Tuesday, May 05, 2020 / 5:01 PM / Bukola Akinyele for WebTV / Header Image Credit: Spilled News
Nigerian needs to restructure its fiscal policy, manufacturing sector, and health care facilities to achieve sustainable and inclusive growth Post COVID-19,said Mr. Zeal Akaraiwe, Chief Executive Officer of Graeme Blaque, he spoke as a guest on WebTV's Market Review Programme which discussed, "COVID 19 Lockdown Easing: Health and The Economy".
According to Akaraiwe, Nigeria has a unique opportunity to reset its economy on the path of productivity, if critical issues such as restructuring its fiscal composition took top priority.
Taking a look at the reopening of sectors of the economy, he said the lockdown had massive economic and social costs which the country could not afford. Graeme Blaque's boss noted that it is a great idea to ease the lockdown of the economy and ensuring that citizens follow safety protocols, ensuring that hygiene and sanitization was at the highest level of observance in both private and public places.
On reaching out to the informal sector on federal and state palliative measures, Akaraiwe was of the view that the informal sector was very difficult get a handle on in the absence of required data which the Nigerian government does not presently have, thereby compromising any attempt at an equitable distribution of palliatives, accountability becomes difficult to implement, not to talk of guaranteeing. Akaraiwe observed that before palliatives can be effective the fiscal authorities need to identify the vulnerable, understand why they are vulnerable and design channels of efficient access to these groups of citizens.
The financial derivatives specialist cited trader money as part of schemes that would need to be strengthened during this period of COVID-19 to reach out to people in a structured and accountable manner and not randomly. He was of the view that Palliatives are needed but they need to be sustained and transformed to jobs and not cash donations.
Speaking on bank staff layoffs, he said on the one side there is a humanitarian angle but on the other side banks are privately run businesses that cannot afford to keep people in employment if they do not create service value. Akaraiwe saw it as a difficult situation.
Mr. Boason Omofaye, Co-Host of the programme and guest analyst, said the banking sector in every country was fragile and peculiar in nature. According to Omofaye, the number of staff in the banking sector maybe much lower than in the telecommunication or FMCG sectors, he noted that when trying to measure the health of an economy the banking sector is the first place to begin to measure how healthy an economy is due to the monetary transmission mechanism that propels all other economic activities.
He said, banks are very fragile and the sensitivity around them should also be considered which aligns with the Central Bank of Nigeria's (CBN's) call for an emergency meeting of the Banks CEOs to provide some measure of strategy into dealing with the challenge of constrained banking businessses.
Speaking on the job market, Omofaye noted that the informal sector in Nigerian now loves palliatives such that policymakers and leaders think as long as they give palliatives to people they would always be prepared for the next election.
"We need to move more people out of the informal economy to the formal economy so their life could have meaning and track people which will enable government to earn more in terms of tax and pension for people to plan their life better also the government need database to track people", the veteran financial journalist explained.
On the matter of curbing the COVID-19 problem Akaraiwe was of the view that the efficient way to stop the virus was hygiene and social distancing. He said, COVID-19 has exposed the problem of the fragility and vulnerability of the economy.
Sharing his thought on the key policy trusts needed for economic sustainability after the pandemic, he explained that COVID-19 was helping Nigeria to expose the things it has buried under a number of rocks. One of the key issues that affect the economy was the fact that the country operated an inverted development pyramid .
He said, Nigeria had gotten into the habit of renting and exporting raw materials rather than value added products that would enhance foreign exchange inflows, the country virtually exports employment and short-circuited its virtuous production value chain. He urged that the country should develop its manufacturing value chain, sort out the domestic power problem and provide an environment friendly to long-term capital. He equally elected for greater fiscal discipline at all levels of government and an improvement in fiscal transparency and governance practices and procedures.
Akaraiwe said Nigeria must plan for the future generation and not get stuck in short-term horizons after getting out of the present pandemic. He recommended that a team should be put together to plan on sourcing foreign exchange in a sustainable manner over the next 6-12 months to make sure that businesses survive, while another team focuses on how to design and execute a long-term plan/vision in order to generate foreign exchange from 12 months to 5 years. Graeme Blaque's CEO concluded that the country needed to restructure its fiscal policy to promote inclusive growth.