Atedo Peter-side, Chairman, Stanbic IBTC Bank, on Thursday raised the concerns that the Federal Government is yet to embrace needed reforms to pull Nigeria out of present economic recession but is rather implementing at least “eleven bad Policies that could plunge the country into further economic crisis.”
The Professional Banker who was a guest speaker in Abuja at the 14th Daily Trust Dialogue which has the theme: “Beyond Recession: Towards a resilient Economy” fears Nigerian economy could be heading the way of Zimbabwean and Venezuelan distressed economies as citizens might not witness growth in income per capital within the next six to eight years.
“The search for economic policies must end now, since we are in dire economic crisis. There is also reluctance on the part of the present administration to break away from the past and embrace economic reforms,” Peterside warned as he called the Central Bank of Nigeria to accept that “its foreign exchange policies and demand management policies have failed.
He said the CBN has placed more restrictions on forex repatriation which is making it increasingly difficult for the badly needed forex inflows to come in as well as local and foreign direct investments.
His words, “CBN has inadvertently created a siege mentality, thereby making privileged access to its forex allocations, which are reserved largely for the politically well-connected, the best investment game in town.
He further raised the concerns that the apex bank directive to banks to allocate 60 percent of forex to manufacturers who account for only 10 percent of GDP has exacerbated an already bad supply situation.
”40% is much too small to accommodate the rest of the economy and so all other sectors have been crippled, including the Service sector which accounts for over 50% of GDP.
“This has unleashed panic thereby sending the parallel market to the high heavens. Forex inflows disappeared partly because of the uncertainty surrounding the ability to repatriate interest/dividends through an overly restrictive 40% window.
“…. Meanwhile it has huge adverse distortionary implications on the supply side. The end result has been our mind-boggling and widely divergent multiple exchange rates which have spooked investors who have taken fright and also taken flight.
“Sadly, we have effectively “shot ourselves in the foot” by taking unsustainable actions that crippled both forex inflows and the Service sector, whilst favouring even those manufacturers who own “zombie” industries that are horribly import-dependent.”
Speaking further, he noted that Present administration’s inability to reach a truce with the Niger Delta Militants is another wrong step which he said has caused the nation over 6 billion dollars per annum.”Communities must be adequately incentivised to keep oil production on going peacefully,” he said.
Peterside also thinks government has flawed in refusing to sell some of its assets for better management and profitability.
Peter-side cited NLNG as a good example for the country. “The main obstacle here is our highly destructive NNPC because they would be reluctant to hold a minority shareholding of 40-49 percent. The secrete behind LNLG success is that LNLG is that NNPC was reduced to taking a position of minority and that is why we have a World Class project there. Asset sales could give between 15 to 20 billion dollars if planned carefully, and that makes the work of the finance minister easier,” he said.
“We urgently need to de-regulate the entire downstream sector, and also privatise NNPC’s refineries accordingly .In my entire life NNPC tells stories and they use language like turn around maintenance and flee with money”
The banker also raised concerns that the nation’s civil service system is still bloated, corrupt and inefficient, saying a privileged 2 percent of the population consumer close to 60-70 percent of the annual budget, via the re-current expenditure votes, leaving little for capital spending.
“This implies that mass redundancy is inevitable,” he told the audience, advising government to urgently implement the Orosanye report.
Speaking on the poor economic viability of states, he said, “Not up to 25 percent of the 36 states are economically viable currently, as they depend hugely on federal government for survival.
According to him, the Federal government must eat the humble pie, and embrace political re-structuring.
He also pointed out that this is the time for the present administration to embrace the partnership of the Private sector, as the government cannot do it all alone, with the present state of the economy.
While also decrying poor legal system in the country, he said, “Nigeria has a dysfunctional legal system which hinders rapid growth of the nation’s economy.
Restoring Business confidence is key in marketing the country, he stated, adding, “Threatening investor’s with fines, and jail does not build confidence of investors whether local or foreign.”
He noted therefore that what appears missing is a holistic approach in solving the problems stating that, “In harmonising the fiscal and monetary policy rate, in addition to handling the monetary exchange rates must be done through macro-prudential policies in an acceptable manner”
The non-harmonised approach to tackling the economic challenges Peter-side said is part of the reason why the impact of the Federal government’s economic management team is not being felt.
“The Most significant reform embraced by the Federal Government reluctantly got overpowered by its own internal contradictions. We saw this in petrol prices and naira devaluation. When these reforms came, they arrived in form of half-measures, we stop shot of petroleum price de-regulation and opted instead for a price fix”
Also in his submission, the speaker of the Federal House of Representatives Yakubu Dogara said there must be innovative approach in solving wide range of economic problems confronting the country, while giving assurance that the National Assembly would work with the Executive in lifting Nigeria out of the economic doldrums.
Kemi Adeosun the Minister of finance had earlier at the dialogue said the Federal government is making concerted efforts on improving infrastructure overall business environment, socio-economic indicators while addressing key structural challenges.
Governor of the Central Bank,Godwin Emefiele in his own contribution said the Federal government is not resting on its oars as it is working round the clock to keep Nigeria out of economic distress.