices because printing more money for circulation at a time it needs to tighten monetary policy does not match.
Mokutima Ajileye, managing director of Procter and Gamble Nigeria, said Nigeria needs to make the rates predictable, which will help manufacturers and other businesses to plan.
She said policy inconsistency is largely affecting the growth of the manufacturing sector.
Citing an example of the government policy for the localisation of inputs by the manufacturing sector, she said the lack of capacity to meet demand and lack of sufficient timeline to build the needed capacity, also makes the policy unrealistic.
According to her, the manufacturers are yet to recover from the February and March 2023 cashless policy shock where purchasing power of consumers were further drained due to a lack of cash to buy household items.
Earlier, Sopiribo Ideriah, ABC New Members President, said there is a need to curb inflation and address debt from a revenue-generating perspective which would engender the positive impact needed for the economic development of the nation.
He said it will also attract investors from the G7 and foster international trade through the African Continental Free Trade Area (AFCFTA).
Ideriah, who said that Nigeria’s total public debt stock, domestic and external debt stocks, recorded a 14.46 percent increase from N39.56 trillion on December 31, 2021, to N46.25 trillion at the end of December 2022, added that the rising debt, coupled with the elevated currency depreciation rate and Nigeria’s infrastructural deficit further impede the capacity to overcome the current economic burden, especially for the incoming government.