The Centre for the Promotion of Private Enterprise (CPPE) has urged the government to enhance backward integration to promote domestic production of goods and services, as well as to support export development.
The director/CEO of CPPE, Dr. Muda Yusuf stated this while reacting to the Trump effect on the Nigerian economy.
Yusuf said the inception of the Trump administration in the United States of America has remarkably changed the dynamics of global trade, global economic outlook and geopolitical trajectory.
According to him, the US economy is also experiencing a record disruption in its economic, trade and political governance systems. These developments have multi-dimensional implications for the Nigerian economy.
“There are immediate and remote consequences for energy prices, trade relations, economic diplomacy, macroeconomic stability, donor funding and capital flows. These are evolving outcomes of the Trump presidency which would impact the outlook for the Nigerian economy in the near term.”
He noted that diaspora remittances may be affected by the current immigration policy of the Trump administration, saying that the United States have a huge number of diaspora Nigerians, estimated at 500,000, many of which may be affected by the current immigration policy on documentation.
On government revenue, Yusuf explained that “heightened prospects of a drop in oil prices would negatively impact government revenue and foreign exchange earnings. This has implications for the outlook for revenue, fiscal deficit, government debt and exchange rate. The current budget benchmark of $75 per barrel may not stand under the circumstances.”
He disclosed that the suspension and possible termination of the entire aid programme would create significant financing gaps for some government programmes, especially in the health sector, noting that the relevant agencies of government are already taking steps to mitigate the possible consequences of the termination of USAID programs in these sectors.
CPPE MD emphasised that there is a need for the government to commit more to the policy of self-reliance and less import dependence in critical areas of the economy, especially energy, food, pharmaceuticals and security, saying that excessive import dependence poses a major risk to economic and social security of a country.
He also said “a key lesson from the disruption is that no country should be too dependent on others for its strategic needs. There is a need to ensure that policies of the government are geared towards ensuring economic resilience that minimises vulnerabilities to external shocks.”
He pointed out that “the emerging new global order is progressively leaning towards economic nationalism, de-globalisation and economic fragmentation. Domestic economic policies must be framed within the context of this reality. Nigeria’s trade and industrial policies are very critical to achieving this resilience.
“The government must deepen backward integration through stronger intentionality to promote domestic production of goods and services as well as export development. The current economic reforms are already on course to ensure strategic structural shifts towards reducing dependence on imports.
“The government should urgently address current productivity shortcomings in the real sector to make domestic production competitive domestically and internationally,” Yusuf said.
