Yemisi Izuora

The Centre for the Promotion of Private Enterprise [CPPE] has commended the recent Executive Order removing import duties , Value Added Tax, VAT, Excise duty on pharmaceutical raw materials, intermediate products, medical diagnostic equipment and machineries.

The Center however called for such intervention in the energy sector, to promote energy security.

About half of Nigeria’s more than 200 million people are hooked up to a national electricity grid that can’t provide sufficient daily electricity to most of those connected. Many poor, rural communities like Olodo Okin are off the grid entirely.

In a country with abundant sunshine, many are looking to solar energy to help fill the gaps, but getting risk-averse investors to finance major solar projects that would give Nigeria enough reliable energy is an uphill struggle. It means that millions in the country are finding ways to live with little to no electricity.

Studies have shown that Nigeria could generate much more electricity than it needs from solar energy thanks to its powerful sunshine.

But 14 grid-scale solar projects in the northern and central parts of the country that could generate 1,125 megawatts of electricity have stalled since contracts were signed in 2016.

Those trying to develop solar projects in the country blame interest rates for borrowing which can be as high as 15 per cent, two to three times higher than in advanced economies and China, according to the International Energy Agency (IEA).

That means it’s more costly for solar companies to work in Nigeria or other developing nations than in rich countries. Africa only has one-fifth the solar power capacity of Germany, and just 2 per cent of global clean energy investments go to the continent.

Reacting to the Executive Order, Chief Executive Officer, CEO, of the Center, Dr. Muda Yusuf noted that the measures would boost domestic production of pharmaceutical products, reduce the cost of medications, improve access to healthcare and impact positively on the well-being of citizens and would also revitalize our pharmaceutical industries and create more jobs.

Yusuf stated that fiscal policy measures have much better prospects of addressing supply side challenges in the economy, if well targeted and that boosting production is very vital to fixing the current inflationary pressures, driven largely by supply side challenges in the economy.

He said that fiscal policy measures are potent tools for the realization of this objective.

“We recommend that these fiscal policy measures should be replicated to boost production in other segments of the real sector.  We need similar executive orders for agriculture, agrochemicals and Agro-allied industries to curb the surging food inflation; we need similar intervention in the energy sector, to promote energy security and incentivize private investments in the sector; there is need for similar support for Iron and steel sector to aid the construction industry and reduce construction costs for housing and infrastructure.

We also need fiscal policy protection to support domestic investments in petroleum refineries to conserve foreign exchange, create jobs, and deepen backward integration.” he said.

He also added, “There is a groundswell of economic nationalism globally and we should respond by strengthening our domestic production capabilities across all sectors. Fiscal policy measures have proven to be more impactful on real sector performance than monetary policy. The real sector of the economy deserves to be effectively protected and incentivized to improve production and ensure sustainability investments in that space.  The Nigeria economy cannot afford to submit to a regime of complete trade liberalization in the light of the challenges faced by domestic manufacturers. We need to stem the tide of deindustrialization of the Nigerian economy, the exit of foreign direct investors and the rising mortality rate of domestic industries.  We believe that stepping up fiscal policy interventions would facilitate the realization of this objective. But we must be ready to trade off some revenue in the short term.  The economy would be better off in the medium to long term,  with regard to growth in domestic production, less import dependence, heightened prospects of disinflation,  higher job creation and better economic resilience. “

The CPPE also commended the Central Bank of Nigeria, (CBN) for scrapping of its Price Verification  System Portal which was a needless duplication of the functions of the Nigeria Customs Service, and a product of a dysfunctional foreign exchange regime. We urge the CBN to sustain its engagement with the private sector for quality, evidence-based feedback on monetary policy outcomes.

In the meantime, he advised that authorities should identify other overlapping regulatory functions which had continued to constitute impediments to domestic and foreign investments.

The impact varies across sectors, he said adding that some of these regulatory overlaps exist with respect to the Federal Ministry of Environment, National Environmental Standards and Regulations enforcement Agency [NESREA], State environmental protection agencies, local government environmental units, and state waste management agencies.

He also listed overlapping functions in respect of  SON, NAFDAC, Nigeria Agricultural Quarantine Service, Weights and Measures Department, Federal Competition and Consumer Protection Commission [FCCPC].

These he said are some of the numerous regulatory institutions with overlapping mandates and are sources of avoidable distractions and significant financial burden to investors.

In the logistics sector there are numerous regulatory and institutional irritations from multitude of agencies of state and non-state actors creating logistics nightmare for investors.

“We have state VIO, FRSC, State traffic agencies, Police traffic units, local government traffic units, there are state and local revenue generating agencies on highways as well as non-state actors.” he said.

Meanwhile, in the spirit of the economic transformation programmes of the current administration, Yusuf said it is imperative to ensure effective implementation of Executive order 003 which prescribes that preferences must be given to local manufacturers of goods and service providers in the public procurement of goods and services by the MDAs.

There is also Executive order 005 which focuses on improvement in local content in public procurement with science, engineering and technology components. But a policy can only be as good as its implementation.

These executive orders have been flagrantly violated overtime without consequences.

The CPPE therefore appealed to the presidency to ensure compliance by the MDAs with these executive orders in the spirit of current efforts to boost domestic production, grow domestic talents and reform the economy.