The nation’s economy is presently in need of fiscal direction, removal of fuel subsidy and transparent channeling of the proceeds to infrastructure and social investments, as well as competitive pricing of electricity tariff to drive investment and boost economic growth.
Though the assessed needs appear to be hard choices, the research by FSDH Merchant Bank Limited, showed that it will only take determination and transparent implementation of the withdrawn subsidy funds to bring the benefits to all.
Available figure from the Central Bank of Nigeria (CBN) shows that Nigerians spent a total of $33.04 billion between 2009 and 2018 as personal travel expenses on education and health related issues, which were bothered on human capacity and infrastructure.
The bank’s Head of Research, Ayodele Akinwunmi, while presenting the monthly economic and financial markets outlook for June in Lagos, at the weekend, said the Next Level growth and development agenda of government would remain idle without the immediate appointment of the cabinet.
The appointment, with their respective portfolios in this month, will enable them start the implementation of the approved budget, while unlocking investments that are on the sidelines.
He explained that there are more compelling reasons now than before for the government to remove the petroleum subsidy and channel the money into some other social intervention programmes that have direct impacts on the poor in view of the low government revenue.
“We also recommend an adjustment to the electricity tariff to drive investments into this critical sector. This will also accelerate the growth of small and medium scale businesses in the country that are handicapped because of epileptic power supply and the high cost of running on generator and other more expensive sources of power.
“There must be deliberate efforts and strategies to improve the quality of education and healthcare delivery in Nigeria, as this will improve productivity and boost economic growth and development of the country. Such efforts will also help the county to conserve the foreign exchange,” he said.
According to him, the increased demand pressure in the foreign exchange market from education and health-related tourism could have been saved if the sectors in Nigeria are well funded.
Akinwunmi also pointed out that there was need to develop the solid minerals sector to expand the revenue base of the country and also earn more foreign exchange, reducing heavy dependence on oil.
“We recommend a model where government will partner with the private sector to invest in exploration in the sector and after gathering adequate data on reserves, government can sell mining licence.
“Development of the solid minerals will also help boost the economies of the states of the federation since all of states in the country have at least one solid mineral,” he said.
Speaking on the nation’s debt challenges, he advised that to manage the high interest expenses on the debt relative to the current revenue, it should consider issuance of zero-coupon bonds.
But as a form of transparency, such bonds and other bond issues going forward, should be tied to specific projects that have economic value addition to the country, with a mechanism to ensure that debt contracted is used for intended projects.
Similarly, the research, according to him, suggested that government considers crude oil swap arrangements with construction companies, either local or foreign, for road or rail construction across the country.
“This will help to accelerate the development of road and rail transportation in the country and also reduce direct government expenses on such projects. Eventually, such projects will improve competitiveness of the Nigerian economy.
“Government should engage Nigerians in diaspora and sell investments opportunities to them, both debt and equity in government instruments and entities in order to drive foreign remittance inflow,” he said.
The expert explained that the move to engage the Diasporans has become necessary as the country was among the lowest growth nations in the foreign remittance inflows between 2008 and 2018, according a data from the World Bank.