Experts urge more economic reforms for growth
To take the economy out of secular stagnation in 2018, experts have called on the Federal Government to deepen its structural and institutional reforms and attract more participation of Multi-National Enterprises (MNE).
According to them, the economic growth levels at the end of 2018 might not have any substantial impact on income nor address the bloated level of misery if policies that support Private Capital Formations and best address the dent in per capital income are not vigorously implemented by the authorities.
Presently, according to the World Bank, the Per Capital Income of an ordinary Nigerian stands at $2,177 after fallen from $2,665.16 and $3,221 compared to the previous and penultimate while present Purchasing Power Parity (PPP) stands at $5,740, far less than the previous and penultimate which were $5,900 and $5,740 respectively. Although it is expected that as growth pick up marginally at the end of 2017, PPP will move in the same tandem.
Regardless, the experts posited that growth might be too little to provide a scaffold for per capital income to rise, validating the existence of a secular stagnation.
Speaking at the Institute of Chartered Accountants of Nigeria (ICAN), Economic Discourse Series; themed: “2018 FGN Budget and Beyond” held in Lagos the Founder/Chief Executive Officer, Proshare Limited, Olufemi Awoyemi, who spoke on; “2018 Budget and the Scare of Secular Stagnation” said the effect of the 2018 budget would only be positive for few selected sectors/economic agents. The sectors, he said include; agriculture, construction, Information and communication technology, transport, and exporters.
“Government increased intervention in the agriculture sector, Increased spending in capital expenditure will blister the construction sector, Slashing requirements for exporters coupled with the export promotion policy of the present admiration, the continuous investment in rail and road among others are positive/ winner indicators for the economy”
“Oil prices have risen but the balance of stock crude is margin. Besides the cap to production will limit capital investment in the upstream, On-going rebalancing of debt portfolio by government will dent yield on their risk free asset which will therefore reduce the revenue mobilization, Increased attention in the solid sector remain a budding stage, the manufacturing, real estate and banks will be neutral or at losers end”, he said.
He noted that the filtering face value of the 2018 total budget from Naira depreciation and inflation, is put at the actual value of $23 billion stressing that the 2018 budget is 15per cent and 13per cent higher than 2017 and 2018 but far less than budget year of 2010, 2011, 2012, 2013 and 2014 respectively.
“Net spending will only contribute 5.2per cent of net capital income, relatively lower than 2014. Net government spending to PPP will be 1.9per cent, slightly higher than 2016 and 2017; which was 1.7per cent for those years. The effect of government spending as a contribution to net per capital at the end of 2018 will be largely flat. Maintaining the crawling peg coupled with an expansionary monetary policy puts monetary freedom largely neutral” he stated.
President of the Institute of Chartered Accountants of Nigeria, Isma’ila Muhammadu Zakari who spoke on the motive for the gathering stated that, as professional accountants members are relied upon to play a critical and strategic role in bringing the much- needed stability to business and society.
“There are very high expectations by businesses, employers, clients, regulators, other enlightened stakeholders and indeed even ordinary, “less informed” Nigerian citizens, on the Institute of Chartered Accountants of Nigeria and indeed all us Chartered Accountants to contribute our knowledge and skills not only in getting the Nigerian economy out of the woods, but in contributing to its sustainable growth and development.
“It is against this backdrop, that the Institute organised this ICAN Economic Discourse Series with the theme: “2018 FGN Budget and Beyond” to explore the 2018 Federal Government of Nigeria Budget aimed at analysing it and determining if its objectives of promoting recovery and growth of the Nigerian Economy are achievable”, he said.
The Chief Economist, Pricewaterhouse Cooper (PwC), Prof. Andrew Nevin who spoke on; 2018 Budget: Nigerian Economy and Perspectives on Global Economic issues declared that the fact that Nigeria’s parliament recently adjusted the oil price assumption to U$ 47/bbl in the process of approving the 2018-2020 expenditure framework, could impact the overall revenue projections, as well as the fiscal deficit for the 2018 budget.