It is not unusual for developing economies such as Nigeria to borrow locally or internationally to augment shortfalls in generated revenue needed for administering the economy. The Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA) once again asserts its position on the nation’s increasing debt profile; that if the Federal Government must continue to borrow, then the funds must be channeled to the development of critical infrastructure required for economic growth and not for recurrent expenditure. It is also expected that once the projected growth is attained, there will be a systematic “reduction in the nation’s dependence on borrowing” as recently stated by the Minister of Finance.
The Presidency confirmed that $3 billion out of the entire $5.5 billion being sought through the International Capital Market (ICM) will be used in refinancing maturing domestic debts in order to manage the country’s internal debt stock. The Association understands that this will reduce the crowding out effect being experienced but cautions that high interest rates and inflation continue to pose enormous challenges to entrepreneurs in Nigeria and may limit the impact of this initiative.
The remaining $2.5 billion is being sought to finance the 2017 budget deficit and fund projects like the Mambilla hydropower project, rail projects, second Abuja airport runway and the construction of the Bodo-Bonny road. These proposed projects form only a minute amount of the total infrastructural deficit the nation faces, a situation which brings to fore the issues which continue to impede a truly conducive environment necessary for increased productivity of labour and capital towards accelerated economic growth.
NACCIMA however calls for prompt and assiduous implementation of the budget as well as sustained momentum in ensuring that the economy stays vibrant and investor confidence is sustained. The Association also strongly cautions that intended projects should be keenly appraised and monitored for effective and efficient application of borrowed funds.
The Federal Government must provide a robust feedback mechanism through which the private sector as a major stakeholder, can review the progress of its policies, projects and programmes.
Diversification of the nation’s economy must continue to be a priority to reduce the overdependence on crude oil, stimulate economic activities; reduce unemployment, infrastructural challenges and the need to keep borrowing.
Finally, the Association implores the Federal Government to continue to ensure a disciplined and coordinated approach to fiscal and monetary policy implementation.
IYALODE ALABA LAWSON. MFR, FIoD, JP.
National President, NACCIMA.
10th October, 2017.