For the federal government to take the nation’s economy out of its recession and place it on a sustainable growth path, there must policy reforms in oil, power, mining, aviation sectors.
The is the assertion of analysts at Afrinvest (W.A) Limited, a Lagos based investment banking firm in its Economic and Financial Market Outlook 2017 report obtained at the weekend.
According them, the Nigeria’s business cycle would be highly dependent on the ability of policy makers to deliver incremental oil output in 2017, restore macroeconomic stability by rebuilding confidence in monetary policy and the administrative side of the foreign exchange FX market structure as well as showing commitments to structural reforms. Moreover, given the expectation of tighter monetary policy across the advanced economies, the pace of funds flow to emerging markets may slowdown in 2017.
They said the much needed policy reforms are inevitable as Nigeria stands the risk of being further relegated as already witnessed in 2016.
Afrinvest noted that given that oil revenue contributes a significant chunk to government’s revenue, it is imperative to implement structural reforms that will ensure transparency and efficiency so that the much needed foreign capital flows into the economy can be ultimately attracted.
“These reforms are majorly centred on passing the Petroleum Industry and Governance Bill (PIB) into law as well as revolutionising the gas sector to enhance the gas-to-power network and resolve the security challenges in the Niger-Delta. We recommend a much more lasting pragmatic solution that incentivise disgruntled Niger-Delta agitators to shield their swords and embrace peace. To this end, we believe that privatisation, across the oil & gas value-chain, should be a key focus so as to entrench efficiency in operations and actualise the full deregulation of the downstream sector which began in May 2016,” they said.
In the area of power, the analysts said they believe the current challenges facing the power sector need to be decisively tackled head-on.
“The whole process from supply of gas to the generating companies (Gencos) down to the transmission of electricity to the final consumers as well as the cash collection process from the consumers through to the gas suppliers, needs to be revamped. Also, there is a need for debt and equity restructuring by players in the sector in order to sufficiently capitalise firms as successful implementation of these reforms would make the sector more attractive for potential investors and as such the current liquidity crunch may be addressed,” they added.
Afrinvest said mining should be removed from the exclusive list so as to give the state governments the impetus to explore and develop their respective natural resources and also possibly foster interstate alliances, just as the company harped on the privatisation of the Airports around the country to aid in the efficient operation of the airports, unleashing tourism and commercial potential of the economy.
“This will also rid the federal government of the burden of maintenance and development of the airports which are currently in a deplorable state. These airports can be viewed as business hubs given the presence of shopping malls, restaurants, office complexes among others,” they said.