What next administration must do to revamp Nigeria’s economy –Agora Policy

Agora Policy, an Abuja-based think tank, says the incoming administration needs to undertake fast, coordinated macroeconomic policy reforms on fiscal, monetary and trade fronts.

In its policy memo titled ‘Urgent Policy Actions on Fiscal, Monetary and Trade Fronts’, Agora Policy said the Nigerian economy has significant potential but faces a myriad of economic challenges which needs to be handled quickly.

The think tank, founded by Waziri Adio, former executive secretary of the Nigeria Extractive Industries Transparency Initiative (NEITI), said the policy actions or economic reforms must be predicated on inclusion, transparency and accountability.

Recommending solutions to Nigeria’s fiscal problems, Agora Policy said the government needs to take decisive action on boosting oil revenue by ending oil theft and removing petrol subsidy.

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The organisation also said the tax net should be broadened to capture the formal and informal sectors not in the existing tax net, budget implementation framework should be improved, full compliance with the Fiscal Responsibility Act, among others.

On monetary reforms, the think-tank said the government should strengthen the fiscal-monetary coordination committee to ensure that the monetary authority (Central Bank of Nigeria) and the fiscal authority (federal ministry of finance, budget and national planning) optimally coordinate policies to ensure the gains from fiscal and monetary reforms are maximised.

“Restore monetary policy to focus back to its price stability mandate, taming inflationary pressure and strengthening the monetary transmission: The CBN should focus on its core mandate of maintaining price stability. The CBN should set clear and realistic targets for inflation, and a timeline for achieving these targets,” the report reads.

“The removal of the current multiple exchange rate windows being operated by the CBN: This would make the exchange rate market-determined and mitigate speculative pressures that fuel arbitrage conditions in the market. This would further inspire confidence from domestic and foreign investors.

“Putting an end to ways and means financing of FGN expenditure: This would curtail the growth of the money supply and thus curtail inflationary pressure. Part of this will involve the CBN helping the FG to properly forecast its revenue as well as helping the FG, on a technical level, identify potential sources of revenue. A strategy will also need to be developed to manage the current stock of FG’s debt at the CBN.”

Agora Policy said Nigeria has used several trade restrictions mainly to protect domestic industries and spur domestic productivity.

The organisation said the restrictions have not achieved the planned objectives as domestic firms remain largely uncompetitive due to structural rigidities tied to the inadequate soft and hard infrastructure.

Agora Policy urged the government to reopen all closed borders and remove all food trade restrictions.

“The government needs to prioritize the development of a goods and services export strategy in collaboration with the subnational governments,” the organisation said.

“Such a strategy should focus on labour intensive sectors, and should clearly identify priority sectors and potential markets by leveraging Nigeria’s global network of diaspora and consulates.”