Nigeria needs to pay adequate attention to 10 priority areas, strengthen the disbursement and accountability framework of the Central Bank of Nigeria (CBN) funds among others to accelerate the country’s economic growth.
This was disclosed by Partner and Chief Economist, PwC Nigeria, Andrew Nevin, Chief Economist of Coronation Merchant Bank, Chinwe Egwim, Bismarck Rewane, MD/CEO, Financial Derivatives Company and Executive Secretary/CEO Ms Yewande Sadiku at the Nairametrics’ Economic Roundtable themed, ‘How to get out of this economic crisis,’ on Saturday, August 7, 2021.
Nevin pointed out that though the nation is rich, its dead assets are a major bane to its economic growth.
Dead asset refers to unregistered real property and is considered lost value because the landholder is unable to transfer or leverage the property to borrow or access capital.
The areas, according to the economist, are unlocking Nigeria’s vast dead assets to stimulate growth, Harnessing the power of the diaspora, Driving export growth through services. the need for growth to be spread across the country, and not just in a few urban centres, Improving on the country’s low investment and gross capital formation, and moving a thriving informal sector to the formal sector.
Others are Improving on the business environment, and ease of doing business, Addressing Nigeria’s big three distortions (exchange rate, power, and subsidies), Shifting focus from the Gross Domestic Product (GDP) lens to sustainable development goals, and prioritising climate change.
Nevin added that finding the political will to act and unlock Nigeria’s dead real estate assets will have a transformative impact on the lives of Nigerians.
As far as Rewane is concerned, the simple solution for Nigeria’s economic difficulty would be to stop doing dumb things, and start doing smart things as running a deficit is not inherently bad.
He explained that the fact that the government is running a fiscal deficit is not a bad thing in itself because it could be a countercyclical move, which is in line with the Keynesian school of thought, meant to stimulate growth in a recessive period.
“Budget is a tool of economic management,” he said, drawing attention to the use of budget deficit in the U.S to stimulate growth evident in their economic recovery and low unemployment figures.
“The question is whether your deficit is giving you the economic outcome or is just a deficit in numbers,” he said.
He added that fiscal policy debate is centred on the revenue generated, which may be good, but more attention should be called to the way the revenue is spent on improving the welfare of Nigerians.
“Emphasis should be on how the government revenue is spent and its impact on the people,“ he said.
“What is the impact of the spending on unemployment, literacy and multidimensional poverty?” he added.
When considering an appropriate fiscal policy measure, stopping unnecessary overhead and leakages in the Nigerian economy is important. This is to ensure that the objectives of fiscal policy are achieved.
Rewane also drew attention to the exchange rate, stating that Nigeria is moving in the right direction very slowly. Questions about the high exchange rate are not important but what should be the core issue should be the performance of Nigeria relative to its trading partners. “A market-determined exchange rate is possible,” he stated.
More importantly, mentioning the inevitability of cycle turns, he said Nigeria needs to learn more business cycle volatility and make the country less vulnerable to external shocks.
He concluded his remarks with a quote: “For Africa, Nigeria in particular, three things are important; Stop doing dumb thing, start doing smart things and start doing modern things.”
On the importance of capital inflow (investments) in driving economic growth, Sadiku explained that though global capital inflow has been under pressure since 2011 in Nigeria, the most populated black nation is not resting on her oars.
According to her, between 2011 and till date, the only year we experienced a hike in capital inflow was 2018.
She said, “Investors are very brave but the capital they carry is cowardly”. Capital goes where it is not threatened and where it is comfortable. The greatest antidote to the cowardice of investors-money is confidence.
“Government is doing some work on the ease of doing business in Nigeria but the decline has been going on for so long. The movement of capital is subject not only to the competitive advantage Nigeria has but also to comparative advantage. The job of looking for investors can’t be left for an agency but should be collective,
“Investors are concerned about security, corruption, exchange rate, policy instabilities and arbitrary regulatory functions and the government has been building blocks that need to be in place and there needs to be an acknowledgement that it will take a while.”