The Nigerian Economic Summit Group (NESG) has outlined specific reforms necessary for accelerated economic advancement in growth-challenged Nigeria, while business leaders say a ready private sector awaits sweeping changes by the government that would make the country attractive for capital much available both home and abroad.
The recommendation by NESG follows President Muhammadu Buhari’s reaffirmation, in his New Year message, that his administration would lay the foundation necessary for lifting 100 million people out of poverty in the next 10 years and the World Bank’s warning that Nigeria could be home to one in four of the world’s poorest by 2030.
At the NESG Macroeconomic Outlook 2020 themed “Nigeria in a New Decade: Priorities for Accelerated Growth, Job Creation and Poverty Reduction”, 12 specific and crucial interventions were highlighted for the government to embark on to improve the business environment, competitiveness, attract investment and accelerate growth.
For quick wins, NEGS says the government must implement budget reforms, appoint credible individuals to drive reforms, halt ad-hoc policymaking and engage stakeholders, curtail activities of non-state actors and free up redundant assets.
Medium-term reforms would require power/energy sector reforms, pursue legislative reform to unlock investment, adopt PPPs in infrastructure delivery and ensure human capital development.
On the other hand, long-term reforms require that the government addresses subsidy programmes – petrol, electricity and exchange rate, implement fiscal policies to retain and attract investments and implement industrialisation policies.
“I don’t doubt the sincerity of the FG about lifting 100m people out of poverty but FG is not prepared to make difficult decisions,” said Andrew Nevin, PwC chief economist. “Time is running out.”
NESG projects a best-case growth rate of 3.5 percent for Nigeria in 2020 (unemployment at 21 percent and underemployment at 20 percent) if crude oil averages $75pb.
Under a business-as-usual scenario, the growth rate would be at 2.6 percent (unemployment at 25 percent and underemployment at 23 percent) with oil at $62pb, while a bear-case would result in a contraction of -1.9 percent (unemployment at 27 percent and underemployment at 25 percent) should oil plunge to $44pb.
Ayo Teriba, CEO, Economic Associates, said at the event in Lagos that Nigeria’s heavy dependence on oil has led to current unfavourable outcomes and with the focus still on the liquid gold, Nigeria is missing out on the opportunity to tap in the much-available cheap global liquidity.
“Nigeria has suffered a steep loss of liquidity which has hindered growth,” said Teriba. “Rather than identify growth as our major priority, raising liquidity threshold should be the focus.”
Teriba pointed to India’s successful LPG (Liberalisation-Privatisation-
In the three quarters of 2019, Nigeria was only able to attract a patient capital (FDI) of $666m from abroad, only 3.4 percent of total foreign investment inflows (hot money making up 73.4 percent). China attracted $64bn FDI last year.
Franklyn Ngwu, a senior lecturer in Strategy, Finance and Risk Management at the Lagos Business School, said the issue for Nigeria is not the absence of liquidity but the absence of investment-friendly policies that can make the country attractive for global liquidity already at a record high.
Economists say about 25 percent of capital in the world are in developed countries where yields are negative and if Nigeria could attract a mere 2 percent, the country can unlock most of its growth potential.
While much capital is available globally on the back of quantitative easing by major central banks, experts say Nigeria has adequate domestic capital in private hands it can also unlock if the government stepped outside of its comfort zone.
“Private sector money is available but it’d only go where the environment is attractive,” said ‘Laoye Jaiyeola, CEO, NESG.
Nigeria can also unlock value in dead capital and fast-track the race to reduce the poverty narrative in the country.
“Poverty incidence is very high in areas like Borno State but people there have vast land resources they cannot borrow against,” said a private sector participant. “Unlocking that capital can actually increase the net worth of the poor who have land resources.”
DAVID IBIDAPO & SEGUN ADAMS
