The Centre for the Promotion of Private Enterprise, CPPE, has urged the Federal Government of Nigeria, FGN, to ensure a better macroeconomic management framework to stabilize the exchange rate.
The group made this known while reacting to the Nigerian Economy At 61 through its Founder/CEO, Muda Yusuf, who is also an Economist and Former DG , LCCI.
“There is a need for urgent steps to be taken to ensure a better macroeconomic management framework to stabilise the exchange rate, eradicate the challenge of illiquidity in the foreign exchange market and to stem the current depreciation of the Naira. It is imperative to have urgent reforms in the foreign exchange market with greater focus on supply side strategy. There is need to review the current disproportionate emphasis on demand management of the foreign exchange market”, he said.
“So also strengthening strategies to attract private sector capital to compliment government financing of infrastructure. Need to reduce the level of debt financing especially the reliance on commercial debt to fund government operations. Public debt is already at an unsustainable threshold. Steps should be taken to attract foreign exchange through a strategy of ensuring new investment opportunities to stimulate foreign capital inflows into the economy. We should be seeking more equity capital than debt capital”, he added.
Speaking further, he said, “There is need to review the country’s trade policy to support investment growth and investment sustainability. Tax policy must support investment not become a disincentive to investment. The security situation which has continued to deteriorate needs to be urgently addressed in order to create more investors confidence. There should be greater emphasis on quality intelligence in the war against terrorism”.
“The Oil and Gas Sector reform which is now being anchored on the Petroleum Industry Act, PIA, should be accelerated in order to ensure the unlocking of value in the oil and gas sector, particularly the gas sector. Institutional reforms are necessary to ensure that the regulatory institutions have better disposition to support the growth of investment and focus less on the generation of revenue.
“The international trade process needs to be reformed to prioritise trade facilitation. The current obsession for revenue generation is hurting the international trade processes and impacting adversely on domestic and foreign investment. Therefore, the orientation of the Nigeria Custom Service, Nigerian Ports Authority, the shipping companies and the terminal operators and the security agencies at the ports need to change in favour of an investment friendly international trade processes.
The country’s macroeconomic management framework continues to pose serious challenges to investors in the economy. This situation has been further compounded by the shocks and disruptions inflicted by the covid-19 pandemic.
He noted that the macroeconomic management challenges have manifested in the following ways over the years which he listed to include: weak and depreciating currency, high inflationary pressure, high debt profile, exchange rate volatility, liquidity crisis in the foreign exchange market, increasing fiscal deficit and acceleration of money supply growth following the rising CBN financing of deficit.
“There are also profound concerns around investment climate issues. High infrastructure deficit, cargo clearing challenges which has continued to worsen, weak productivity in the real sector largely as a result of infrastructure conditions, regulatory challenges and policy inconsistency.
Persistent importation of petroleum products had continued to put pressure on foreign reserves and weakening the capacity of the CBN to support the forex market. Petroleum refineries have remained non-performing over the years”, stated the CPPE boss.