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Why Nigeria Needs to Drive Productivity and Fiscal Restructuring - Tope Fasua

Nigeria Economy	853 VIEWS
Nigeria Economy
853 VIEWS

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Wednesday, September 03, 2020 / 5:50 PM / Bukola Akinyele for WebTV / Header Image Credit: Premium Times NG

An economist and CEO of Global Analytics, Mr. Tope Fasua, has urged the Nigerian government to drive productivity, prioritize fiscal restructuring and spend more money in the area of stimulus Post COVID-19.

He said this as a guest on WebTV's "Economy and Politics" programme which explored the issue of "Re-engineering Nigeria's Economy Amidst Global Economic Uncertainties".

According to Fasua, Nigeria must take a war-time approach to economic strategy as the current realities shaped by COVID-19 reveal the need for a robust stimulus plan to catalyze socio-economic activities across the country.

Giving an analogy he said the stimulus package gulped about N2.3trn which was just 1.5% of the current Gross Domestic Product (GDP) of the country.

The analyst called for fiscal responsibility on the part of Ministries, Department and Agencies (MDAs) which would require an effective oversight role by the National Assembly, in line with the principle of checks and balances.

Speaking on policy options for monetary and fiscal policy that could help in countering a recession in Q3 2020, Fasua agreed with the notion that the Japanese "Abenomics" type model of synergizing structural, fiscal and monetary policies will be key for stabilizing the economy.

Fasua agreed that Nigeria was already on the path of depression characterized by high unemployment, high inflation, weak growth and even a high poverty rate. Giving a historical perspective, he said the last time a depression occurred globally it affected major economies like the USA and the UK between the 1920s and 1930.

He was of the view that the inflation-targeting approach of the Central Bank of Nigeria will not work for the economy from the monetary side, but rather efforts geared towards boosting productivity. He stressed the need for the CBN to reduce its interest rate this period.

The CBN according to him should continue to encourage banks to lend to the real sector which is vital to achieving a productive economy, which will translate to jobs and economic activities for the citizens.

Providing further insight he said from the monetary side the focus should be High GDP growth rate and High Inflation, while on the fiscal side, he believed that Nigeria needs to reposition its economy by focusing more on real sector interventions.

Speaking on the current economic sustainability plan, ESP emphasized the need for development planning economic plan and structured borrowing at the domestic and international levels.

This brought to the fore the need for Nigeria to reconsider leveraging the diaspora community and the capital market to roll out development bonds that can stimulate the economy.

On the side of Foreign Direct Investments, FDI he called for investor-friendly policies that can attract investments into the era, considering the era of disinvestment, divestment, rebalancing and amongst others.

He said the "home-bias" international finance was now a predominant issue at the global economic space, as investors have resorted to playing safe with investments at their respective home countries; considering the level of volatility around the globe.

Citing the recent Q2,2020 NBS Capital Importation report he noted that UAE, Mauritius, and British Virgin Island were sources of inflows into the Nigerian economy, with the UK as the highest and called for real-time investments.

According to him, on what the country needs to do to reposition itself. First, it needs to unlock all the sectors to be sure that everyone is running above par and attracting foreign direct investment (FDI) into the country.

Looking at the fiscal revenue distribution framework, he advocated for a revisiting of the current formula with more emphasis on the Local Government Areas (LGAs).

Fasua proposed 25% to Federal Government, 35% to States and 40% to the Local Governments. He said the productivity that needs to be unleashed in Nigeria should be across the board. He called for the integration of the rural areas in the development agenda to boost agro-production.

He called for joint planning committees for the LGAs with inputs from the Federal and state governments, with the wooing of technocrats, scholars and even professionals to the office of the Local Government Chairman.

For the 2021 budget, he acknowledged the fact that the country plans to spend well over N12trn. He observed that the country faces the challenge of financing its budget while acknowledging low capital inflows and high recurrent expenditure.

In his closing thoughts, Fasua advocated the following;

Big budgeting and adoption of the Abenomics economic model
Meritocracy in the appointment of officials managing key positions in the Nigerian economy.
Driving pragmatism in leadership by implementing key projects and programmes that can achieve inclusive economic growth.
Honesty on the part of political office holders to ensure transparency and accountability in government.
Mainstreaming Generation Z's (0 to 25 years) into the economic development strategy leveraging digital technology.
Embarking on robust fiscal reforms that will reposition the Nigerian economy.