‘How to sustain economic recovery amid uncertainty’
With earlier pressure which forced the economy into a contraction easing off amidst improved oil production, economic experts have advocated proper policy response and need to bridge infrastructural gap in various value-chains.
According to the experts, as improvement in oil price and production improves government finances and widen monetary maneuvering, it is important that the apex bank lean more on capital account ahead of the current account, by boosting foreign inflows
Indeed, experts at Economic Associates noted that the economy is on an upturn, even though the vacuum between cyclical pressure and the needed policy response still exist.
“Regardless there is a need for more proper policy response to the cyclical upturn: Such as diversifying external financing and prompt countercyclical spending. The presence of a poor road network is largely responsible for making agriculture largely uncompetitive.
“Therefore the ability to ensure that inputs and outputs leave their places of production to designated markets will be important so as to drive down cost, reduce wastage and also reduce economic exposure”, the experts added.
To make policy implementation effective and have positive impact, experts at PwC also urged government to remove bottlenecks limiting the gains from the private sector.
Latest report by PwC on promoting economic prosperity through an analysis of the state level business environment in Nigeria showed that discussions with the private sector indicate that there is great interest in investing at the sub-national level, but the bottlenecks in the business environment remain a challenge.
“Based on our assessment, challenges to doing business are broadly similar across all states. However, the magnitude of the challenges varies and depends on policy initiatives in each state and the implementation thereof, we have identified limited access to finance and inadequate infrastructure, especially power supply as major business constraints.
“In addition, we highlight the following constraints in the state level business environment as identified in the course of our study: Lack of clarity on registration procedures for new businesses, high cost of land acquisition and difficulty in obtaining land title, sanctity of agreements and enforceability of contracts, inadequacy of intra state transport infrastructure (road and rail), low level of automation of business processes within the civil service, lack of clarity of around investment protection laws, raw material shortages and weak Public Private Partnership framework”, the report added.
Though large scale mechanised agriculture and agro-processing were the major investment opportunities in agriculture as cited in all focus states for the study, major business constraints identified were poor organisation of farmers, inadequate processors, insufficient funding, limited agriculture research, poor infrastructure (power and roads from farm areas to markets) and limited market outlets for produce.
On his part, the SME Group Chairman of the Lagos Chamber of Commerce and Industry (LCCI), Jon Kachikwu chided government of its inability to live up to its expectations to businesses while expecting so much from operators.
Lamenting the difficulty in doing business in the country, he said: “Basically, the major challenges for businesses border on forex challenges, infrastructure, multiple levies and high interest rates.
We now have a situation where exporters cannot have access to their repatriated dollars, yet non-exporters can access theirs. People involved in the semi-processed industry have challenges repatriating their funds and that has affected volume of non-oil export and encouraged non-oil exporters to explore other means of doing businesses.
“Infrastructure, especially access to electricity remains a major challenge. Many of us pay taxes to use generators in your facilities as well as for access to potable water. Government officials across the various levels come to our offices to harass us for several levies. The challenges are multi-faceted and government is only paying lip service to its policies.
“The interest rates are equally not competitive for small businesses to operate in the country. There is no profitable business that can be done with 25 per cent interest rate. Government needs to live up to its responsibilities”, he added.
However, the Executive Secretary at Nigerian Association of Small & Medium Enterprises (NASME), Eke Ubiji, was of the opinion that things are already improving for operators in the formal sector following efforts by the Federal Government through the Presidential Enabling Business Environment Council (PEBEC) to remove critical bottlenecks and bureaucratic constraints in eight priority areas for doing business in Nigeria.
He said: “In the area of ease of doing business, we are aware that the office of the vice-president has started running a programme on SME clinic to create an interface with major stakeholders in the value-chain (public and private sector). For instance, the Corporate affairs Commission (CAC) has reviewed its processes to make business registration very easy, while the Federal Inland Revenue Service (FIRS) is working to address the issue of taxation.
“The FIRS had last year, waived penalties on taxes for small businesses to encourage compliance and make things easier. There are still challenges in the area of access to finance. However, with the new Development Bank of Nigeria (DBN), we hope that with the commencement of the bank’s operations, access to finance will be addressed”.
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