BY MOSES OBAJEMU, ADESOLA AFOLABI, BUKOLA ODUFADE & OLUWASEUN AFOLABI
Tweak fiscal, monetary policies for pro-market climate
Open up economy for growth
Rebirth of middle class
Immediate action on infrastructure
Full attack on unemployment
Full deregulation of oil industry
All eyes are now trained to May 29 when a president will be inaugurated to head up a government that would begin a four-year term and already, leading lights in the organised private sector (OPS), as well as some captains of industry in the financial services and energy sectors of the economy, who were sampled by business a.m. as the elections held over the weekend, have set an agenda for the president and his government.
They would like to see him put in place policies that will bring about the economic regeneration of the country, open up the economy, promote job creation, bring about a rebirth of the middle class, reduce poverty, create employment and promote savings within the first 100 days of the administration.
Muda Yusuf, director general of the Lagos Chamber of Commerce and Industry (LCCI), representing the OPS; Uche Olowu, president, Chartered Institute of Bankers of Nigeria(CIBN), for the financial industry, as well as Rotimi Fakayejo, chief executive officer, Enterprise Stockbrokers and David Andori, chief executive officer of Highcap Securities Limited, among other notable business managers, tasked the new government to immediately put in place policies that will transform the economy and make life better for the people.
On policy expectations, Yusuf said the new administration must come up with a very radical proposal to improve the country’s infrastructure in order to attract private capital.
“The new government must come with a very radical proposal to improve our infrastructure. When I talk about infrastructure, it cuts across all components, such as, our roads, ports, airports and power, because that is the biggest problem that we have in the economy today.
And to do that, the new government has to come with a programme to attract private capital to be able to complement whatever the government is putting on the table. This is because we need massive investment in infrastructure, not just by the government but by the private sector. If policies are right, private sector capital will then come,” Yusuf said.
On specific policies that are urgently needed now to bring about improvement in the economy, he said it is imperative to have a quality framework for public private partnership that will give convenience to investors.
“Another important policy is about funding. This has to do with monetary policy. We need to work around the current high interest rate. We cannot use the kind of funds we have in our banks today to finance infrastructure, because of the cost and the tenure. So, there has to be a monetary policy framework around that, to ensure we have the right kind of funding. Otherwise it will be difficult for domestic players to participate in infrastructure development,” he noted.
He also emphasised the need for policies around attracting foreign direct investments and foreign capital, as well as policies around managing exchange rate, as well as respect and sanctity for contractual obligations.
“This is because, infrastructural projects are long term projects and we do not want a situation where people cannot recoup their investment due to governance issues that cannot be rectified with an adequate court system. So as an institutional issue, we need a framework on respect and sanctity of contractual obligations,” Yusuf explained.
He is also advocating support for local industries through the provision of infrastructure, noting that industrialisation is about competitiveness, adding that competitiveness is about cost of operation which has infrastructure as a major component cost.
Yusuf called for the establishment of industrial parks to enhance productivity and enhance SMEs development. He said pockets of special economic zones will enable easy set up of SMEs and enable them pull resources together, either to import or export.
The government should also promote tax incentives for industries and offer concessions in terms of the tariffs on their incomes.
Reforms are also being pushed by the LCCI for the oil and gas sector, which Yusuf described as one of the country’s biggest headaches.
“Over 30 percent of our forex is being spent on importation of petroleum products and yet we have refineries that don’t work, and they don’t work because they are government owned refineries. We don’t have a public sector that is structured enough and wired to be able to manage such enterprises. Unfortunately, there are lots of arguments on privatisation of those refineries, despite the economy paying dearly for it.
“For every import made, we are exporting jobs and putting a lot of pressure on our foreign exchange as well as killing investment locally because the NNPC has taken over all the importation of petroleum products,” he said.
Also speaking to business a.m on the policies expected by banks and financial institutions in the country, during the government’s first 100 days in office, Uche Olowu, president of the Chartered Institute of Bankers of Nigeria (CIBN), said the basis and philosophy behind the 2019 election is hunger and serious unemployment.
According to Olowu, the first direction of the government during the first few days in office should be to tweak the fiscal and monetary policies that will enable a pro-market environment for the SMEs to thrive and create jobs.
“The end game is to improve the living standard of the people. People can’t get quality life if they are not gainfully employed, so it’s a ticking time bomb because the level of unemployment is very high,” said Olowu.
He advised the president and his cabinet to take as its first direction, the creation of a level playing field that will enable SMEs to thrive because of their unique characteristics of a high level of job creation.
Explaining the correlation between strong governance, rule of law and inflow of foreign direct investments (FDIs), Olowu recommended that the successful candidate at the polls ensures rule of law. This is because the country can’t grow on its own, as it requires a level of FDI, “which will come on the back of strong governance, sanctity of contract and rule of law.”
On how the government can enhance the financial intermediation role of the banking and financial institutions, Olowu noted that the economy must thrive to reveal the active nature of the banks.
“Banks’ financial intermediation role is being hindered, because the economy is not working as it is supposed to, Olowu said. “You don’t intermediate when the economy is not doing well. Banks may shy away from giving credit to some sectors because these funds may go due to the sectors not performing well. But in a situation where policies are implemented to galvanize the entire sectors of the economy, the role of the banks in taking monies from surplus to deficit sources will now be better appreciated,” he added.
Olowu further explained that unlocking the potential of the rural economy is very critical to addressing service delivery to the unbanked. He disclosed that the Shared Agent Network Expansion Facility being driven by the banks, mobile operators, the Central Bank and the CIBN can further revolutionise the rural economy, which can then drive the SMEs to flourish.
David Adonri, managing director of Highcap Securities and a seasoned stockbrocker who also spoke with business a.m. on policy expectations from the new government, explained that a major factor to propel the capital market and the economy is if the economy operates a market based economy.
Adonri clarified that the stock market crisis being experienced each time foreign investors pull out funds from the local bourse is as a result of a global phenomenon practised by both foreign and local investors.
“These investors come in and go out depending on the state of the economy and the state of the market. It is not something the government can legislate against, but what can be done to enhance investors’ confidence in the economy is to make the economy strong and this will make the capital market profitable,” he said, adding that once there are policies and programmes that make the economy strong, both the domestic and foreign investors will come in and retain their investments.
Rotimi Fakayejo, chief executive officer, Enterprise Stockbrokers Plc, spoke of the need for investments in the country to be enhanced by stabilizing savings
Fakayeje told business a.m. that the country’s stock market can be made more resilient if adequate and efficient infrastructure are in place, noting that it is the first thing that will create jobs.
“When jobs are created savings will be enhanced, and when savings is enhanced then investment can thrive,” he explained.
He however noted that as long as people are feeding from hand to mouth and uncertain about where the next meal will come from, it will be difficult to sustain growth in the capital market.
Paucity in infrastructure hinders small and medium enterprises (SMEs) Fakayejo said, referring to them as the bedrock and back bone of the economy.
“If power supply in not regular and farmers who are in Ibadan or Iseyin find it difficult to get their perishables on time to Lagos due to bad roads, suffer losses, how then can the SMEs grow, or employment opportunities created?” Fakayejo queried, lamenting the issue of a working and effective infrastructure being raised yearly without anything being done to correct the situation.
He said foreign portfolio investors (FPIs) will always come to Nigeria, and the market will sway northwards irrespective of the person inaugurated as president on May 29, but he said the sustenance of the upward movement is crucial.
Fakayejo thus advised that to make available a sustained positive movement in FPIs flows, the government needs to take as priority, the availability of adequate and efficient infrastructure.
He said this will also aid funds being more available for consumer spending, increase demand, profitability and production from local firms such as Unilever or Nestle, who can in turn employ more hands and lead to a general improvement in the economy.
Oil industry leaders expect deregulation of the downstream sector to be a priority for the new government. Olufemi Adewole, executive secretary, Depot and Petroleum Products Marketers Association of Nigeria (DAPPMAN) in a phone conversation with business a.m. said that “if any government comes in and they are bold enough to deregulate, that would be good for the industry.”
Mahmud Tukur, managing director of Eterna Oil plc, told business a.m. that his number one wish from the president is that on May 29, the day of inauguration, that he announces full deregulation of the petroleum industry, particularly the downstream sub-sector.
“When there is fuel scarcity people still buy fuel at high prices. Why don’t they just allow the market find itself? Let’s stop wasting money on subsidy. I pray that [come] May 29, 2019, that the president announces deregulation,” Tukur said.
He said the payment of subsidies means the country is subsidizing consumption, noting that it is not sustainable.
Ishaya Amaza, an energy law specialist and a senior associate at Aelex, a leading Nigerian law firm, wants the government to act on passed bills in the electricity sector, especially on the provision and contracting of off-grid electricity either through the eligible customer regime or embedded power generation.
“There is already sufficient framework for the generation and provision of power from other sources. The question is if these other sources will be able to, in supplying power to the grid, compete with comparably lower costs of generating power from gas. I believe that more focus should be made on the off grid generation and supply of power from other sources,” Amaza said.