Public sector reforms put in place during President Muhammadu Buhari’s first term will be central to driving sustainable economic growth, according to Okechukwu Enelamah, co-founder, African Capital Alliance (ACA), and former minister of trade, industry and investment.
Some of these reforms include the Treasury Single Account (TSA), the Integrated Payroll Personnel Information System (IPPIS), and the Voluntary Assets and Income Declaration Scheme (VAIDS) that has increased the number of taxpayers from 13 million to 19 million, which has curbed some leakages.
Others include the ease of doing business drive, pioneer status incentives alongside other policies to accelerate industries and enterprises.
Enelamah spoke recently at the annual Economic and Business breakfast conference organised by Rand Merchant Bank Nigeria (RMBN) in Lagos.
He admitted that Nigeria had the right and attractive fundamentals for a sustainable growth, highlighting the country’s strong population base and growth, and abundant natural resources.
However, he believes a lot more needs to be done both from the public and private sectors to harness these resources and drive robust economic growth.
In President Buhari’s second term, the former minister expects the government to drive full-fiscal responsibility through revenue growth and fiscal discipline. He also expects bolder investments in infrastructure to close the infrastructure deficit gap.
According to the former minister, Nigeria has an infrastructure deficit of over $100 billion that needs to be fixed over the next few years. On this, he called for more partnership with the private sector noting that the government cannot do it alone. To drive private sector participation and investment, he also expects acceleration in the execution of the ease of doing business policies especially expanding incentives that really matter to investors.
On industrialisation, he expects the government to aggressively roll out Special Economic Zones (SEZ) and industrial parks.
Enelamah called for more interventions and support from the government to the agriculture, healthcare, education, and insurance sectors as well as continued financial support for Micro, Small & Medium Enterprises (MSMEs).
In his welcome address, Michael Larbie, CEO, RMB Nigeria & Regional Head West Africa, noted that efforts to reposition Nigeria’s economy to deliver growth above population growth rate and also create jobs is a key focus worth pondering on by policy makers.
He noted that Nigeria’s economic growth in the last five years does not reflect the strength and productive potential of the country’s exciting real sector. As such, he concluded that the opportunity to change course and usher Nigeria into inclusive and sustainable growth does indeed exist if the right operating environment and policies are instituted.
Eme Essien Lore, country manager, International Finance Corporation (IFC) Nigeria, stated that the banking sector has not lived to the expectation of supporting the real sector based on available data.
According to her, the IFC wants to see more MSMEs gain access to affordable funding to expand and grow their businesses. She however addressed the need for the country to entrench a robust credit system and see through ongoing reforms (collateral registry and credit bureaus) to help provide banks with additional comfort to increase lending to the private sector.
On a broader note, she indicated foreign investors are interested in Nigeria but are looking for the right business climate and fiscal response that is sustainable. According to her, FDIs will mostly improve if investors see progress from government on power sector reforms ($3-$6bn deficit), stability and flexibility in the exchange rate, removal of FX restrictions, removal of petroleum subsidies and stronger & sustainable revenue mobilisation.
Panellists who spoke on banks and the real sector relationship stress the need for banks to understand the business of their clients. Among the panellists were Olukayode Pitan, managing director of Bank of Industry, Biola Alabi, CEO of Biola Alabi Media, Raj Gupta, managing director of African Industries Group, Christian Wessels, managing director of Daystar Power and Teddy Ngu, Director, Corporate Affairs and Agric Business Initiatives, GB Foods.
Gbenga Sholotan, head, research, RMB Nigeria Stockbrokers, in his presentation on the outlook of the economy, noted the increasing importance of the non-oil sector to Nigeria’s economy stating that over the last four successive quarters, Nigeria’s real GDP growth has been driven by the non-oil sector, with the oil sector delivering negative growth over the period.
Gbenga also noted that the non-oil sector now contributes about 90 percent to Nigeria’s real GDP, an increase from the 30% contribution four decades ago. More recently, according to Gbenga, the telecommunications and agriculture sectors have mostly driven Nigeria’s real growth. He therefore stressed the need for other sub-sectors’ potential to be unlocked to drive real sector growth in Nigeria.
He further noted the slowdown in FDIs and also highlighted that Nigeria’s human capital index at 0.34 is lower than sub-Saharan Africa average of 0.4, adding that there is room for improvement on this basis.