Agora Policy, an Abuja-based think tank, says the incoming administration needs to undertake fast, coordinated macroeconomic policy reforms — such as regional industrial hubs, removal of all food trade restrictions, provision of incentives for export-oriented firms among others — to help remedy challenges affecting Nigeria.
In its policy memo titled ‘Urgent Policy Actions on Fiscal, Monetary and Trade Fronts’, Agora Policy said the Nigerian economy has significant potential but faces a myriad of economic challenges which needs to be handled quickly.
The think tank, founded by Waziri Adio, former executive secretary of the Nigeria Extractive Industries Transparency Initiative (NEITI), said the policy actions or economic reforms must be predicated on inclusion, transparency and accountability.
Recommending solutions to Nigeria’s fiscal problems, Agora Policy said policy makers should replace import bans with import duties.
“The use of tariffs rather than the existing import bans would spur the domestic productivity of firms, especially those that rely on the import of intermediates that are affected by the import prohibition,” Agora Policy memo said.
The Nigerian think tank said the replacement of import bans with import duties has to be done in a coordinated manner between the Ministry of Industry, Trade and Investment, Ministry of Finance, Budget and National Planning, and the Nigeria Customs Service.
“Federal Government of Nigeria should prioritise the development of industrial hubs and export processing zones as well as the delivery of critical infrastructure which support international trade, such as ports, roads, and telecommunications networks,” it said.
Agora Policy said in view of obvious budgetary constraints and current revenue shortfalls, the Government should seek partnership with the private sector.
“The partnership with the private sector could help enhance efficient service delivery and reduce trade costs, thereby making it easy for domestic firms to integrate in domestic and regional value chains,” it said.
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According to the memo, reopening all closed borders and removing all food trade restrictions have hurt prices and have not led to the expected increase in domestic productivity.
It also said the Government needs to prioritise the development of a goods and services export strategy in collaboration with the subnational governments.
“Such a strategy should focus on labor intensive sectors, and should clearly identify priority sectors and potential markets by leveraging Nigeria’s global network of diaspora and consulates,” Agora Policy said in the memo.
It said the rise in foreign investment outflows needs to be addressed by sending positive signals to foreign investors.
“The exchange rate needs to be market-determined. Also, security, banditry, kidnapping and insurgency need to be adequately tackled to send positive signals,” Agora Policy said.
The memo said in order to leverage on the enormous market opportunities created by the African Continental Free Trade Area (AfCFTA) agreement, there should be a gradual reduction of import tariffs on intermediate products used by domestic firms that export or plan to do so.
“At the same time, the discretionary import duty waiver allocation system needs to be replaced with a clearly defined industry-wide incentive system that supports export-oriented firms,” Agora Policy said.
A critical issue that the incoming administration has to grapple with is how to revamp the economy, and quickly, Agora Policy said, adding that the key macroeconomic statistics do not paint a rosy picture.
