At BusinessDay economic summit, FG says economy on track

In a friendly but heated debate on Friday, leading players in the Federal Government’s economic management team said the country’s economy was on track, but their counterparts in the private sector insisted that more reforms were needed.
The debate was at the BusinessDay 2018 Economic Outlook with the theme “Navigating from recovery to growth.”
Okechukwu Enelamah, minister, industry, trade and investment, led the public sector team that included Patience Oniha, director-general, Debt Management Office (DMO). Though, Yemi Kale, Statistician-General of the Federation/CEO of National Bureau of Statistics (NBS), was part of the government economic management team, but he stuck with the numbers to show that the country’s recovery from recession still remained largely fragile.
But Enalamah expressed optimism that Federal Government was on track to sustain economic growth, while the DG of DMO said both domestic and foreign borrowings were helping to stimulate the economy and create jobs.
However, the Statistician-General cautioned that the dominance of oil made the Nigerian economy vulnerable, but added that the structure of the economy was closely tied to oil performance.
“My view is that policy direction of the government is right. I do think that Nigeria is headed in the right direction. What we need to do is to ensure sustainability,” Enelamah said.
He insisted that the government had a clear policy direction as contained in the Economic Recovery and Growth Plan (ERGP), which was supportive of domestic production. “We want a market-driven economy where government plays its own part in creating the enabling environment for the private sector to thrive,” the minister said.
However, he also insisted that businesses had a responsibility to partner government to drive economic growth, “while the government must ensure it does not frustrate private capital investment.”
Oniha backed the position of Enalamah in her own presentation at the event, urging the private sector to drive the process for Nigeria’s economic growth.
“A lot of the factors that made Nigeria look like it is not a good place to invest in have all been mitigated,” she insisted.
Explaining the government increased borrowing, she said, “The truth is that if you must implement your budget, you need to have the revenue or savings (reserve) to tap into, otherwise you have to make up by borrowing.”
She explained that Nigeria’s debt management strategy was not targeted only at the sovereign but also at the corporate.
“The focus of the government is that of a diversified economy that will make the private sector drive the needed growth. Borrowing has helped the government to implement its budget, provide infrastructure and attract investment. Thankfully, the numbers are looking up in terms of GDP and inflation. Nigeria is a good destination for investment if we are able to stimulate economy.”
She said the DMO borrowing strategy had enabled and facilitated the creation of debt capital market, and an exchange like the FMDQ that was largely focused on debt securities.
She explained that the government current debt management strategy was to strike a balance between external and domestic debt borrowing, while also reducing debt service cost.
But Kale adopted a more cautious note from his colleagues.
“Even though we are out of recession and still growing, over 20 economic activities are still in the negative territory,” Kale noted, while looking at the statistics that would determine the direction of the economy in 2018.
“Economies run in a boom and bust cycle, but the speed at which economies get into the bust is always high. Recovery in oil exports has strengthened the country balance of trade. This has helped in the country’s growth in reserves. Though, we have exited recession, economic growth is still fragile. Unemployment remains high,” he said.
Kale’s cautious note resonated with the private sector. Bismarck Rewane, managing director/CEO, Financial Derivatives Company Limited, who spoke on “tepid recovery and limited impact” was of the view that what had happened in the country in the last 12 months in terms of talks about economic numbers had been “more of propaganda and less of analysis.
“There is remarkable progress but less accomplishment. There is much noise about external reserves. You will have to look at external reserves in relation to your external liabilities. For ‘Mr. Average’, his salary remained flat while prices of goods and services went upward. He kept suffering and smiling.”
But Rewane still foresees GDP growth to average 2.2 percent in 2018.
Austin Avuru, MD/CEO, Seplat Petroleum Company plc, queried why the government’s was focused on borrowing when it could implement policies that would have generated large sums of money to reduce borrowing.
“What is the essence of keeping refineries that will never work? What is the point of investing in oil pipelines that we do not know whether they will be effectively managed?” he asked.
He argued that if the government had mustered the courage of sell some of its assets, “we could easily be raising up to $20 billion that would have made it unnecessary to go borrowing. What economy will survive if you borrow to fund subsidies,” he asked.
He also cautioned that the Niger Delta situation, which seems to have calmed, remained fragile.
For Opeyemi Agbaje, managing director/CEO, RTC Advisory Services Limited, insisted that even though the country’s policy makers had done things that were good, but they need to go to the root of the country’s basic problems.
“The truth is that there is a need to attract private capital into the economy. The ERGP says we believe in the private sector-led economy but when it comes to interest rate, Foreign exchange (FX), and inflation the body language tends to be central control,” he said.
Similarly, Bola Onadele Koko, managing director/CEO, FMDQ OTC Securities Exchange, said he was not excited as most people about the economic growth.
“We need a different paradigm shift in the whole management approach. This economy will never thrive on fixed exchange rate,” he said.
However, Taiwo Okeowo, deputy managing director, FBNQuest Merchant Bank, advised the government to focus on infrastructure and how to build long-term capital.
“Nigeria’s story is always the case of two sides of the same coin. The indicators are facing up but seem to be short-termed. The truth is that we need to look at Foreign Direct Investment (FDI). Foreign Portfolio Investments (FPIs) are not long-term capital. We need to create environment that will retain FDIs,” Okeowo said.
Iheanyi Nwachukwu