• Warn on wrong steps ahead of elections
• It’s significant year for Nigerians, says Ajibola
• ‘How electoral outcome will determine economic progress’
• Inflation, cost of living crisis among major challenges
Stakeholders across business communities have said insecurity, financial leakages, free fall of naira, rising debt, and other factors could stall economic progress, as the country heads into elections.
While insisting that Nigerians must elect right leaders or face total collapse of the economy, the experts, in separate interviews with The Guardian, said the country must put an end to incessant borrowing and re-engineer fiscal and monetary policies to strengthen the naira.
The advice comes in the face of rising debt profile and fear of debt distress. The public debt rose to over N44 trillion at the end of September. The government is contemplating an additional N8.8 trillion to fund the 2023 budget, even as there appears to be a deadlock on management of another N22.7 trillion owed by the Central Bank of Nigeria (CBN) through the ways and means (W&W) window.
An economist and Group Chairman at International Energy Services Limited, Dr. Diran Fawibe, said the country needs to aggressively pursue peace to checkmate pervasive insecurity, adding that incessant borrowings must stop forthwith, while the nation must ensure fiscal discipline in 2023. He said the country must plug financial leakages across all tiers of government and the CBN must end free fall of the naira.
Fawibe also called for judicial investigation into recent or ongoing oil theft and allegation of stamp duty fraud. He said: “Nigeria must work towards removal of oil subsidies as soon as possible before it bankrupts the economy. There is a need to take effective measures to attain and sustain oil production level of 1.8 to two million barrels per day.
“We must lay a solid foundation to streamline investments in the oil and gas upstream, midstream and downstream sectors through orderly implementation of the Petroleum Act and ensure a transparent level-playing field in all engagements across board.”
According to him, there’s a need to introduce stimulus packages for non-oil sector development and export of high-value products. He called for a need to reorder channeling of human resource capacities and dynamism of youths with measurable targets and periodic policy impact assessments, while asking politicians to behave themselves during forthcoming elections, aware that politics is just a means to an end, and not the end itself .
Former President of Chartered Institute of Bankers of Nigeria (CIBN) and professor of economics at Babcock University, Segun Ajibola, noted that 2023 is significant in Nigeria and for Nigerians for many reasons.
“The hydra-headed problems of inflation, the international value of the local currency and high unemployment rate should be tamed. Current government policies towards resolving these disequilibrating factors need to be continued and strengthened,” Ajibola said.
The professor said removal of petroleum subsidy must be on the front burner, stressing that government must break the monopoly of NNPC on importation of fuel before subsidy removal can have helpful effect in Nigeria. He noted that supportive actions, such as turnaround maintenance of existing refineries and private sector investment in oil refineries, would help in the long run.
Ajibola said current policies and incentives on agriculture and industry need to be effectively implemented, especially as some tax rates are being reviewed upwards.
Chancellor at Edo-based Mudiame University and Managing Director of Mudiame International Limited, Prof. Sunny Eromosele, said while the current government may not be able to do anything about the state of the economy, choosing right leaders in the general elections is required to improve economic indices.
“Looking at the national economy, nothing will change due to political tensions. It may be a standstill until elections are over,” he said. He added that if the new government is well prepared to hit the ground running, the economy could experience a little change in the fourth quarter of the year.
“Right policy framework with good intentions can turn the situation around. Considering the war in Ukraine and Russia, and the U.K. and U.S. recession, including the China COVID-19 issue, Nigeria should or must ensure that internal issues are resolved,” Eromosele said. He insisted that local approaches must be deployed to sustain the business of the country.
Managing Partner, BBH Consulting, Madaki Omadachi Ameh, noted that 2023 would be a tough year for Nigeria and Nigerians. He disclosed that the election season would bring uncertainties, and government, being in a sitting duck mode, would not help matters.
“The expected global economic downturn will have its impact on the Nigerian economy as well. Policymakers must buckle up and address long outstanding issues, such as wasteful and inefficient subsidies, low productivity in public and private sectors, further improvement in agriculture, and drastic import substitution, to shore up the value of the naira, among other measures,” he said.
Former chairman of Petroleum Technology Association of Nigeria (PETAN) and Chief Executive Officer at CB Geophysical Solutions and Vhelbherg, Bank Anthony Okoroafor, does not expect much progress in the first and second quarters of the year because of elections and transitions.
“Subsidy which is a heavy drain on the reserve will not be removed before transitioning, for fear it will trigger a backlash. Costs of consumables will continue to go up. Unemployment will still be high, amid declining income per capita and high levels of poverty. Exchange rate in the parallel market will be higher, costs of debt servicing are projected to exceed revenue,” Okoroafor said.
In the third and last quarters, with a new government in place, he projected the subsidy will be removed while the Dangote refinery comes on stream. Professor emeritus and renowned energy economist, Wunmi Iledare, said no magical trick would turn the economy around in 2023, being, especially, an election year.
“However, the first is to hope for a fair and free election with no unintended consequences of political hooliganism that can further have short-term implications on a stagnated economy. INEC officials must optimally be at their best,” Iledare said.
He sees 2023 as a lame duck year, noting that the role of professionals in key sectors of the economy – energy, petroleum, economics and finance – is critical during the first six months.
According to him, CBN, in particular, has an important role to play in managing money supply by mopping up excess money circulating in the economy. Iledare said the new National Assembly must avoid unnecessary unauthorised expenditures by ministries, departments and agencies, stressing that the 2023 budget is already bloated and padded.
Iledare said: “If there is a time in history to invoke the Fiscal Responsibility Act, the first six months of 2023, represents that time. I am not sure the extent possible, but outgoing political leaders can redeem their inaction by calling for implementation of the PIA provisions on the downstream petroleum sector.”
Executive Director at Green Growth Africa and Research Fellow at the Politecnico di Milano, Italy, Dr. Adedoyin Adeleke, expressed concerns over implications of the general elections on the economy, saying a successful political transition is sacrosanct to growth and stability of the economy.
Adeleke said: “On the political side, Nigerians must realise, in practical terms, that politics determines the policies. The politicians we choose will be our policymakers; hence, as a people, we need to take the 2023 general elections as personal businesses.” He said addressing security challenges is critical, because foreign investors, including Nigerians in the diaspora that could attract economic benefits to the country, are being discouraged.
Adeleke said: “In addition to industry scale diversification, there is a need to empower young people to boost local productivity. We must produce what we consume and consume what we produce, if there will be any significant change in our pathetic economic narrative.
“There is a need to come down heavily on imports. The administration will come in, and sad as it may be, will be procuring new vehicles. It will be shameful if they leave Nigeria-produced automobiles to procure those manufactured abroad.”
Former President of Society for Petroleum Engineers (SPE), Joseph Nwakwue, said 2023 would bring full restoration of Nigeria’s oil and gas production capacity.
That, according to him, will ease ongoing fiscal and forex challenges. He said a more vigorous and faithful implementation of the PIA would lead to full liberalisation of the downstream, and more investment inflows into the entire industry value chain.
“I also expect a reduction in fuel import dependence with the streaming of Dangote Refinery and resuscitation of NNPC refineries,” Nwakwue added. Energy Economist at the University of Ibadan, Prof. Adeola Adenikinju, said the COVID-19 situation and the China and Ukraine war would affect Nigeria’s economy in the year.
Decrying the level of revenue ratio to GDP and per capita, Adenikinju said the new government must find a way to address the situation, especially by expanding revenue sources, instead of paying too much attention to managing available revenue.
Factors being deployed to normalise inflation across the world would, according to him, impact the economy in Nigeria. Adenikinju also called for removal of subsidies, fostering of growth in the downstream sector, improvement on security and taming of oil theft and vandalism.
THEGUARDIAN
