Rewane advocates debt restructuring to revive ailing economy

To bail out the nation’s economy from financial distress, experts have stressed the need for the government to urgently embark on policy measures that would restructure existing debts and extend the repayment period of its credit obligations.

Managing Director/Chief Executive Officer of Financial Derivatives Company, Bismarck Rewane, while addressing stakeholders at a forum held in Lagos, yesterday, said the government needs to lessen its debt burden by restructuring and seeking other options to enable payment flexibility.
Speaking on the theme: ‘Corporate Resilience – Economic Recovery From Unforeseen Pandemics’, Rewane said another factor that would sustain the nation’s economic growth is to ensure that the government deploys funds approved for developmental projects for the purpose intended.
“Government must restructure the debt, reschedule it and seek better terms for repayment. You have to be honest with yourself and use the money for the designed purposes; you cannot borrow to steal.

“The trust deficit is there, it is a cumulative pattern of bad behaviour, which has left us where we are in the last 60-70 years. It has become a pervasive nature of our leadership and followership; they have come to accept falsehood as part of Nigeria’s DNA. We must change that and it has to start with some drastic steps,” he said.

Rewane disclosed that economic growth is expected to remain low throughout 2023 to 2027 forecast period, owing to limited fiscal space, high infrastructure deficit and monetary tightening.
Therefore, he stressed the need for the government to rev up investment in telecommunication services, infrastructure and financial technology to drive the economy into a perfect market.
Rewane described corporate resilience as an integral part of strategic building, noting that most African countries, especially Nigeria, had structural problems which were exacerbated by COVID-19 induced shocks.

With global shocks becoming imminent and inevitable, he urged corporates to build contingent capital and embark on revenue diversification as buffers for unforeseen pandemics and shocks.
He also listed increased investment in work-from-home facilities, technology and information infrastructure, timely updates on business plan and strategies to reflect economic realities, enhanced supply chain network through increased digitisation and investment in backward integration to protect businesses from exogenous shocks as growth-induced factors for corporate organisations.

Furthermore, he underscored the need for institutions to prioritise environmental, social and governance (ESG) goals in order to attract investment and drive equitable growth in the long run.

According to him, small and medium enterprises (SMEs) with a strong ESG focus will be in a better position to attract interest, drive sustainable growth and garner support for effective regulatory compliance.

On multiple taxation, Rewane said: “ We must be more efficient in the collection of taxes but also reduce the number of taxes. The burden of tax is a problem, the lower the tax rate, the more compliant people are going to be.

“Therefore we should go more on tax efficiency of tax with more credibility in leadership and policies. If we are honest to the people, people will be more willing to pay taxes than if we are dishonest.”