By Rosemary Onuoha

Mr. Victor Ogiemwonyi, an economic expert has advised the federal government to reduce the budgetary allocation for recurrent expenditure by over 40 per cent, stressing that the feat can be successfully achieved if only government is serious and sincere.

Ogiemwonyi, who is the Managing Director of Partnership Investment Plc, a member of the Nigerian Stock Exchange, stated that reducing the budgetary allocation for recurrent expenditure will not have any adverse or negative impact on the economy because money from recurrent expenditure have not been gainfully used to transform the economy in times past.

Citing Edo State as an example, Ogiemwonyi noted that the Edo State government cut down on its budgetary allocation for recurrent expenditure after Adams Oshiomhole came on board as the Governor of the state, and the action has paid off tremendously against the general belief that such action has the tendency to make the economy bleed.

The Partnership Investment boss also asked the federal government to do take some drastic measures regarding the security situation in the country as foreign investors are being scared away from the country and is consequently taking its toll on the economy.

He said “Due to the crash in stock prices, many companies listed on the stock exchange were forced to come down to their true value unlike in the past when most of them were overvalued. With their true values in place now, it is the best of times for foreign investors to come in, however, these investors are scared of coming in because of the security situation in the country.”

Ogiemwonyi said that security challenges are not good for the capital market because there is the tendency of the market being volatile. And when the market is characterized by volatility, investors are unnecessary cautious of coming in.

On the removal of fuel subsidy, Ogiemwonyi said that it could lead to high operating cost for companies which will invariably affect profit in the long run, as such most companies are likely to report losses at the end of the 2012 financial year.

Ogiemwonyi was however optimistic that year 2012 will witness some positive developments that will impact on the economy.

He said that the privatisation process that is going on in the power sector which will cause distribution companies to be sold to private establishment could lead to improved power situation in the economy and consequently employment generation.

He said “If the distribution companies are successfully privatized, power situation in the country will improve in 2012 and if power becomes available, there is going to be pep for economic advancement.”