The pressing need to mobilise private capital, fix the power conundrum, abandon fuel subsidies, reduce corruption in public sector and improve the ease of doing business, dominated a pulsating discuss among stakeholders at the Presidential Policy Dialogue organised by the Lagos Chamber of Commerce and Industry (LCCI) on Thursday.
As ideas swamped the room of investors and stakeholders, Okechukwu Enelamah, minister of trade and investment, listened and scribbled a few notes, desperate to avoid missing the tiniest detail, after promising the room he would convey their propositions to Abuja.
Nigeria is in its second year of an economic recession, after oil prices and production plunged and acute fuel and power shortages crimped business in 2016. In the first three months of 2017, the economy contracted 0.5 percent, according to the National Bureau of Statistics (NBS).
“We must think beyond the current recession and come up with big and audacious policy reforms to boost growth,” said Aigboje Aig-Imoukhuede, president of the Nigerian Stock Exchange and chairman of the occasion.
Imoukhuede urged the government to ramp up efforts in mobilising domestic capital; such that road shows are not only done abroad for international investors, but also within the country, in order to woo local investors who have just as much funds as their international counterparts.
“The domestic capital available in Nigeria is enormous, but we are not properly mobilising it,” Imoukhuede said. “The banking revolution that we all regard a success today, was funded domestically. Why can’t we have road shows for local investors?” To reduce corruption in the public sector, Imoukhuede recommended automation of government processes for better efficiency.
Nike Akande, president of the LCCI, asked that fuel subsidies be made away with, to lessen the financial burden on ailing government revenues and “reduce the diversion of petroleum products to neighbouring countries.”
An un-dynamic pricing template which caps the retail price of petrol at N145 per litre has been long overtaken by higher oil prices and exchange rate volatility, jacking up landing costs for petrol marketers who have now stopped importing petroleum products.
Contrary to claims by government officials of a complete subsidy removal, the subsidy simply moved up the chain from the marketers to the Nigerian National Petroleum Corporation (NNPC) which sells to petrol marketers at N133/litre, despite landing costs of around N150 per litre, thereby providing a subsidy of c. N17/litre.
OPEC peers, Saudi Arabia and Mexico-with more petrodollars at their disposal compared to Nigeria- plan to ditch petrol subsidies in gradual phases between 2017 and 2018, after recognising its unsustainability.
“The Petroleum Industry Bill also needs to be passed without delay, to broaden the scope of private investment,” Akande said. An hour later, news broke that the said bill- hitherto stuck in parliament for seven years- had been finally approved by lawmakers.
The need to improve the ease of doing business also came to the fore, with stakeholders pushing for a review of the high cost of capital and power shortages in the country.
Nigeria was ranked 169th of 180 countries on the ease of doing business index, tracked by the World Bank for 2017. Government targets to be within top 100 by 2020.
The Manufacturers Association of Nigeria (MAN), ably represented in the dialogue, decried the huge costs manufacturers shoulder as a result of incessant power shortages and an inefficient transportation network.
Nigeria, home to some 180 million people- produces about as much power (around 4,000MW) used by Edinburg, a city in Texas, USA, with a population of 100,000. Neighboruing South-Africa boasts of 40,000MW.
“The lack of tax harmonisation is also a challenge,” said Frank Jacobs, chairman of MAN. “We want to see more consistency in policy, even as we commend government’s efforts to ease the acute dollar shortage that has crimped growth in the sector.”
The manufacturing sector exited recession in the first quarter of 2017, bringing five quarters of output contraction to a staggering halt.
The sector’s performance was aided by improved dollar supply by the Central Bank, which is said to have sold some $4 billion in four months, to grease the illiquid foreign exchange market.
Enelamah, who represented Yemi Osinbajo, the country’s acting president, at the dialogue, was optimistic of on-going reforms to pull the economy from recession and put it on the investor map again.
“I am particularly optimistic about the newly signed executive orders, the progress made by the Presidential Enabling Business Environment Council (PEBEC) and the oil cash-call reforms,” Enelamah said.
“The signed executive orders will ensure that the latest reforms are enshrined into the DNA of every government agency. Meanwhile, “Our exit from joint cash-calls will boost our oil production and revenue, as well as provide ample funds for government investment in infrastructure.”
Enelamah concluded his address with these words, “It takes a generation to build a nation and no matter how committed this administration is to reforms, it is not a four year job.”
Nigeria requires between N25 trillion to N30 trillion of annual investment to reach a GDP growth rate of 5-7%.
The Federal Government is providing around N2 trillion of this, indicating that GDP growth will only happen with significant flows of private sector investment, from both domestic and international sources.
The major constraints to such robust growth are the self-serving attitude of those in power and the failure of the public sector to provide an enabling environment for private investment, Imoukhuede observed.
LOLADE AKINMURELE
