Nigerian-British Chamber of Commerce (NBCC) says the Federal Government should concession public assets to attract private capital to efficiently exploit valuable assets lying un-utilised.
In its Economic Review and Policy Statement for first quarter of 2017, the chamber says private investment will also reduce the burden on the government to utilise moribund assets.
The NBCC commends the Federal Government on its Economic Recovery and Growth Plan, saying it addresses major structural deficiencies in the economy.
It, however, adds that success of the plan lies on the ability of the government to implement the policies.
“We believe the Eurobond issuance is the first step. Subsequent borrowing via concessionary loans from organisations such as the World Bank and the African Development Bank as well as Diaspora funds are essential to provide the capital required to drive economic recovery and remedy FX liquidity,” the chamber says in a statement to BusinessDay.
The chamber calls for a holistic tax structure that will address some of the loopholes that are already in the system.
“A holistic tax that will, among other outcomes, increase the tax base by effectively absorbing the informal sector into the economy is also imperative,” it says.
On Nigeria’s plan to borrow to plug the N2.3 trillion deficit in the proposed 2017 budget, the chamber says foreign borrowing will place more pressure on Nigeria’s debt service burden, which is already about 35 percent owing to low government revenue.
The NBCC says the influx of foreign exchange capital will be essential in bolstering Nigeria’s foreign reserves, which will in turn raise foreign investor sentiment on FX liquidity.
“With increased borrowing, further disruptions in oil production and failure to meet revenue targets may result in credit rating downgrades,” the chamber says.
“This inflow of Foreign Capital coupled with robust fiscal policy will provide a much needed injection of capital to fund key capital projects which will drive economic recovery and growth,” it states.
It adds that increased foreign borrowing will provide the much needed influx of Foreign Capital, but the current weak macroeconomic fundamentals suggest that investors will demand higher coupons on Nigerian Sovereign Debt.
