Private sector cautions Federal Government on 2020 budget cut
Organised Private Sector (OPS) has cautioned the Federal Government over slash in 2020 budget by N1.5 trillion.The group, under the aegis of Nigeria Employers’ Consultative Association (NECA), urged the government to ensure that the reduction comes from recurrent expenditures rather than capital expenditures.
While OPS commended the government’s efforts at protecting Nigerians and also keep economic activities going, the group said it was time for government had deliberately curb wastes and institutionalise a roadmap for the rapid diversification of the economy.
Specifically, they maintained that expenses that will not contribute to national development should be focal points at this time, even as they urged that greater effort should be made to mobilise Nigerians to support their efforts.
Director-General of NECA, Timothy Olawale, who also commended the Central Bank of Nigeria (CBN) for the bold step taken to aid the survival of businesses and the economy at large through the fresh N1.1 trillion interventions for critical sectors, said the step is consistent with global economic practices and would help the economy to stabilise, while ensuring improved economic activities.
While giving insights on areas where the stimulus should be deployed, the NECA boss averred that government should consider funding for infrastructure projects that would improve access to markets for farmers and SMEs as well as reduce the operational costs to increase non-oil exports.
According to him, the real sector should also be urgently supported to improve capacity utilisation and create jobs.From recent realities, he said the need to support the health sector; especially local drugs manufacturing companies and health laboratories should be taken into cognizance.
He said: “The impact of the coronavirus across over 100 countries have affected global supply chains, as well as demand for goods and services. Commodity prices have also been affected, as crude oil prices have plummeted. The stimulus by the CBN, if strategically deployed will not only keep the wheel of economic activities going but will also protect jobs and stop the slide in recession.”
Meanwhile, on the reduction in price of Premium Motor Spirit (PMS), otherwise known as petrol to N125, NECA urged that government should allow the international price of crude to determine the prices of the product in Nigeria, and the template should be flexible to accommodate changes as it might occur.
The association expressed that the price of petrol and other petroleum products could have been much lower, if the pricing template had been rigorously followed and applied.
They cautioned that the shortfall in oil prices should not be a licence to further mortgage the future of the nation with borrowing as the Budget is already struggling under the weight of debt service.
They also called for caution, noting that Nigeria operates a mono-economy hinged on oil and urged government to ensure a total eradication of the subsidy regime in whatever form in the country.
DG, NECA said: “Government should address the issue of subsidy and ensure its total eradication. Energy consumption subsidy is any policy by the government that is aimed at reducing the price of energy consumed by citizens relative to what the price would have been in the absence of such policy.
“The regulated price arguably will reduce the consumer price index (CPI) and make it easy to regulate the level of inflation. Subsidy often leads to increase demand for PMS due to over use and waste arising from reduced price of the product, creating unnecessary shortage of supply.”
The NECA boss also urged government to provide leadership and direction in diversifying the economy, stating that the nation cannot hinge its destiny on the price of a commodity in which it has no control on the pricing.
“It is time to deliberately create a roadmap for a rapid diversify of the economy away from oil. We need actions; the government needs to create avenues for more economic activities to happen like diversifying the tax revenue of the government beyond oil,” he said.