A new report released by Afrinvest has said unless urgent actions are taken to address Nigeria’s widening fuel subsidy payment, budget deficit, power sector woes and other challenges affecting the nation’s development, projected economic objectives may remain elusive.
The report, called the ‘Nigerian Banking Sector Report’, which was launched in Abuja predicted that fiscal deficit in the 2018 budget could widen from N1.9 trillion to N4.4 trillion, adding that the country could record revenue underperformance of 40 per cent in independent revenue of the government.
The report noted that the swift rise in the statistics of subsidy payment on petroleum products in the face of rising oil price from 2015 could affect the nation’s economy if nothing is done.
The report was pessimistic about achieving independent revenue and recoveries as projected in the budget but admitted that expected oil revenue oil could be achieved.
Ike Chioke, Group Managing Director, Afrinvest West Africa, who said the report is an agenda for the new government, noted that, while the Federal Government planned to generate 41.6 per cent of its revenues from oil and the remainder from taxes, independent revenue and recoveries, there would be a significant underperformance in revenues by 40 per cent.
“Federal Government’s ambitious spending plans contrast poorly with revenue realities.“We estimate the fiscal deficit to expand to N4.4tn above budget estimate of N1.9tn, representing 3.5 per cent of nominal Gross Domestic Product, well above the three per cent threshold prescribed by the Fiscal Responsibility Act,” the GMD said.
Chioke insisted that Nigeria has the capacity for double digit growth to spur the economy provided government is willing to implement necessary reforms.He said: “Annual double-digit growth which is required for sustained employment creation and poverty eradication is not impossible if critical reforms are passed.He added that there was need “for wide scale infrastructure deployment.
“We also affirmed that substantial and sustained improvements to the quality of human capital – through investments in education and health – are required to effectively utilize physical capital and achieve string economic performance.”Highlighting six basic sectors that the new administration must focus on, the firm said government must ensure transparency in oil and gas contracts, expedite passage of the petroleum industry bill and fully liberalise the downstream sector
On power, the group noted that price control must be removed to improve the sector, implement reforms required by multilateral partners to attract financing and bridge metering gap.
The report also advocated for increase in the budgetary allocation to education sector to drive human capital development, encourage state government to provide counterpart funding to access Universal Basic Education grant and prioritise intervention for weak regions.
Similarly, the report noted that Nigeria must attract and deploy cheap funding for transport infrastructure, collaborate with the private sector through public private partnership and focus on infrastructure that would connect cities.On broadband infrastructure, the company said issues surrounding right of way must be addressed through collaboration with state government, adding that there was need for reduction in taxation.
Highlighting the challenges in the agricultural sector, the report seeks priority on crops with high productivity and export value. It added that there was need to boost productivity through irrigation and fertiliser as well as initiative that would attract private sector investment.