Chief executive officer (CEO), Financial Derivatives Company, Bismarck Rewane, has said that the government needed to focus on some policy changes, aimed at steering Nigeria toward economic resilience in 2024.
Rewane said this during an Economic Outlook Session organised by the Lagos Chamber of Commerce and Industry (LCCI) yesterday in Lagos.
The event has the theme: “Building Economic Resilience in 2024: Strategies for a Sustainable Future”.
The economist predicted that Nigeria is primed for a 3.3 per cent growth in 2024, while projecting a potential increase in the minimum wage from N30,000 to N50,000.
He noted that the Naira is undervalued by 33.58 per cent at the parallel market rate of N1.285 per dollar and 4.16 per cent at the Nigerian Autonomous Foreign Exchange Market (NAFEM) rate of N890.54 per cent.
He said the country’s key macroeconomic challenges included suboptimal and non inclusive growth, increasing income inequality, high poverty and unemployment rate.
Others, he noted, were spiralling inflation, widening fiscal imbalance and currency pressures.
He emphasised that economic resilience could be assessed through four broad indices: macroeconomic stability, good governance, macroeconomic market efficiency, and social development.
According to him, the inevitable policy changes for 2024 include external and internal factors such as debt rescheduling, increasing interest rates, more efficient money supply, and an efficient foreign exchange market.
Others, Rewane added, include cost reflective electricity tariff, petrol subsidy reduction and wage review.
“Key fiscal policy objectives would be to stimulate growth output, boost employment level, ensure equitable distribution of income and wealth, boost investment level and debt management.
“Major opportunities for policy changes include exchange rate sanitisation, which would lead to export smuggling to reduce, boost in global commodity supply, lower food prices.
“Opportunities for policy changes in increased tax rate and efficient tax collection would lead to boost in state government revenue, paid contractors and increased demand for cement and other commodities.
“In 2024, Nigeria will remain more integrated with the global and regional economy and will be vulnerable to exogenous shocks, especially global oil prices and supply chain shocks.
“Nigeria will also need to come to terms with its domestic and external debt situation and is expected to begin talks with the IMF and reschedule its external debt.
“However, policy reforms without institutional reforms will only make things worse,” he said.
President, LCCI, Gabriel Idahosa, said the event was an annual platform designed to review key policy developments and macroeconomic performance in the previous year.
Idahosa said that it also involves discussing the outlook for the year ahead, while focusing on risks and opportunities.
He noted that the economy in 2023 had proven to be surprisingly resilient amid multiple shocks arising from significant inflationary pressures, consistent currency depreciation, decelerated economic growth, debt sustainability challenges among others.
He noted that the World Bank, in its 2024 global economy, predicted growth projections for Nigeria in 2024 and 2025 to 3.3 per cent and 3.7 per cent, respectively.
Idahosa, however, stated that the downside risks to the growth prospects include rising costs of living, weak business environment, poor manufacturing performance and rising unemployment.
Director general, Budget Office of the Federation, Ben Akabueze, noted that the biggest challenge for the government was raising public revenues against the background of increasing public demands for goods and services.
He said that cutting expenditure was not a feasible option as the country was not spending enough, stating that the country’s expenditure was one of the lowest in the world.
Chairman, Presidential Fiscal Policy and Tax Reforms Committee, Taiwo Oyedele, said that key policy recommendations to stimulate economic growth.
This included attracting investments, government’s suspension of some taxes in 2024, waiver of Value Added Tax on diesel, Compressed Natural Gas and Liquified Petroleum Gas (LPG).
“The sacrifices of the Nigerian people on fuel subsidy worth close to four trillion Naira have been factored into the budget to be spent, to impact the people more positively; such as roads to farms, solar power storage to preserve perishables.
“We also plan to relieve small businesses from the budget of tax via a draft law to take the burden off them,” he said
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