The Nigerian Private Sector’s Plea for Relief and Growth Amidst Economic Reforms
The Organised Private Sector of Nigeria (OPSN), represented by its Chairman, Dele Oye, has voiced strong concerns over the recent implementation of a four percent charge on the Free On-Board (FOB) value of imports by the Nigeria Customs Service (NCS). This charge, a significant increase from the previous one percent, is viewed as an additional burden on industries still grappling with the aftermath of recent economic reforms. Oye, who also serves as the President of the Nigerian Association of Chambers of Commerce, Industry, Mines, and Agriculture (NACCIMA), argues that this new levy will inevitably increase production costs, thereby contradicting President Bola Tinubu’s objective of reducing inflation to 15 percent. He advocates for either a suspension of the FOB charge or, at the very least, an exemption for businesses engaged in production and manufacturing, suggesting that the charge be targeted towards luxury goods instead.
The OPSN chairman emphasizes that imposing additional taxes is counterproductive to stimulating economic growth. He suggests that instead of resorting to taxation, the government should prioritize fostering a conducive business environment through reasonable regulation, access to single-digit loans, and enhanced stakeholder engagement. He points to the success of business-friendly destinations like Dubai, attracting investment while others, like London, experience capital flight due to high taxes. Oye maintains that Nigeria needs to become more competitive than its neighbors by creating an environment that attracts investment rather than imposing further financial burdens on businesses.
Addressing the recently revised 2024 budget, Oye expresses concern about the growing fiscal deficit, particularly the additional N4.5 trillion allocation. While acknowledging the positive aspect of allocating funds to support the Bank of Agriculture and the Bank of Industry, a move long advocated for by the private sector, he stresses the importance of fiscal responsibility. He believes that these institutions, with proper funding, can provide much-needed single-digit loans to bolster the productive sector.
Oye also calls upon the Central Bank of Nigeria (CBN) to play a crucial role in fostering economic growth. He urges the CBN to reduce the monetary policy rate and cap public-sector borrowing, thus freeing up funds for private investment. He explains that repaying existing public sector loans would lower the interbank rate, leading to a subsequent decrease in interest rates with CBN support. Oye believes that access to affordable loans is a key catalyst for revitalizing the economy.
Furthermore, the OPSN chairman underscores the necessity of finalizing resolutions on the tax bill and enhancing the competitiveness of Free Trade Zones (FTZs). He argues that FTZs, as major catalysts for growth, should be made as attractive as those in neighboring countries like Ghana to attract international industries and stimulate economic expansion. He emphasizes the importance of positioning Nigeria as a desirable destination within the global network of FTZs.
Oye concludes by emphasizing the significance of stakeholder engagement in policy formulation. He urges the government to embrace a collaborative approach, consulting with the private sector and other stakeholders before implementing major economic policies. He believes this collaborative approach is essential for ensuring policy effectiveness and achieving the desired economic growth and stability. He stresses that policies implemented without adequate stakeholder input often result in unintended consequences and hinder economic progress. The current situation, he argues, presents an opportunity for the government to foster a genuine partnership with the private sector, creating a more robust and resilient economy.
