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Nigeria’s economic woes: FG is to blame- Experts

 Nigerian economy is at present going through a big challenge with rising debt and inflation, stagnant growth, big infrastructural gap and low oil revenue. The country is majorly dependent on oil and the crash of global oil prices a few years ago sowed the seed of the present economic crisis. As a result, the Nigeria recently fell into recession which it is still struggling to exit. Similarly, persisting structural and policy challenges continue to constrain growth. Babajide Okeowo in this report takes a critical look at how the country arrived at this precarious economic state and sought expert opinions on the way out.

International Monetary Fund, IMF a few days ago issued a damning report on the state of the country’s economy. According to the IMF: “Nigeria’s economy is growing more slowly than all emerging markets as a whole, under current policies, the outlook remains muted, over the medium term in the absence of strong reforms, growth would hover around 2.5 percent, implying no per-capita growth as the economy faces limited increases in oil production and insufficient adjustment four years after the oil-price shock.”  This is not all.

Last week, another shocking revelation was made on the country’s sagging economy. This time it came from Nigeria’s Debt Management Office (DMO), which reported that the country’s total debt profile as of December 31, 2018, stood at N24.387 trillion. The debt grew by 12.25 per cent from N21.725 trillion in 2017 about N2.66 trillion in just one year.

Patience Oniha, DMO Director General said Thursday in Abuja that the debt was as result of borrowing to fund projects, finance budget deficit and also finance maturing obligations of the government.

Experts are, however, alarmed at the country’s growing debt and the slow growth of  economy, insisting that a huge debt profile and a snail-speed growth was incapable of reducing poverty or joblessness. They asked the Federal Government to allow the private sector drive the development of the economy, saying that it was only the private sector that has the capacity to grow and drive the economy and challenged the government to formulate policies and provide friendly environment forPrivate sector, not public sector can drive the economy- Oyedele

According to Mr. Taiwo Oyedele, Tax Leader, Price Waterhouse Cooper, PwC, Nigeria, the private sector has the capacity to drive the economy while urging the Federal Government to focus less on creating jobs but, rather concentrate on formulating the right policies and creating the right environment for businesses to thrive and as a result boost the economy. This, he further said will solve the issue of tax evasion bedeviling the country.

“Government should not be the one to create jobs, theirs is to formulate the right policy, create a friendly business environment and the private sector will drive the economy. Take for example, do you know that the United States of America produces about 10million bpd and they do not even refer to themselves as an oil producing country and also do not have a national oil company, yet they made more than $5tr in taxes from all level of governments, where do they get all the money from, they got the money from taxing companies like Apple, Google. When your business and your people are prospering, taxes come naturally. The whole amount budgeted by the federal government is a fraction of the revenue that a company like Google will make in a month. How can we create businesses that will thrive, employ people, create wealth and they will pay taxes? It is simply by creating the right business policies.

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He added that nobody is going to invest in Nigeria because they love Nigeria, not even Nigerians will do that, investors will only go to where they are able to make money, and in the process of making money, we will solve the tax problem and everybody is happy for it. The culmination of issues bedeviling us is some of the issues that our politicians must confront head-on. We have the Economic Recovery and Growth Plan, ERGP which is a fantastic document, my worry is in how we implement it, we seem to pick what we like from the document and do away with what we don’t like forgetting that all the component are supposed to work together

Don’t overtax poor Nigerians

Oyedele also advised the government not to overtax poor Nigerians but should look at ways of capturing rich Nigerians who should be paying tax but are not doing so.

“In advanced countries of the world, the top one [1] percent of the society pays more taxes than the bottom ninety-nine [99] percent. The more there is inequality in the society, the more those at the top will pay more taxes than the entire remaining population of those who are poor. Unfortunately, in Nigeria, the reverse is the case, the poor and those at the bottom of the pyramid are the ones paying the taxes while the rich and those at the top does not pay tax, those who have the ability to pay the taxes are not even paying. Those at the National Assembly, to the governors and the rest of them, are not even paying” he lamented.

Put round pegs in round holes, experts advise President Buhari

On his part, the MD/CEO of Cowry Asset, Johnson Chukwu, the first way to address the issue of Nigerian economic woes is to put the right people in the right positions to manage the country’s economy and chart the right policies that can stimulate growth.

“Getting the right people into the right position will go a long way in solving some of the economic issues facing the country. There are a lot of Nigerians who are competent in the economic sector who can help the president to chart sound economic policies. He should look for competent hands to man some of the critical economic positions like the Ministry of Finance and the Federal Ministry of Budget and National Planning, these are critical sectors of the economy” he said.

Chukwu also urged the President to outsource the management of the Federal Ministry of Petroleum Resources to a competent hand who can handle the job.

“He should also outsource the manning of the Federal Ministry of Petroleum Resources to somebody else who can do the job” he added.

He also charged the Federal Government to do away with the culture of blaming past administrations for the economic woes of the country but to take responsibility.

“This government should also do away with the penchant of blaming past administration for what is happening. You do not take up leadership position with the hope of dwelling in the past, leadership is about the future and not about what happened in the past, the people are looking up to you that your tenure should alleviate their suffering, it is of no consolation to them to keep reminding them about the past” he added.

Speaking in the same vein, The Dean, Faculty of Business Administration, University of Uyo, Akwa Ibom State, Prof. Leo Ukpong Ukpong charged that a combination of both short and long-term fiscal and monetary policy strategies should be deployed to stimulate the economy.

“For instance, on short-term fiscal policy, FG should appropriate funds for investment in capital intensive projects such as road constructions and repairs, electricity and other key infrastructures. Such projects have the potentials to quickly stimulate the economy. There should also be provisions for bailout or job retaining financial packages designed to help struggling, labour-intensive firms to remain in operations” he said.

On the long-term fiscal policy strategy, Ukpong said a combination of tax, interest rates, and partnership packages should be designed to serve as incentives for both indigenous and foreign investors to invest in the manufacturing and related industries.

“Government could extend long-term investment tax break to investors who are into building and production of parts for refineries, auto parts manufacturing, and construction equipment in the country” he added

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On monetary policy, in the short term, Ukpong advised the Central Bank of Nigeria (CBN) to use all available monetary policy tools such as Open Market Operation (OMO), interest rates adjustment, among others, to reduce job losses and unemployment.

He said: “For example, interest rates need to be reduced to help reduce short term financing and other operating costs. In the long run, the CBN has to pursue a policy to reduce inflation, long term borrowing rates, and liberalised and harmonised the foreign exchange market to support sustainable long term economic growth.”

Growing the sector that can grow the economy important – Expert

Speaking further, Chukwu called on the Federal Government to take a critical look at growing the sectors that will is capable of creating jobs as a panacea to solving the economic challenges of the country.

“We should be looking at growing the sector of the economy that has the capacity to create jobs. What are the sectors of the economy that can create jobs? The manufacturing sector is one of such sectors. For a country that has a population of about 180 million people, we should stimulate the economy so that entrepreneurs who are ready to put in their capital, put in their energy can create the needed value to boost this economy” he said.

If we have refineries in this country, we will have petrochemical industries, plastic industries and all the raw and refined materials from the refineries, why are we not looking at that. There are several other sectors like that, the agricultural sector, the solid minerals why are we not building the supporting infrastructures that will enable the refining of some of the materials that we produce to inject a lot of benefits of value addition to the country” he added