President Muhammed Buhari was elected President of Nigeria by Nigerians with so many expectations, however many Nigerians have been left disappointed with his administration and with 2 years into his four year term, time seems to be an elusive resource for the Buhari’s government. The primary purpose of Government according to the 1999 constitution shall be the welfare and security of the people, this means that in 2017 citizens welfare must be accorded top priority. As Nigerians enter into 2017, we at mylettersandnumbers look at Ten key Economic policies that President Muhammed Buhari and his cabinet should focus on with a view to addressing the myriad of economic challenges and effectively ending recession.
A country is said to be in Recession when it records 2 consecutive negative figures in its GDP (Gross Domestic Product). Government will solve this if it implements the following;
Adjust Re-current Expenditures. The Nigerian government has made an estimate of the sum N2.98trillion for non-debt recurrent expenditure; this amount is too huge for a labour force which is less than 10% of the total population which is currently put at 193 million. It is against prudency that those saddled with the responsibility of preparing the budget continuously to allocate over 50% of the budget to recurrent expenditure, this does not include the bogus salaries and allowances of members of national assembly. The government must reconstitute the National salaries income and wages commission to check excesses in the civil service, there must be a uniform salary structure across agencies, ministries and departments. Unnecessary expenses disguised as running costs should also be removed in order to free funds for capital purposes to the majority of Nigerians that crave better living standards.
Create Employment Opportunities. A recent study conducted by the Bureau of Statistics revealed that the unemployment rate increased to 13.9%, while the number of unemployed people increased by 555,331 most of whom lost their jobs in 2016. Nigeria has a young population and cannot afford to leave them idle. In 2017 government across all levels must be the catalyst in driving job creation; this must be reflected in their capital expenditure, programmes and policies. With an annual fresh graduate population of a million, government must leave no stone turned in making sure these hands are engaged productively. Support must be given to the Banking, Agricultural and Educational sector where many hands are currently employed also incentives should be given for companies to invest in new sectors such as sports, tourism and entertainment sectors.
Diversify The Economy. With the price of crude oil falling since 2015, government has seen a reduction in anticipated revenue; this is mainly due to its dependence on crude oil as its major source of revenue neglecting agriculture sector. In 2017 government must find alternative sources on which it will anchor its budget, one of which could be the mining sector which is yet to be untapped, also is the agricultural sector, earnings from cocoa, oil palm groundnut rice and tomatoes could earn the government a substantial amount of revenue not forgetting the robust telecommunication sector through sales of spectrum and various taxes on the manufacturing sector, at this stage there must be an unequivocal and unrelenting effort of government to spread their nets. If the economy is diversified there will be more jobs, the tax net will increase, and government borrowings will reduce.
Establish Social Welfare Programmes. A large percentage of Nigeria’s population are dependent ranging from 0-18 years and 65 years and above. They are not expected to work as the younger ones are expected to be in school while the older ones are expected to be retired. Government must not leave out this category of the population out of their plans; a monthly allowance should be given to the older population while their pension, benefits and gratuities are paid. Health services should also be made free to children and the aged even as the children who are not expected to be working should be given a daily meal during school periods to enable them grow physically and mentally. Also the unemployed should be given grants to set up small business as this will reduce the unemployment rate. All This will enhance living standards and increase the life expectancy.
Increase The Minimum Wage. Inflation rate has increased astronomically during the last year, currently at a double digit rate, prices has risen across all boards, food-stuffs, transportation, education fees, consumer and industrial goods, many Nigerians are finding it hard to cope, for a country that is import dependent, and its minimum wage is N18,000 ($59) in a month is too low for the average worker, who will pay rent, feed and transport him/herself to work. To mitigate the effects of these rise in prices, government must raise the minimum wage, though there is an on going negotiation with the country’s labour union of an increase to N50,000 ($163). This process should be sped up as many Nigerians cannot go through another 12 months in an abyss of darkness even as the inflation rate is not expected to fall.
Promote Import Substitution. Nigeria over the years has become an import dependent nation. With almost every single commodity been imported ranging from foodstuffs like rice, frozen poultry products, to industrial goods such as cars, machineries to consumer goods such as clothing wears, electronics and phones coupled with a decreasing foreign reserves as a result of a fall in revenue, this demand of foreign goods has led to an unprecedented pressure on the naira seeing it slip and lose grounds against the dollar, which currently stands at N305 to $1. This has also trickled down to the prices of such goods in the market. A solution to this will be to encourage local production of those goods deemed essential and could be easily produced back home, this will reduce the demand and pressure on the naira. Industrialist should be given adequate infrastructure necessary for production especially fixing the epileptic power supply which hovers around 3000-4000mw, also farmers especially staple crops farmers should be given all support necessary to increase production to meet the ever increasing demand. Also companies where these goods are imported from should be encouraged to set up local plants especially the industrial ones. A key to promoting import substitution is to establish export processing zones, one in each of the 6 Geo-political zones.
Reduce Interest Rates. In order to stimulate growth especially in the private sector the government through the Central Bank of Nigeria should lower the interest rate to single digit, as the current double digit of 14% is discouraging for investment given that the conducive environment necessary for production is unavailable. A single digit interest rate will see a lot investment and re-investment in the manufacturing and agricultural sectors.
Stabilize Foreign Exchange Rate. The Naira has been devalued twice in the last 2 years, 2016 budget peg the exchange rate at N190 to $1 but ended the year at N305, this continuous fluctuation isn’t good for business as it creates anxiety and uncertainty. Since many commodities in Nigeria are imported and the prices of theses goods are largely influenced by the prevailing exchange rate a fluctuating exchange rate give rise to an increasing inflation and improvishes the citizens. Government must ensure that the Naira becomes stable in 2017 so as prices of goods can be relatively stable while further devaluation should be discouraged.
Widen The Tax Net. Key to government achieving all its goals and objectives is the availability of funds, and the level of tax it collects depends on the number of people including companies that pay tax. These Taxes involves VAT, personal income tax, company tax, petroleum tax. Individuals who work and companies are liable to pay tax as stipulated by a law, a certain percentage of their income and profit. It is quite unfortunate that only 16% of the total population pay tax. Government through its revenue collecting agencies must work and ensure that those who are yet to be capture under the tax net are brought in and are made to pay a fair amount and pay promptly an increase in the tax net will ensure an increase in revenue to fund government plans.
Zero Tolerance for Financial Recklessness. Government must ensure every single Naira spent is accounted for and spent on the right purpose. Stealing of funds should be discouraged as every step necessary must be taken to ensure loopholes are blocked and government monies are rightly spent.