As the Nigerian government prepares the budget 2022, business leaders and economists have cautioned the Federal Government on the need for productive disbursement of billion-dollar loans being incurred by the administration.
At a webinar organised by the Abuja Chamber of Commerce and Industry (ACCI) and moderated by the Executive Director National Chamber Policy Centre, Mr. Olawale Rasheed, stakeholders decried the current application of loans to cover recurrent expenditures while also expressing apprehension over the servicing of debt with over 90 percent of national earnings.
Speakers and participants drawn from business and private sectors at the virtual meeting held Tuesday, were joined by the Statistician General of the Federation, Dr. Simon Harry, the Chairman Fiscal Responsibility Commission, Victor Muruako, President, Manufacturers Association of Nigeria (MAN), Engr. Mansur Ahmed and others in dissecting the implementation of budget 2021 and review of 2022 budget proposal.
Economists who delivered papers at the webinar include Mr. Olusegun Zaccheaus on behalf of KPMG, Dr. Lukman Oyelami a lecturer at the University of Lagos and Dr. Ibrahim Ayuba, a faculty member of ACCI BEST Centre, a statement by Olayemi John-Mensah, Media/Strategy Officer, ACCI disclosed.
Welcoming the participants at the virtual meeting, the President of ACCI, Dr. Al-Mujtaba Abubakar identified multiple challenges facing the economy and urged the government to support the private sector if the national economy is to truly turn the right corner.
He said the economic climate worldwide is challenging as nations struggle to cope with fallout of the pandemic, adding that across Africa, governments are struggling to innovate and achieve stabilisation after global disruption that is still reverberating in many parts of the world.
“For us in Nigeria, the economy faces multiple challenges even as government makes the best out of the very complex situation by focussing on infrastructural development and innovative financing. In the face of dwindling revenue, borrowing has become inevitable generating concerns about debt distress. Inflation rate is continuously high.
“The recent second quarter GDP growth while commendable has not assuaged the structural hiccups within the economy. Amidst high unemployment, the cost of doing business is skyrocketing as businesses suffer under the hammer of multiple taxation.
“Budget 2021 should therefore be seen and reviewed within the context of global economic recession and dislocation of global production value chains.
“While successes are recorded in the completion of critical infrastructures, the state of insecurity has complicated the productive processes within the agricultural sector. An already negative situation was further worsened by the dwindling fortunes of naira against other major currencies. This is coming at a time of low export and high import which negatively impacted on the nation’s foreign reserves”, Abubakar said.
The Statistician General of the Federation, Mr. Simon Harry in his presentation, said stringent measures should be taken against rent seeking mentality to curtail volatility in the forex market in other to eliminate shadow economy of the parallel market.
Represented by his technical adviser, Mr. Daniel Amba, he said, automation of the processes will go a long way in checking linkages in the system and help save time and checkmate corruption, adding that consolidation on CBN interventions will boost output that will lead to decline of food inflation.
The Chairman Fiscal Commission, Barr. Marouko also said, it is imperative to always assess budget proposals and implementation, so as to control expenditures and predict future budget needs, thereby providing decision makers with the information they need to prepare the budget for the next fiscal period.
The Chairman who was represented by the Director Policy and Standard, Abutu Hyacinth also said, processes for comparing 2021 budget to actual results, together with the analysis of a diverse set of indicators will be undertaken to gauge the overall performance towards best informed analysis and consideration of the 2022 budget proposals.
Also speaking, an Economist Dr. Oyelami said debt service/ revenue ratio is very worrisome and the government should look into these issues by restrategizing to generate more revenue.
“Nigeria needs to be more realistic about revenue projections, it is obvious government is not generating enough to cover expenditure which is not really scary but inability to generate enough to cover recurrent expenditure is really a bad omen”, he said.
A faculty member ACCI BEST Centre, Dr. Ayuba said there is the need to focus on the viability of non-oil sectors such as agriculture, mining, leathers, others to have a structured market, improve value chain and help increase exportation of finished products.
Mr. Adeyemi Folorunsho Director, Manufacturing Association of Nigeria (MAN) stated that the issue of debt profile should be seriously addressed and committee should be set up to monitor, evaluate, execute order, adding that there are lot of policies backing the issue of debt profile.
He also emphasised that the government should pay more attention to manufacturing of local products and reduction of unemployment so as to boost the manufacturing sector.
Representative of KPMG, Mr. Zaccheaus stated that government recurrent expenditure continues to rise at a fast pace than revenue which is having impact on the ability of government to deliver on certain fiscal capital project.
He added that the current issues around the Value Added Tax (VAT) will go a long way in affecting the revenue fortunes of the federal Government, hence, more attention has to be placed towards diversification of the economy and business friendly policies.