The year 2019 is finally here and Nigeria seems to have carried over many lingering problems into the new year with great impact on the nation’s economy. First is the issue of deficit budgeting, which has become a continuous phenomenon in Nigeria’s annual budgets since 2013.
Government’s resort to deficit budgeting is because of inadequate revenue to cover its expected expenditure over the budget period. This year’s budget has a deficit of N1.86 trillion and the government will resort to borrowing from local and foreign sources to be able to fully execute it.
If the country cannot stop the smuggling of PMS to neighbouring ECOWAS countries, then there should be no subsidy for PMS in Nigeria. That way, the price of PMS should be the same across ECOWAS countries.
Secondly, government revenue, as a proportion of Gross Domestic Product, is at about six per cent. This is too low and far less than the ratio for other comparable developing countries like Kenya (19 per cent), India (21 per cent), China (28 per cent) and South Africa (28 per cent).
Consequently, there is a dire need for the Federal Government to aggressively strengthen its revenue diversification efforts to new sectors hitherto not covered and intensify collection from present clients. It must also ensure that the economy expands sustainably to enable it get more revenue. Except these measures are put in place, debt service may become a major issue for the country in the near future.
We also note that some of the economic policies that the Federal Government is implementing are not in the right direction and cannot give the country the sustained exponential growth that it deserves. These policies should be quickly amended to significantly lift the economic growth of the country. Among such policies is the exportation of crude oil to refineries overseas and then bringing the refined product back home, thus creating jobs in those countries and creating more unemployment in Nigeria. Government should put its refineries right and build new but smaller ones so that it can save money and also employ more people at home.
Another policy in the wrong direction is the Federal Government’s refusal to complete the Ajaokuta Iron and Steel complex in order to have enough steel at home for the various steel companies and save the foreign exchange being used in importing steel.
Yet, one other cause for worry is the wrong perception that private sector operators are greedy, selfish, and incapable of working with government towards the development of the country. This is faulty, baseless and without foundation, more so, that most of those in the economic management team are from the private sector.
In fact, the view across the world is that government alone does not have all the resources to develop the economy. In this 21st century, with globalisation and the need for large-scale funds to cope with infrastructure requirements, governments across the world are collaborating with the private sector to provide world-class infrastructure for their people. Nigeria’s case cannot be an aberration. Most of the projects for which foreign exchange are being sourced abroad by government that may later become debt traps for the country can actually be raised through Public Private Sector Participation. There is a need for attitudinal change by those in charge of the nation’s affairs. They must robustly embrace the private sector operators to develop the economy.
Next is the fuel subsidy policy, which is now gulping extra N744 million per day. We call for a rethink because it is actively promoting massive smuggling of the product to other ECOWAS countries. We condemn a situation where almost 50 per cent of the 60 million litres of Premium Motor Spirit, sent to the market per day by the NNPC, find their way to the neighbouring ECOWAS countries through smuggling. This is bad and the policy should be reviewed without any delay.
The implication of the PMS subsidy policy is that Nigeria is actually subsidising the cost of fuel used in those ECOWAS countries and actively promoting smuggling, which is not good for the nation’s economy. If the country cannot stop the smuggling of PMS to neighbouring ECOWAS countries, then there should be no subsidy for PMS in Nigeria. That way, the price of PMS should be the same across ECOWAS countries.
In addition to accelerating diversification of the economy to agriculture, solid minerals, manufacturing and other sectors, other issues that should call for government’s active attention this year are the need to grow the nation’s external reserves to an enviable level, reduction of government’s local and foreign debts and creation of robust collaboration between the public and private sectors for quantum leap in the growth of the economy.
We also call on the government to rapidly put an end to the spate of violent crimes across the country and the Boko Haram insurgency in the North East region to encourage investors to invest in the country. This will enable those living in the region to engage in economic activities, particularly in agriculture and contribute their own quota to economic development of the country.
