By Emeka Anaeto, Economy Editor
Amid concerns in the political sphere over the request for emergency powers on the economy by the presidency through a proposed executive bill, the private sector operators appear united by contemporary hardship and are in support of drastic and urgent economic measures. However, they were still unsure what to expect in the bill.
Sources close to the economic team under the office of the Vice President, Professor Yemi Osinbajo, told Sunday Vanguard at the weekend that “some politicians are expressing misgivings over alleged plans to give the president sweeping powers over key economic assets of the country which could be misused, while others are just mounting opposition because they are political opponents of the presidency”.
While declining to give specific contents of the proposed economic emergency powers bill, the source explained that “when the bill is ready it will answer all the questions and address all the misgivings being expressed against it”.
He also declined to give information on when the bill would be presented to the National Assembly, but hinted that work has almost been completed and should be ready anytime this week.
However, a cross section of private sector operators and financial institutions’ economists have told Sunday Vanguard that the troubles businesses have been facing in the last one year would force them to accept any arrangement that would bring expedited sanity and stability to the commercial sector.
According to an official of one of the first generation banks who pleaded anonymity, “the proposed bill may be controversial in some political considerations but the private sector operators would align with positions that seek to promote the economy by helping businesses to thrive.
“In our bank, we feel the heat of economic downtown just like in other businesses and since we cannot stop or influence politicians in their fields, we rather concentrate on pro-business issues”.
Also speaking to Sunday Vanguard on the issues involved, a senior analyst with CardinalStone Partners Limited, a Lagos based investment house, Tiffany Odugwe, explained that “the Nigerian economy has been adversely affected by external shocks, in particular a fall in the global price of crude oil. This has resulted in a slowdown in economic activities which have been aggravated by the inadequate supply of foreign exchange.
“Faced with the prospect of an economic collapse, the President is seeking emergency powers to overhaul the economy and set it on the path to growth. Recognising the slow pace of reforms in Nigeria, the emergency bill seeks to cut through bureaucracy to speed up procurement processes, easily redirect existing budgetary allocations to urgent projects and amend UBEC (Universal Basic Education Commission) laws in favour of state governments.
“If passed, we expect these measures to boost the economy; however, FX remains a challenge and may limit the overall impact of this initiative”.
But the chief economist at FSDH Merchant Bank Limited, Mr. Ayodele Akinwunmi, disagreed to any form of additional powers to the president whether emergency or not. He told Sunday Vanguard yesterday that what the current administration needs is to communicate its plans coherently to the private sector and make the private sector to buy into it.
He said the government also needs to demonstrate to the private sector that it will honour any term of its agreement, adding that once there is improved confidence in the activities of the government, private sector will take investment decisions that will lift the economy from recession into positive growth.
Explaining his position further, Akinwunmi stated, “I think the reasons we are having economic contraction in Nigeria today can be linked to the following: the neglect of the power sector; the neglect of the critical infrastructural development in Nigeria which can support the growth of the critical sectors of the economy; the neglect of agriculture for cheap money from oil. There is no doubt the country has a comparative advantage in agriculture but the sector was neglected for oil; exporting raw materials without adding value on the raw materials in Nigeria before they are exported, and; huge corruption”.
In concluding he stated, “I do believe that these factors can be addressed within the power that the president has today”.
For Razia Khan, Africa chief economists at Standard Chartererd Bank, “anything that can be done to speed up decision making and boost business environment will likely be seen as positive.
“From this perspective the focus of getting government agencies (including consular offices) to work more efficiently will be a good thing. From this perspective a more business friendly environment (If that is what is being suggested) will be a positive. But in order to succeed it will probably require other assurances on policy certainty.
“Shortening the procurement process in order to speed up the pace of capital expenditure is a good idea provided all the right safeguards are in place. With Q2 (second quarter 2016) GDP possibly confirming a technical recession for the Nigerian economy further stimulus is much needed. Accelerated investment spending is required if the economy is going to avoid a full year contraction”, she stated.
In his own reaction, Robert Omotunde, the chief economist at Afrinvest West Africa, another Lagos based investment house, said, “we would perhaps also like to see the new bill as an initiative that should be sustained going forward and not just for the purpose of reflating the economy alone”.
The organised private sector, OPS, notably, the Manufacturers Association of Nigeria, MAN, the Lagos Chamber of Commerce and Industry, LCCI, have anchored their support for emergency economic measures, not necessarily overriding political powers, on the precarious situations in the various sectors of the economy.
Muda Yusuf, Director-General, LCCI, said: “The sense of urgency demonstrated by President Buhari on the need to fix the economy should be acknowledged. It is a welcome development. Although the details of the Economic Stabilization Act are yet to be released, a few indications of the government’s thinking have been reported.
“In my view, some of the issues can be dealt with within the authorities of the executive; while others need legislative actions. I agree with the proposal to fast track the procurement process in order to quickly activate the stimulus spending by government. This should, however, be done without compromising the integrity of the procurement process.”
Reacting, Dr. Frank Udemba Jacobs, President of MAN, said: “It’s a step in the right direction. Something drastic has to be done by the government to rescue the economy from total collapse”.
The bill, when finally packaged, is to be entitled, “Emergency Economy Stabilization Bill 2016” and is being proposed to help stimulate the economy.
Objectives of the action plan on the economy which may be technically in recession include, but may not be limited to bridging the procurement process to support stimulus spending on critical sectors, and allowing virement of budgetary allocations to projects that are urgent, without going back to the National Assembly.
Others include amending certain laws such as the Universal Basic Education Commission (UBEC) Act, so that states can easily access cash trapped in the accounts of the commission; and embark on radical reforms in visa issuance at Nigeria’s consular offices and on arrival in the country, to improve the ease of doing business in the country.