By Adaeze Okechukwu
Lagos based investment firm, Afrinvest said the federal government has underperformed in the implementation of the Economic Recovery and Growth Plan (ERGP).
Chief Executive Officer/ Group Managing Director, Afrinvest LTD, Mr Ike Chioke stated this in Lagos, while presenting the firm’s outlook for the economy in 2018, titled: ‘The Nigerian Economy and Financial Markets 2017 Review & 2018 Outlook’.
The investment firm noted that although there have been notable improvements in the foreign exchange market , external reserves and equities market since the introduction of the Investors’ and Exporters’ Forex Window, the government has however failed to achieve the proposed key priorities of the four- year ERGP.
Chioke said: “The government came out with the ERGP last year to drive structural reforms. There have been some improvements at least the main anchor of the plan which is to stabilize the macroeconomic environment. We can give them a pass mark for this because they have been able to achieve stability in the foreign exchange (FX) market, external reserves are just shy away from $40 billion and the headline inflation moderated to 15.4 percent.
“They also indicated that they would work towards agriculture and food security- we can only give the government a half mark for that because there are still a lot of extraneous factors to be solved such as: storage cost , transportation cost and even the herdsmen attacks on farmers.
“In terms of transportation infrastructure, we have not seen any material improvement. The government cannot claim to have introduced a train line; as adding a few more coaches on an existing train line does not equate to improvement in transport infrastructure.
“On the energy side, we still see some concerns there. Fuel scarcity is back in Lagos following the difficulty that was experienced December last year.”
The power sector remains a sector with enormous challenges indicating an implementation lag.
“Lastly, there has been no material change in industrialisation, let alone focusing on SME. This underscores that the government has stepped gingerly on the major reforms that would have driven all of these improvement. They really have not been willing to take all requisite steps.”
Speaking on the challenges in the energy sector, Chioke noted that, “One of the biggest challenges for all the players in the sector is that the underpinning assumption that guides that Multi-Year Tariff Order (MYTO) structure has changed materially. When MYTO 2 was set in 2015, inflation was assumed at 13 percent, exchange rate was N178 per dollar. However, in 2017, inflation averaged at 16.7 percent with exchange rate at N305.7 per dollar. This has made electricity distribution companies, Discos, unable to supply power at an economic tariff structure. This is akin to the issue that we are facing in the downstream of the Oil and Gas sector. The landing cost of bringing Premium Motor Spirit (PMS) is at N178 per litre.