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By Bimbola Oyesola
Nigeria’s economy may face further challenges, if the government fails to review some of its policies that are already driving companies out of the country, warned the Nigeria Employers’ Consultative Association (NECA) recently.
Director-general of NECA, Mr. Adewale-Smatt Oyerinde, reiterating the organisation’s position on the state of the economy, said government, since the beginning of 2023, has been implementing policies that do not support the operations of the private sector, who, incidentally, are the largest employers of labour in the economy.
According to him, some of the policies that are inimical to business include the currency redesign policy of the CBN, the removal of fuel subsidy, the floating of the foreign exchange, increase in various taxes, including excise duties, and, most recently, upward review of the foreign exchange rate for clearing of imports by the Nigeria Customs Service and banning of alcoholic beverage in sachets and pet bottle of less than 200m, saying: “these measures are swiftly dragging most private businesses to the brink of collapse.”
He noted with dismay the unfortunate recent exit of GlaxoSmithKline, a multinational pharmaceutical company, and Procter & Gamble, two companies that have operated in the country for decades.
He noted that, as the economy stands, there are many more companies to join the exit train or close shop, if the harsh operating environment persists.
Reacting to the recent report on unemployment by the National Bureau of Statistics, which indicated a rise in unemployment rate to 5.0% in the third quarter of 2023 from 4.2% in the second quarter of the year, the NECA DG noted that the implication of the poor macroeconomic and business environments on employment is grave as many businesses are downsizing as a way of cutting costs in order to remain afloat.
Oyerinde said the employment index may continue to worsen, unless there is a deliberate action to review some of the policies that caused the most recent economic dilemma.
To address the challenges of unemployment, he opined that government should deliberately address the operating business environment to support production in the private sector, which actually engage in productive employment.
He equally called for an end to monetary rationing, which is going on at the moment, and ensure that the optimum quantity of money needed to stabilize the economy is in circulation.
The NECA boss also charged the federal government to review and moderate the fuel subsidy removal; “subsidy is a tool for socio-economic stability and growth – fuel subsidy, unemployment allowance, Free Medicare, Social security Allowance, Old age allowance, Child upkeep allowance are all subsidies. Incidentally only fuel subsidy existed in Nigeria.”
Other urgent reviews include, the floating exchange rate regime to save the country from monetary collapse, adding that no heavily import-dependent nation such as Nigeria allows its currency to swim in the murky waters and vagaries of the invisible hand; it has to be transparently guided.
“Government should review its stance on the Tax Credit for infrastructural, mostly on road constructions carried out by private sector. Also, should review its tax projections from the private sector, particularly in the present condition.
“The truth is that high taxes do not help anybody, not even the government. High taxes, as it is currently becoming, has the tendency to crowd out a swathe of businesses in the country.”
Oyerinde further advised government to eschew pride and take actions to improve the operating environment to enable businesses return to improved level of stability to supports decent employment.