It wasn’t a surprise that the enormity of the economic challenges confronting the nation dwarfed the euphoria of the inauguration of President Bola Tinubu’s cabinet last week as anxious Nigerians expect the president’s economic team to hit the ground running immediately, writes Festus Akanbi
With the inauguration of his 45-member cabinet last week, economic affairs commentators said the coast is now clear for President Bola Tinubu to bring his much-touted magic wand to bear on the economy which has continued to haemorrhage despite the initial quick fixes by the current administration since May 29.
Analysts have argued that unlike in the past when attention was usually focused on three key ministries of Finance, Petroleum and Industry, this time around, the president has through his body language indicated that the official dragnet for succour would be spread to other ministries capable of aiding the anticipated recovery.
These key ministers have the herculean task of formulating measures to strengthen the Nigerian economy, ranging from stabilising the naira, restoring investor confidence, aligning fiscal and monetary policies, speeding up budget implementation and empowering the informal economy.
President’s Economic Team
The list of such cabinet ministers includes those of Finance and Coordinating Minister for the Economy, Mr. Wale Edun; Minister of Industry Trade and Investment, Dr. Doris Uzoka-Anite; Minister of Power, Adedayo Adelabu; Minister of Communications, Innovation and Digital Economy, Bosun Tijani; Minister of Marine and Blue Economy, Bunmi Tunji; Minister of Solid Minerals Development, Dele Alake and Minister of Aviation and Aerospace Development, Festus Keyamo.
Others include Minister of Budget and Economic Planning, Atiku Bagudu; Minister of Agriculture and Food Security, Abubakar Kyar; Minister of State, Gas Resources, Ekperikpe Ekpo; Minister of State, Petroleum Resources, Heineken Lokpobiri; Minister of Defence, Mohammed Badaru and Minister of Labour and Employment, Simon B. Lalong.
Without any doubt, all eyes will be on Wale Edun, the Minister of Finance, who also doubles as the Coordinating Minister for the Economy. Edun, an England-trained economist, started at the defunct Chase Merchant Bank, before becoming an investment officer at the development finance arm of the World Bank, the International Finance Corporation. He founded the credit rating agency, GCR Ratings, now backed by New York-based Moody’s, has chaired the investment bank Chapel Hill Denham and was an executive director of Lagos merchant bank, Investment Banking & Trust Company Limited, the precursor of Stanbic IBTC Bank.
He is a former Commissioner for Finance in Lagos State, where he succeeded in pioneering strategies that enlarged its internally generated revenue from an average of N1.2 billion to around N7 billion monthly between 1999 and 2007.
However, analysts said that, in his current assignment, Edun will oversee an economy in the middle of one of its toughest fiscal crises, already N46.3 trillion ($60.4 billion) deep in debt with more than 96 per cent of its revenue for last year devoured by debt servicing. Observers said Edun’s bigger headache lies in convincing investors to buy bonds at a time when the country lacks potential for debt sustainability although he has indicated his resolve to attract investment funds, equity funds, not debt from those around the world interested in investing in the Nigerian economy.
Economists believe that rebuilding investors’ confidence is going to be paramount as Edun and his counterpart in the Industry, Trade, and Investment ministry collaborate to attract more foreign investors. They contended that issues like multiple taxation, port congestion, and regulatory bottlenecks associated with registering businesses are expected to be part of his agenda.
Edun is also expected to drive legislation that will boost mineral production across the states. Analysts said having worked with Dele Alake, a fellow Tinubu man, who now superintends the solid minerals ministry, it won’t be too difficult to make an impact.
Pressing Economic Issues
The complexity of the assignment before Tinubu’s cabinet was succinctly summed up in a report by the Centre for the Promotion of Private Enterprise (CPPE) last week. The report signed by the CPPE’s Director, Muda Yusuf explained that the government should be ready to tackle macroeconomic issues, establish adequate economic governance, and ensure fiscal consolidation. Yusuf added that ensuring foreign exchange policy reforms, industrialisation, trade and tariff reforms, agricultural reforms, oil and gas sector reforms, financial sector reforms, and regulatory reforms should be sacrosanct. He noted that adequate policy changes in the core sectors would bring the required economic prosperity to the country.
The centre believed that the enormity of the current challenges has made it necessary to look beyond the resumes of the cabinet members. According to the report, now that the euphoria of the new offices has come down, “The administration should establish quality economic governance consistent with tested economic principles, empirical evidence and contextualised within socio-economic peculiarities. From the onset of the administration, signalling and investors’ confidence is critical.”
Analysts also suggested that security apparatuses need to be deployed to safeguard production and prevent foreigners from turning the mining trade to national disadvantage by aiding arms proliferation as has been seen in the alleged gold-for-arms deals in Zamfara State.
They maintained that large-scale commercial agriculture targeting crops with export prospects is equally imperative for Nigeria’s economic overhaul.
Foreign Exchange Accretion
For a country in dire need of foreign exchange inflow, analysts said the African Continental Free Trade Area (AfCFTA) already presents itself as a low-hanging fruit for the actualisation of the dream of reshaping Nigeria into an export-oriented economy, easing Nigeria’s access to a regional market worth $3.4 trillion in combined GDP. According to them, what is perhaps paramount beyond scaling up export size is quality assurance of made-in-Nigeria goods, which is a major factor that will make the country’s output competitive particularly in much more sophisticated markets like South Africa and Egypt.
According to Fitch Ratings, Nigeria needs to solve its acute shortage of foreign currency that is slowing down its economic growth if it wants to improve its sovereign rating after being downgraded deeper into junk a fortnight ago.
The firm downgraded Nigeria by one level to B-, six notches above default and on par with Ecuador and Angola, citing government debt-service costs, worsening external liquidity, low oil production and the expensive subsidy on imported gasoline.
Last week, the CBN announced the reinstatement of Bureau de Change (BDC) operators in a bid to stabilise the foreign exchange (forex) market.
FX market operators said bringing back the BDCs can help increase the supply of forex in the market, which can also help meet the demand for foreign currency and potentially ease pressure on the exchange rate that had been on a roller coaster these past few weeks.
Stakeholders said this step would enhance transparency and accountability and introduce competition into the forex market, which could lead to more competitive exchange rates.
However, some analysts argued that depending on the level of demand and supply, an influx of forex from BDCs might not be sufficient to significantly impact the exchange rate, especially if there are other factors contributing to the high exchange rate.
Observers said Nigeria’s high debt burden is another obstacle that must be urgently surmounted by the government’s economic team. Already, members of the organised sector say the debt burden is killing their business.
They alleged that the government was using the country’s debt crisis to impose anti-growth manufacturing taxes in its bid to curb the debt problem, arguing that this has put the manufacturing sector at the receiving end even though the borrowed money was not invested in areas that would have a positive impact on the performance of the manufacturing sector.
Now that the cabinet is in place, it is natural for Nigerians to be in a hurry to experience the transformation of the nation’s economy which the new administration promised with its renewed hope mantra, as anything short of this will dash their hopes in the Tinubu government. (Thisday)
