Sunday, 28th May 2023

‘Govt must stabilise economy for next administration’

By Gloria Nwafor
10 January 2023   |   4:00 am
On policy recommendations for the incoming government, we propose that it must demonstrate strong political will and nationalistic zeal to not only unravel the mystery surrounding the fuel subsidy on which over N4 trillion was expended in 2022 but also name and prosecute those found to have deprived the nation of huge developmental funds.

Director-General of NECA, Wale Oyerinde

As the general elections draw near, Director-General of the Nigeria Employers’ Consultative Association (NECA), Adewale-Smatt Oyerinde, in this interview with GLORIA NWAFOR, tells the Federal Government to ensure economic stability and create a foundation for economic renaissance for next administration.

Possible policy thrusts of next administration 
On policy recommendations for the incoming government, we propose that it must demonstrate strong political will and nationalistic zeal to not only unravel the mystery surrounding the fuel subsidy on which over N4 trillion was expended in 2022 but also name and prosecute those found to have deprived the nation of huge developmental funds. The next government’s priorities should include, ensuring macroeconomic growth and stability; getting the nation’s refineries to work and removal of the fuel subsidy; ensuring a fair and just system of taxation, which must include the harmonisation of all taxes across the federation; alignment of the fiscal, monetary and trade policies to stimulate growth and increase investor’s confidence; review the national security architecture as this will have a ripple effect from a reduction in the loss of lives, high cost of transportation and food inflation, among others. Government must give more attention to trade and non-oil exports as an alternative for foreign exchange earnings, develop a more robust monetary policy to defend and increase value of the Naira, be deliberate in creating plans to reduce bourgeoning debt profile, facilitate a more conducive environment for businesses and ensure an all-inclusive growth across all sectors of the economy. While it is obvious that the road ahead will not be easy, it is expected that the current government will refocus its energies on ensuring economic stability and creating a foundation for an economic renaissance, post-May 2023.

Challenges hindering businesses to create jobs 
It will not be totally out of place to say that this government would be leaving a legacy of taxes, levies and fees for the Organised Private Sector (OPS). The quantum and rate of taxing organised businesses has been quite unprecedented in the last few years. At the last count, organised businesses were made to pay over 50 different taxes, levies and fees (both legally and illegally). To further burden the already over-burdened organised businesses, the National Assembly passed the Finance Bill, increasing the Tertiary Education Tax (TET) rate from 2.5 per cent to 3 per cent. It is worrisome that an increase was implemented in 2021 through the Finance Act 2021. This singular increase effectively raised the Corporate Income Tax (CIT) to about 36 per cent, which undoubtedly, comparatively, is one of the highest rates in the world. All these not only created enormous challenges for businesses, they also hindered them from maximising their full capacity to create jobs and wealth. As we progress into the year, the outgoing government must all within its powers to ensure some level of stability in the polity. The efforts at reducing oil theft should be stepped up. The government must take a second look at the challenges of the multiplicity of taxes and the introduction of new ones. It will be counter-productive to continue to increase taxes and invariably burden many businesses out of existence. While we cannot control global events that affect us, we can do well to resolve the many contradictions inherent in our polity. In 2023, the ripple effects of the Russia-Ukraine war will continue to be felt as global fiscal tightening will continue with consequential effects on Nigeria and other struggling economies. Energy challenges will continue in Europe with Russia weaponising gas and food supply. The removal of fuel subsidy in Nigeria could trigger protest from organised labour even as the purchasing power of average Nigerians continue to dwindle due to increasing inflation and high unemployment rate. It is also expected that businesses will face more challenges as the quest for sustainability and not competitiveness continues. The incoming government must be bipartisan and decisive in addressing the myriad of challenges that currently stifle the growth of businesses and invariably national development. The challenges are huge, but with the right policies and people at the helm of different Ministries, Departments and Agencies (MDAs) and with close collaboration and partnership with the OPS in policy design, implementation and monitoring, these challenges are surmountable. With the National Bureau of Statistics reporting over 33.3 per cent unemployment rate and over 63 per cent of persons living within Nigeria, about 133 million people, are multi-dimensionally poor, the best that any government can do is to continuously facilitate a favourable environment for businesses to thrive.

Issues that dominated business environment in 2022
The year 2022 was unique given the many issues that characterised it. These issues were local and peculiar to Nigeria, while others were global, with dire consequences for us as a nation. As the nation struggled to recover from the COVID-19 pandemic, which inflicted leadership and sustainability challenges across the globe, businesses were forced to operate under excruciating circumstances, made worse by inherent systemic contradictions. Some of the other issues that organised businesses struggled with included energy costs, the multiplicity of taxes, unavailability of forex for productive endeavours, insecurity, spiraling inflation, rising debt stock of government and many others. At the end of 2022, businesses had spent over $22 billion on alternative energy sources. The price of diesel reduced from an average month-on-month retail price of N289.37 in December 2021 to N288.09 per litre in January 2022, indicating a decline of 0.44 per cent. However, as at December 2022, the price had skyrocketed to over N800 per litre. While many organisations finalised their operating budget based on the estimated diesel cost of about N288 per litre, they were operationally compelled to spend 500 per cent above the budget amount.

Bright spots in 2022
This included the strides of the Industrial Training Fund (ITF) -NECA Technical Skills Development Project (TSDP). The Project, a model Public-Private-Partnership in the development of critical skills for industrial development started over 10 years ago. In 2022 alone, notwithstanding its constraints, the project graduated over 10,000 skilled individuals. This effort is in furtherance of the fulfillment of the mandate of the ITF and NECA. The project frontally contributed to the reduction of the increasing rate of unemployment with social consequences.

Also of note is the passage of the National Health Insurance Act, which made health insurance compulsory for all Nigerians and the renewed efforts to curb oil theft, which was better late than never was also a bright spot. While we have expressed our utmost surprise at the increase in Tertiary Education Tax (TET) from 2.5 per cent to 3 per cent in the Finance Act, 2022, we commend the effort at infrastructural development, especially the rail in many parts of the country. While more could have been done given the huge borrowing, purportedly for infrastructural development, the 2022 efforts needed mentioning. We applaud the reversal of the planned increase in excise duty rates on tobacco, spirits, alcoholic and non-alcoholic Beverages as part of the 2023 Fiscal policy measures and tariff amendments, after several advocacy efforts. Sticking to the already approved 3-year Roadmap, which commenced on June 1, 2022, remained the most honourable thing to do. A more consultative approach and inclusion of the OPS in the policy design and formulation process will serve the nation better, going forward. The protracted ASUU strike, which caused a major gloom in the education sector was also resolved. It should be noted that Education remains the bedrock of any Nation’s development, thus, the resolution of the crisis should be celebrated and commended. Notwithstanding the many glitches between the fiscal and monetary authorities, we note the efforts at stabilising the Naira and achieving other macroeconomic growth. Our concern remained the seeming non-consultative approach of these authorities. As critical stakeholders in the Nigeria project, we urge that more effort should be made to involve the OPS in the process of policy formulation, implementation and evaluation.