BY MARK ITSIBOR, Onu Queen, Abuja, CHIKA IZUORA, OLUSHOLA BELLO and ANDREW OJIEZEL, Lagos
Actors in the country’s economic sector have aligned with the federal government on a series of economic recovery plans which it plans to execute.
Specifically, they harped on apt implementation of outlined policies to enable the country quickly exit the current recession.
Sector stakeholders who spoke in separate interviews with LEADERSHIP Sunday said the year 2021 has better prospects if the government can continue to follow up policies with actions, urging it not to relax on some of the initiatives it started last year, but increase the speed of implementation.
The director-general, Lagos Chamber of Commerce and Industry (LCCI), Mr Muda Yusuf, said although the Nigerian policy environment is characterised by a great deal of uncertainty, government policies should drive the economy in 2021.
He added that implementation of the African Continental Free Trade Area (AfCFTA) agreement from January 1, 2021 for Nigeria serves as an avenue for local industries to penetrate new markets and establish strong cross-border supply chains with other African countries.
Stressing that only countries with open, friendly and enabling business environments stand to benefit from the agreement, he stated that this underscored the need for Nigeria to strategically position itself for significant trade gains, saying the AfCFTA poses new competitiveness risks for Nigerian firms, especially for those in the real sector of the economy.
He added that a second wave of the COVID-19 pandemic in Nigeria could propel governments at all levels to enforce strict restriction measures.
This, he said, poses threat to the recovery prospects of the Nigerian economy, noting that persistence of the pandemic till the first quarter of 2021 would most likely change the policy direction of the Nigerian government.
Yusuf added that the Petroleum Industry Bill (PIB) seeks to establish a framework for the creation of commercially oriented and profit-driven petroleum entities, to ensure value addition and internalisation of the petroleum industry through the creation of efficient and effective governing institutions with clear and separate roles for the petroleum industry.
He noted further that the Finance Bill 2020 was developed by the federal government to support the implementation of the 2021 budget through key reforms to specific taxation, customs, excise, fiscal and other laws.
On its part, the Independent Petroleum Marketers Association of Nigeria (IPMAN), said government’s approach to gas utilisation and development is a challenge to industry operators.
The national president of the association, Mr. Chinedu Okoronkwo, told our correspondent that the body is now putting resources together to float a modular refinery.
Okoronkwo, though did not say IPMAN would jettison the earlier proposed $3 billion (N1.08 trillion) refineries in Kogi and Bayelsa states, he said with the new drive of government to create value in the gas sector, the association had commenced discussions with the Federal Ministry of Finance to quickly establish a mini refinery for local products refining.
Okoronkwo urged the federal government to invest more in modular refineries as a way of ending fuel scarcity in the country. “Our expectation then in 2018 was for the government to invest more on modular refineries to be able to have more petrol locally to address scarcity,’’ he said.
The IPMAN helmsman said government had performed creditably well in the downstream sector since 2017, adding that it should crown it by building more modular refineries. According to him, a modular refinery is cheaper to build and it can move from one place to another.
“A modular refinery is capable of refining between 10,000 and 35,000 barrels of crude oil per day,’’ he said as he also told the government to provide incentives that would attract investors to the oil and gas sector.
He said since IPMAN had observed sincerity in developing the sector, it would soon announce details of the outcome of its discussions with the ministry on the proposed modular refinery.
Okoronkwo said the ministry was assisting in facilitating the necessary approvals, funding mechanisms and eventual groundbreaking ceremony of the project.
“In the next one year we will be celebrating the inauguration of the project,” he said.
He continued: “One of the objectives of the Nigeria Gas Transportation Network Code (NGTNC) is to unleash the potentials of accelerated growth to stimulate investment opportunities and national economic development. Thus, for ease of operationalisation of the NGTNC, the DPR has established a Network Code Electronic Licensing and Administration System (NCELAS) portal to process all licenses required for operating gas transportation arrangements and administration of all regulatory roles, required for the optimal performance of the network code.
“The DPR has also commenced the issuance of licenses to gas transporters, shippers and agents via the network code, and the migration of existing gas transportation agreements into the network code regime has begun.
“Despite the challenges posed by the COVID-19 Pandemic, the traction achieved by the government in implementing some of the policies introduced for the sector in 2020 has made stakeholders become more optimistic that the government is dedicated to stimulating the necessary investments in the sub-sector”.
On his part, the managing director of Sofunix Communications and Investment Limited, Mr Sola Oni, said the federal government’s Economic Recovery and Growth Plan (ERGP), re-opening of borders and other initiatives were laudable plans to put Nigeria’s economy on sustainable growth and development.
He however pointed out that the “elephant in the house” is implementation, saying this had always been the bane of initiatives of various administrations in the country.
“As of today, insecurity and macroeconomic vagaries and impacts of the COVID -19 pandemic have remained major risks to implementation of virtually all policies,” Oni said.
Meanwhile, the federal government is confident of rejuvenating the economy through massive investment in natural gas development both for export to sustain foreign exchange earnings and expanding domestic and regional markets for gas.
The managing partner, Sefton Fross and oil and gas analyst, Mrs. Olayemi Anyanechi, said Nigeria had taken the necessary steps towards gas commercialisation which would enhance revenue generation and fast-track industrialisation, hence, generate employment and boost local industries.
Anyanechi, a commercial and finance lawyer, said 2021 hold enormous potentials in the country’s oil and gas industry if the right fiscal policies are put in place to drive the administration’s well-articulated initiatives.
She told LEADERSHIP Sunday that what is left is for the government is to enhance policy consistency.
“Oil and gas projects have long led times with huge capital outlay. The huge investments require clear rules of engagement, certainty, fair and consistent application of rules.
“Accordingly, to boost indigenous participation, the government must foster an even playing field amongst participants. The era of absolute discretion must give way to that of inclusiveness and transparency. Nigerians with technical and managerial expertise in the sector can raise capital easily and should be given more opportunities to own and work assets. Also, rules that protect investments must be institutionalised and applied across board.” she stated.
“In addition, access to funding is critical to industrialisation and growth. I am aware the Nigerian Content Development Fund is currently filling this role and this is a step in the right direction. Criteria for qualification should be well published and funding should be provided solely on merit,” she added.
In the same vein, the general secretary of Federation of Informal Workers of Nigeria (FIWON), Comrade Gbenga Komolafe, in his response, said against this context, the prospect of a rapid economic rebound in 2021 is very murky.
He said, “Economic sustainability plan which is supposedly designed to address multitudes of economic incongruities which were direct fall outs of the Covid-19 pandemic seem well intentioned. The plan is supposed to help stimulate an economy inextricably driven into a depression by virtue of the lock downs imposed as a necessary containment measure for Covid -19. As it is well known, foreign exchange earnings plummeted dramatically as crude oil exports dwindled as Europe and American spot buyers went into lockdowns.”
He however said the implementation of the Economic Sustainability Plan (ESP) had been dogged by serious implementation flaws.
“The N3.4 trillion stimulus funds which are borrowed from the IMF came with conditionalities like all IMF loans. Part of those conditionalities is the increase in fuel and electricity pricing, stamp duty and other user charges have also been introduced. These measures have aggravated inflationary pressures while the foreign exchange rate has gone up astronomically which have all exerted serious inflationary pressure on the domestic markets,” he pointed out.
Stressing that reopening of borders, policy intervention in the forex market, promises of improved security, several sectoral financial interventions among others are on the front burner of government’s economic recovery, he added that other steps announced so far to buoy the economy, including reopening of borders and the CBN’s attempts to further streamline forex guidelines to stem further devaluation of the naira can only be described as basically cosmetic.
“While the two steps might help assuage aspects of local trade and reduce the harassments faced by Informal Cross Border Traders (ICBT), they lack the fundamentality to seriously address the structural deformities of the economy,” he said.
…Urge States To Reduce Pressure On FG Through IGR
Also, worried by the rise in the volume of budget deficit and declining revenue to fund various annual budgets, some stakeholders have suggested ways that the state governments could enhance its Internally Generated Revenues (IGR) and depend less on the dwindling allocations from the federation account.
The worsening economic situation occasioned by the twin factors of COVID-19 outbreak and drop in the prices of oil further exposed the weak nature of the federal and sub-national revenue structure for financing of projects. Revenue allocation from the federation account has nosedived, a situation that clearly showed that state governments must look inward to raise more funds and depend less on federal allocation.
Apart from Lagos and Rivers states with significant proportions of IGR, most states of the federation cannot fund 23 percent of their financial responsibilities without federal allocations or loans.
Available data showed that from 2018 to 2019, IGR constituted N7,972.62 billion (20.5 per cent). Many state governments have run into serious financial difficulties and found it extremely difficult to finance their budgets.
In 2019 for example, the IGR of states represented only about 21 per cent of total revenue. The bulk, which is nearly 60 percent, came from the Federation Account Allocation Committee (FAAC) distribution.
In an exclusive interview with our correspondent, the experts agreed that the state governments must look inwards and explore home-based opportunities and resources, with a view to instituting visionary leadership in all the states and raise revenue for developmental purposes.
States and local governments have powers under the constitution to collect certain types of revenue. The belief is that effective collection of these revenues should make them less dependent on monthly federal allocation.
Regrettably, most state governments in Nigeria have not been able to generate revenue sufficient to cater for recurrent spending let alone capital expenditure.
Commenting on the issue, a former commissioner for finance in Imo State, Prof. Uche Uwaleke, said as a measure to enhance higher revenue generation, states must embark on massive education to boost taxation and get the state assembly to approve a comprehensive list of all taxes and levies via a revenue law, which would be made available to the public.
In his contribution, the lead consultant/ CEO of 2612 Consulting & Professional Services, Peter Adebayo, said state governments need to prioritise the diversification of their economies while highlighting the huge potentials in tax revenue, which is another major source of financing state projects that had been neglected for decades.
The chartered accountant said, “The way out for the state governments to build sustainable economy is to embrace the reality of running a productive, diversified and less dependent economy, which can be achieved by going back to the drawing board and working out modalities for harnessing the various natural resources available in each of the states to stimulate and enhance real sector development that will ultimately lead to creation of jobs and reduce rural urban drift.”
An economic and financial analyst, Stephen Kanabe, stressed the need for governments to deal with the issue of insecurity, invest in agriculture by leveraging on technology and imported expertise and invest more on capacity building for their citizens.
He was optimistic that state governments could attract the needed local and foreign direct investments by creating the enabling environment, thereby providing the platform for more tax collection.
In line with the recommendations of Prof. Uwaleke, Kanabe, who is also a chartered accountant, opined that the solution is for the sub-national governments to operate Treasury Single Account (TSA) to view daily revenue inflows, clean up their payroll systems through biometric capture of civil servants and pensioners, implement a contributory pension scheme and periodically rotate directors of finance & accounts in all the government establishments.
“The key thing is to deal with insecurity, have a business-friendly tax system, make the state attractive for investors, put more funds on capacity building (especially information technology) and guarantee public confidence by ensuring that available resources are channelled to impactful projects. Then, you can be very sure to have the support of the public in the payment of taxes,” he stated.
Stressing the need to deal with the problem of tax evasion and ensuring tax compliance, Adebayo noted that the major factor to stimulate tax revenue generation by government at all levels is fiscal prudence through transparency, probity and accountability in public finance management.
Uwaleke, who is also a professor of financial market at the Nasarawa State University, advised governments at all levels to build capacity in the areas of monitoring and enforcing tax compliance, make tax payments seamless and convenient by developing electronic channels for payment and incorporating the state’s ministry of finance to boost the revenue of the State.
He also advocated punishment for those found guilty of diverting government money to serve as deterrent, while rewarding those that meet the targets, implementation of Whistle Blowing Policy (MOF), automation of payment and accounting systems.
Evolve Sound Policies On Local Content To Boost Growth—NLC
Meanwhile, the Nigeria Labour Congress (NLC) has said to boast the economic recovery progress, the federal government must evolve sound policies and put in place the infrastructure that facilitate the production and distribution of “Made in Nigeria” goods.
The NLC president, Ayuba Wabba, in his New Year message, said the COVID-19 crisis made the appeal to improve local production of goods more pertinent now than ever, stressing that no country develops by being the dumping ground for other people’s creativity and enterprise
He said, “This way, we will even our trade balance, strengthen the naira, create sustainable jobs, improve the living conditions of our people and accumulate wealth for genuine economic diversification. Our starting point must be the recovery of our national oil refineries as agreed with government. This will save us the severe haemorrhage that our economy is subjected to
Read the Source post on Leadership Newspaper.