Expectations as politicians warm up to private sector
The relationship between politics and the economy cannot be ignored, especially as elections draw nearer. Apart from the COVID-19 pandemic, the impact of politics and policies on the economy can be far-reaching. With today’s businesses having to do more with less, alongside ravaging inflation, it is time to hold tough discussions with political candidates on the future of the economy. FEMI ADEKOYA writes.
Every government faces tough decisions about the appropriate measures to be taken whenever there is a crisis. For Nigeria, it has been extremely tough biting the bullet in relation to available fiscal policy options.
Leaving the status quo means businesses have to deal with uncertainty and struggle to survive. While fiscal decisions lag, the lingering issues of insecurity, inflation and foreign exchange scarcity create more concerns for stakeholders.
Governments try to pump up the economy before elections, so that so-called political business cycles create ebbs and flows of economic activity around elections. By the same token, economic conditions have a powerful impact on elections.
To ensure that the business environment is not left behind in political decisions that may affect their existence, the private sector decided to engage politicians on plans for operators.
According to the organised private sector, the business environment remains challenging, hence the need to engage political actors at different levels on their economic blueprint.
President of the Lagos Chamber of Commerce and Industry (LCCI), Dr. Michael Olawale-Cole, said while the chamber is non-partisan, it is however interested in the economic agenda of the candidates and their plans to make a better Nigeria in the next dispensation.
He said the chamber is aware of the overshadowing effect of politics over economics in managing the Nigerian economy and would therefore wish to contribute to the setting of a new economic order that can take the economy from the doldrums.
He highlighted that new policy directions, institutional reforms, and sound governance are critical to creating a new economic order in Nigeria.
“For the past 16 years, LCCI has organized sessions with politicians in every election cycle. This is part of its public policy advocacy to provide a first-hand opportunity for presidential candidates of the leading political parties to speak to the organized private sector on their economic blueprint for Nigeria. All patriotic Nigerians would like to know the plans and intentions of a future President and this will most likely enhance the choices people make at the polls.
“Beyond economic management, we understand that countries rise or fall through leadership and governance. Nigerians have another opportunity to decide who leads them in the next four years from 2023-2027,” he added.
He bemoaned that the Nigerian economy has been inundated with myriads of problems among which are oil theft, an unsustainable subsidy regime, insecurity, and a foreign exchange crisis, but however stated that despite all these challenges, the prospects and future remains bright for the Nigerian economy.
“Nigeria is the largest economy on the African continent with an output in the region of almost half a trillion dollars in nominal terms. The country is also hugely endowed by human and natural resources.
“We need to pay special attention to education, as this will determine the future of our youths. Your Excellency, Nigerians would like to know your plans to address these issues as well as your economic blueprint for the nation,” he said.
On its part, the Nigeria Employers’ Consultative Association (NECA) expressed concerns about the numerous taxes imposed on the private sector.
The employers’ body, also revealed that, currently, at the National Assembly, there are over five different Bills, which also seek to impose various taxes and levies on businesses, in addition to the notable taxes and levies which are of general application, such as The National Information Technology Development Levy (NITDA Levy), Education Tax (or Tertiary Education Tax), National Social Insurance Trust Fund (NSITF), Company Income Tax (CIT), Television and Radio License Fee, Local Content Levy and Stamp duty, among others.
The Director-General of NECA, Adewale-Smatt Oyerinde, lamented that the action will not only reduce the competitiveness of the industries but will also increase the cost of doing businesses and further reduce the potential sustainability.
Articulating factors that were already crushing the real sector, Oyerinde, said while debt and paucity of revenue are challenges that are acknowledged, businesses should not be made to suffer the lack of proper economic planning and political will that have pervaded successive administrations.
He said it was strange that at a time when the government should do all that was necessary to protect businesses from total collapse and reduce the increasing unemployment rate, there are proposals to further increase excise tax on select products, including spirits, alcoholic and non-alcoholic products.
Presidential Candidate of the Peoples Democratic Party (PDP), Atiku Abubakar assured the private sector of partnership in addressing the lingering economic concerns.
“We shall incentivise with regulations and tax incentives for a consortium of private sector institutions to establish an infrastructure debt fund of an initial carrying capacity of $20 billion. This will be for the financing and delivery of large infrastructure projects across all sectors of the economy.
“We will establish an infrastructure development unit in the Presidency with a coordinating function and specific mandate of working with MDAs to fast track and drive the process of infrastructure development in the country”, he added.
On debt accumulation, he said he would be more strategic and more circumspect, saying that the revelation by Nigeria’s Finance Minister in July this year that the cost of servicing Nigeria’s debt has surpassed the federal Government’s retained revenue by N310 billion in the first quarter of the year is very worrisome.
He said he would take immediate steps to slow down the rate of debt accumulation by promoting more Public Private Partnerships (PPPs) in critical infrastructure funding and identifying more innovative funding options.
The PDP Presidential candidate said he would also review the current utilization of all borrowed funds and ensure that they are deployed more judiciously.
“Specifically, our government will ensure that all borrowed funds are for priority infrastructure projects that would generate income, boost output, and put the economy on the path of sustainable growth. I will also review the country’s debt strategy by focusing on concessional and semi-concessional sources with lower interest rates and relatively long-term maturity,” he said.
He advised that the government must reduce the issuance of short-dated debt instruments.
He added that his administration if elected would undertake far-reaching institutional reforms to engender efficiency and reduce administrative costs
“I will introduce reforms that will make the institutions you interface with more efficient. I will streamline their functions and ensure that they focus on their core responsibilities of policy coordination, facilitation and standardization and enabling the appropriate legal and regulatory framework for rapid economic and social development
He noted that the private sector is made to deal with too many federal agencies and actors who often make conflicting policy pronouncements as they interact with investors and businesses, pointing out that many of the agencies operate in a typical civil-service style, with cumbersome processes and delayed decision making or implementation.
He said his administration would support the private sector to drive growth and establish a strong partnership in investing in infrastructure, in creating jobs and income and in the fight against poverty.
“We will listen to the private sector more. Understanding the private sector and securing their buy-in when policies are designed will determine the success of our economic growth and development agenda. Through regular dialogue with the private sector, we will build consensus, improve trust between us and make new reform initiatives easier to implement and sustainable.
“We will restore investor confidence in the Nigerian economy to take risks and invest capital by providing more clarity, coherence, and consistency in policy formulation. Nothing could be more threatening to investment flows than an environment that is full of policy flip-flops. Our monetary and fiscal authorities will be better coordinated and shall ensure a stable macroeconomic environment with low inflation, stable exchange rate and interest rates that will be supportive of businesses’ quest for credit.
“We will allow CBN the independence to pursue its mandate but ensure that such policies are not detrimental to Nigeria’s quest for FDI and to Nigeria’s long-term growth. For example, we will push for a foreign exchange policy that encourages capital inflows and makes capital outflows less attractive to the investors,” he averred.
He lamented that Nigeria under the APC-led government has consistently run-on budget deficits since it came to power in 2015, stressing that these budget deficits are often above the 3 per cent threshold permissible under the Fiscal Responsibility Law.
“Ironically, this has increased the government’s appetite for more debts now more than N50 trillion (if you add AMCON debts and Ways and Means),” he said.
He noted that for the first time in Nigeria’s history, the federal government has paid more in debt service than it earned.
He said capital has taken a flight as policy incoherence and flip-flops combined with internal insecurity continue to pose a significant risk to investment and thus output growth.
“They leave potential investors confused and weary of the Nigerian economy. Foreign Direct Investment (FDI) has progressively declined since 2019. It fell sharply from $8.5 billion in Q1 2019 to $5.8 billion in Q12020 and $1.9 billion in Q1 2021. We have lost our esteemed position as Africa’s preferred investment destination to less endowed nations!” he said.
The presidential candidate of the Labour Party, Peter Obi said his goal is to get Nigerians to trust the government, adding that he was concerned about the Sustainable Development Goals but hoped to focus on areas like food and security, establishment of the Rule of Law, removing Nigeria from oil independence, expanding physical infrastructure, as well as human capital development.
Obi also planned to improve the nation’s foreign policy to restore Nigeria’s strategic relevance.
“These are things that are critical and that we want to do. Our goal is to bring back the trust of people in governance.
“We must show that good governance is aimed at providing needed services to the populace and receiving constructive criticism and moving forward. Securing Nigeria would require concerted efforts, and a shift from coercive to consensus approach,” he added.
Politicians need votes from the people who decide elections. The decisive or pivotal voters vary with a country’s electoral institutions and social divisions. For the private sector, who form the bulk of the country’s tax base, the election is a powerful tool in not only changing governments and societies, but determining the trajectory of the economy for the next four years.