19 June 2017

Nigeria: Experts Chart Path to Growth

Experts that gathered at Nigerian Stock Exchange (NSE) and , in Lagos at the weekend, have stressed the need for government to partner with private sector in order to access the needed capital required to boost the economy for sustainable growth.

The stakeholders, who lamented the effect of the recession on the various sectors of the economy, argued that government needed private sector involvement to generate a pool of private capital to deploy in various sectors of the economy especially in the areas of infrastructure financing.

Specifically, a Senior Lecturer with the Lagos Business School, Dr Doyin Salami, noted that the Federal Government needed to partner with the private sector for private capital for economic recovery and sustainable growth.

Salami, while speaking on the theme: 'Innovating out of Nigeria recession: Exploring new paradigms for Nigeria's economic growth,' pointed out that the country's economic recession had hit the bottom.

He however submitted that the nation's growth sustainability would depend on private sector involvement for private capital to ensure infrastructure development.

According to him, government must promote the role of private sector in economic development, adding that government's commitment to the sustainability of economic reforms would also determine the growth of the economy.

"What will determine where we go from here is commitment to the reforms we have seen. If Nigeria grows less than three per cent, it means that per capital income is still very low, so wriggling out of recession is not the issue but how we can grow the economy in a sustainable manner is what matters."

Speaking further on how to sustain nation's economic growth, the economist maintained that Nigeria needed to diversify revenue base and harmonisation the fiscal and monetary policies to achieve the desired growth.

He noted that government needed to tackle inflation rate, noting that, inflation rate beyond 12 per cent was very bad for the country. "Government must review minimum wage in line with the present realities, adding that, consumers were under significant pressure due to shrinking salaries and wages.

"Wages and salaries are still shrinking in spite of the fact that economic is coming out of recession, we need to find creative measures to take consumers out of pressure," Salami added.

Salami added that government needed to deal with youth employment to increase productivity, noting that the biggest challenge of the country were unemployment and productivity.

The Chief Executive Officer, Stanbic IBTC Bank, Dr Demola Sogunle, said banks non-performing loans grew massively with an average above 20 per cent in 2016 due to recession.

Sogunle explained that devaluation of the naira led to massive impairment while foreign exchange illiquidity eroded capital of some banks in the 2016 financial year.

This, according to him, led to massive rationalisation, right sizing and other strategies to reduce cost in the industry.

He submitting that the only way out for banks at this time was to resort to digitisation to reduce cost, adding that , banks could not afford to roll out branch networks.

The President and Chief Executive Officer, Africa Finance Corporation (AFC), Andrew Alli, said economic contraction affected projects development in the country.

Alli said there had not been many large scale projects in Nigeria in the last few years because of the economic contraction, and that the Corporation is looking at innovative products that would allow financing in naira.

He however called on the government to address the nation's inflation and interest rates to grow the economy optimally.

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