The Nigerian economy, still faced with slowed growth, non-inclusiveness and poor socio-economic conditions, may plunge into further crisis with continued decline in foreign investment inflow, insecurity as well as foreign exchange scarcity among others, the Nigerian Economic Summit Group (NESG) has said.
The group, in its 2022 macroeconomic outlook released on Tuesday, stated that without the implementation of tough sectoral reforms, the impressive performance of the economy in 2021 cannot be sustained.
The outlook titled; “The Last Mile: Reforms Towards Significant Improvement in National Economic Outcomes,” emphasises the need for reforms across three major areas including; reforms on the oil and gas sector deregulation and fuel subsidy removal; reforms on the foreign exchange management; and sector-specific reforms that can drive significant inflows of stable investments such as FDI into the economy.
“Among many issues that dented improved economic outcomes are insecurity, foreign exchange scarcity, declining foreign investment inflows, sectoral rigidity, infrastructure deficit, inadequately skilled workforce, policy inconsistency, and regulatory bottlenecks. Going into 2022, Nigeria has the opportunity to build on current growth performance by initiating tough economic reforms that would remove the constraints on the expansion of sectors of the economy and enhance their capacity to create jobs and lift millions out of poverty,” it stated.
On the oil and gas sector reform, the report stressed on judicious implementation of the Petroleum Industry Act (PIA) to attract investors into Nigeria’s oil industry, particularly the downstream and midstream segments. Laoye Jaiyeola, CEO of NESG, commenting on the oil and gas sector reform, said that Nigeria can no longer afford the continuation of the subsidy era as being considered by the federal government.
Top among the list of options for the federal government include to ensure a gradual phasing-out of the subsidy, implement effective and efficient social interventions before subsidy removal to gain citizens’ trust, as well as intensify efforts to improve revenue. According to him, the oil and gas sector lacks the needed investments for growth, basically due to its unattractive environment.
“We cannot sustain a subsidy regime anymore, the fuel subsidy removal policy, which will affect the welfare of the citizens, needs to be treated with utmost care to create a long-lasting solution that will benefit relevant stakeholders. There is an increasing need to ensure competition in the oil and gas sector, important for improved private sector participation. As a result, the Nigerian National Petroleum Corporation (NNPC) cannot remain the sole importer of refined fuel products if a liberalisation policy in the sector works out well.”
Speaking further, Jaiyeola stated that addressing issues such as high interest rates, macroeconomic instability, inflation, and foreign exchange are critical to the nation’s overall economic growth. In his remark, Asue Ighodalo, Chairman of the NESG noted that peculiar economic comorbidities gravely threaten a full economic rebound for Nigeria.