President Muhammadu Buhari took the oath of office as the fourth democratically elected President of Nigeria after the country’s return to democratic rule in 1999. Finance analysts, who spoke to IFEANYI ONUBA, were of the view that he must within 90 days come up with pragmatic policies to reposition the nation’s economy
To say that Muhammadu Buhari will be taking over the realms of affairs of the country at a time when both the global and domestic economies are in dire need of help is stating the obvious.
In the same vein, the Eurozone consisting of countries like France, Germany, Portugal, Spain, Netherlands and Italy are expected to record less than two per cent growth rate in 2015, according to the International Monetary Fund.
Not immune to trends in the advanced economies, emerging economies like Brazil, India, China and South Africa which sustained global growth in recent years are now experiencing a slowdown.
China, for instance, which has been growing at about nine per cent annually, is now expected to grow at 7.1 per cent in 2015, down from 7.4 per cent in 2014.
Russia and Brazil are facing stagnation with growth expected at only 0.5 and 1.4 per cent, respectively in 2015.
However, India’s projected GDP is expected to grow at an average of six per cent over the next two years.
Overall, the IMF has revised downwards its projection on global growth to 3.3 per cent in 2015 from and 3.8 per cent for 2014.
Nigeria, as a member of the international community is not ‘immune’ to developments in the global environment.
For instance, figures obtained from the National Bureau of Statistics indicated that the country’s first quarter GDP declined from 5.94 per cent as of the end of the fourth quarter of 2014 to 3.86 per cent by March this year.
In nominal terms, the report said aggregate GDP stood at N21.04tn at basic prices. Compared with the opening quarter of 2014 value of 20.16tn, this was 4.32 per cent higher, whereas relative to the preceding quarter value of N24.205tn, the nominal growth was lower by 13.per cent.
It said depressed global oil prices, as well as challenges in supply in the country prevailed over the period of review.
Oil production, it stated, stood at 2.18 million barrels per day in the first quarter of 2015, remaining at the same level as it had done in the preceding quarter.
In the area of trade, the NBS in its merchandise trade statistics for the first quarter of this year noted that the country recorded a N110.2bn decline in trade from N4.98tn as of December 2014 to N4.87tn as of March ending.
The bureau in the report said that despite a rise of N275.6bn in the value of exports against levels recorded in the preceding quarter, a decline of N385.8bn in the value of imports resulted in an overall decline in the value of merchandise trade.
In terms of revenue generation, the persistent drop in oil prices coupled with the low receipts from non oil sources led to a N1.31tn shortfall in revenue within the first three months of this year.
Figures obtained from the Federation Accounts Allocation Committee revealed that within the first three months of this year, a total sum of N1.13tn was generated from mineral and non-mineral revenue sources.
When compared to the amount approved in the 2015 budget, the N1.13tn which is based on actual receipts approved by FAAC represents a decline of N1.3tn or 53 per cent within the thee months period.
A further analysis of the gross federally collectible revenue showed that out of the budgeted revenue of N815bn expected to be raised in January, the actual receipts from mineral and non mineral sources was N416.09bn, representing a decline of N398.91bn or 48.9 per cent.
For the month of February, the sum of N401.46bn was generated, indicating a decline of N413.54bn or 50.7 per cent, when compared with the budgeted amount of N815bn.
The lowest amount of generated revenue was recorded in the month of March, which saw the sum of N315.04bn accruing into the account.
The N315.04bn generated in March represents a decline of N499.06bn or 61.34 per cent when compared to the budgeted estimate.
The huge margin in revenue generation, according to finance analysts, has made it imperative for the Buhari administration to come up with pragmatic policies to block the loopholes in the revenue collection process.
They also contend that if the incoming administration is to be taken seriously in its promise to reposition the economy, then measures should be put in place towards reducing a lot of frivolous expenditures in the Presidency and National Assembly as a prelude to cutting down on waste across the Ministries, Departments and Agencies of government.
Those who spoke with our correspondent are the President, Abuja Chamber of Commerce, Mr Tony Ejinkeonye; the Lead Director, Centre for Social Justice, Mr. Eze Onyekpere; an Associate Professor of Finance and Head of Banking and Finance department, Nasarawa State University Keffi, Uche Uwaleke; and the Registrar, Chartered Institute of Finance and Control of Nigeria, Mr. Godwin Eohoi.
For Ejinkeonye, the first issue that the incoming administration should address is the epileptic power supply situation in the country, noting that this will help promote industrialisation, boost productivity and attract both local and foreign direct investment,
He said, “The Abuja Chamber of Commerce and Industry has made it known to the incoming government that the issue of power and energy must
be urgently addressed in order to promote industry, boost productivity,
attract both foreign and local direct investment.
“Power and energy sufficiency is the fulcrum of any meaningful development of the economy. Another will be determined and consistent policies geared towards revitalising industries as this will increase employment and self sufficiency.
“The Small and Medium Enterprises represent about 85 per cent of the economy. Inasmuch as the previous government has made or provided funds, most of which are yet to be disbursed, the new government should endeavour to provide the enabling environment for the growth of these SMEs.
“This should be in the form of physical and financial infrastructure; streamlining or eliminating multiple taxation and regulations.”
According to Onyekpere, the incoming administration should use the first 90 days in office to restore faith in the economy by increasing accountability and transparency in the management of public resources, noting that this will engender a new spirit of commitment by the citizenry to national affairs.
He said, “The first is that leadership by example will cut off a lot of frivolous expenditures in the Presidency and National Assembly. The platform of more transparent and accountable government will in turn encourage the people to support the government through payment of taxes, reduced economic sabotage in the oil and gas sector and whistle blowing on corrupt practices to reduce the leakages in the system.
“The second is to move expeditiously to reform the fuel subsidy environment by scrapping the subsidy regime and liberalising the sector. I expect the President in liaison with the National Assembly to speed up the reforms in the petroleum industry through the passage and assent to the Petroleum Industry Bill.
“The third is that crude oil theft, which deprives Nigeria due revenue of not less than $750m a month, should be tackled through adequate security arrangements and collaboration with other nations. The fourth is power sector reform – the challenge of vandalism of gas facilities should be tackled.”
He said a meeting with the power investors to find out their challenges would be necessary, adding that those who actually lack the capacity to move the sector forward should be given a mandate to either improve or hands off the power assets.”
Eohoi, on his part, advocated the continuation of the existing government policies on agriculture through the value chains approach and to provide incentives for farmers to produce more food for the nation and for export.
He said since one of the major challenges facing the economy was unemployment, the continued support for the automobile policy that encourages local manufacture/assembly and value adding to vehicles would help to create more jobs.
According to him, the well being of the SMEs is so critical in any economy that the desired growth, generation of employment and production of consumer goods should not be ignored within the first 90 days of the new administration.
He said, “The incoming government should look at how to stabilise the naira by coming up with policies that will reduce importation and boost consumption of local products to reduce the high rate of foreign currency.
“If this is done, naira can firm up to N160 per dollar. We also want them to look at how we can reduce the importation of petroleum products by fixing the refineries to work efficiently and they should also allow the private sector to have refineries.
“They should boost electricity generation and distribution for factories to be more efficient by building on what the outgoing government has done; they can look at where the power privatisation has failed so that we can have good power supply in the country.
“They should also cut down on the number of political office holders to the barest minimum. Foreign trips should be discouraged.”
VANGUARD.
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