Fears of a sluggishly recovering economy topped the list of Nigerian corporate leaders’ concerns coming into 2020. Alongside nine other things, it is still a major headache for the private sector leaders according to the Nigerian Economic Summit Group (NESG).
Economy on “Go Slow”
CEOs are worried that the economy still remains very fragile and vulnerable especially to oil price trends after Nigeria’s biggest annual growth in nearly three years failed to show broad-based improvement.
The Board of the Nigerian Economic Summit Group (NESG) notes that 10 out of the 46 sectors of the economy, contributing approximately 27.1 percent of output, contracted in 2019.
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The economy remains predominately services-led while agriculture Sector continues to grow slowly.
“…growth in these sectors is adversely affected by issues which include rising incidences of insecurity and continuing closure of our nation’s borders,” Said NESG.
Poor revenue generation
The private sector-led think-tank and policy advocacy group noted the need for FG to improve revenue performance at all levels of the public sector, although they warned that it must not be at the expense of investments and job growth.
In particular, while the group praised FG’s move to raise non-oil income through tax reforms like the hike in VAT to 7.5 percent, they warned about the effect of high taxations on business performance.
Dwindling FDI inflow
The decline in foreign direct capital into the economy in the last three years should be matched with a commitment by the FG to attract and protect investments.
The NESG noted policy inconsistency, insecurity and other business constraints such as inadequate infrastructure as key hurdles for businesses.
Need for sustaining Ease of Doing Business positive drive
While NESG praised Nigeria’s continuing progress on Ease of Doing Business and the work of the Presidential Enabling Business Environment Council (PEBEC), it called for the “next level of reform” which would focus on areas like Power Supply; Ports Administration; and Rail Infrastructure Development.
“To achieve this, the government needs to strengthen all laws governing PPP agreements and must demonstrate sincere commitment towards upholding agreements and protecting investors,” said
NESG.
Level of preparation for AfCFTA
That Nigeria signed the continental trade agreement is not sufficient as the country needs to ratify the agreement to become a ‘State Party’ and participate effectively in the on-going negotiations of the treaty, as well as align domestic policies and regulations to maximize trade gains.
Continued Border closure
The NESG urged the government to work expeditiously with its regional neighbours towards resolving the issues and reopening the borders as the adverse impact of border closure especially on trade, employment and cost are mounting.
Currency woes
The decline of Nigeria’s external buffers and that the foreign investment inflows are predominantly short-term portfolio investments worry the private sector leaders.
Given the fall in oil prices and expectation that oil prices will continue to ease, the NESG recommends that the Central Bank consider managing the Naira by allowing the currency fluctuate within a pre-determined range not exceeding 5 percent. Such fluctuation will serve to reduce the net outflow of reserves by improving confidence in the economy, NESG said.
Coronavirus
The World Health Organisation (WHO) has listed Nigeria along with 13 other African countries as nations where an outbreak of the Coronavirus is possible, but the health risk is one of many threats to the country.
It is also important for public policy to note the adverse effect of the Coronavirus on global economic growth, especially commodity prices, and adjust to ameliorate these adverse effects, NESG said.
Government robbing Peter to pay Paul
The NESG said it is worried about the rising cases of harassment of businesses in the guise of raising revenue. Hence it called on a transparent and fair tax collection process that would encourage compliance.
Need for Government synergy
The NESG urged the government (legislature and the executive) to continue to work harmoniously to ensure the timeous enactment of economy enhancing legislation, in particular, the Petroleum Industry Bills, the Companies and Allied Matters Amendment Bill and the Investment & Securities Amendment Bill.
