Rewane: Gaps in Policy Consistency Taking Toll on Economy, Investor Confidence

* Says renewed currency pressure to pose economic difficulties in second half 2024

James Emejo in Abuja

The Chief Executive, Financial Derivatives Company Limited, Mr. Bismarck Rewane, has warned that the federal government’s policy inconsistency was taking its toll on the economy as well as investor confidence.

The economist also warned that the renewed currency pressure may result in further economic predicament for the country in the second half of the year.
Rewane gave his perspectives on the economy at the Lagos Business School (LBS) Breakfast Session, with the theme, “Nigerian Economy on The Brink – Adapt or Collapse?” a copy of which was obtained yesterday.

On the issue of policy inconsistency by the federal government, the FDC boss specifically referenced the government’s recent suspension of the cyber security levy after announcing its implementation with fanfare.

He said the federal government also recently distanced itself from a, “fiscal stimulus package that was cynically leaked to the media by fifth columnists.”
He added, “In spite of these missteps, there appears to be a determination and consistency to push through a reform agenda (2.0) designed to rectify the shortcomings of the 2023 reform and position the economy for competitiveness in 2025.

“Luckily, the gap between the ask N100,000 and the offer 60,000 in the minimum wage drama has narrowed sharply, and a deal is now imminent.”
On the naira exchange rate against the United States dollar, he noted that since the Naira appreciated by 14 per cent on May 28, 2024 at the official market, the local currency had depreciated by 21 per cent to N1,481.49/$ as of June 6.

Rewane, also lamented that the country’s telecommunications sector, which remained a catalyst for future growth, was fast losing its spark.
He said, “This is due to economic challenges, inflation, exchange rate pressures, regulatory burden, right-of-way conundrums, and multiple taxations crunching the once vibrant sector.

“Although the sector’s growth outperforms annual GDP growth, but after discounting for inflation, it becomes evident that the sector is stagnating as revenue and margins decline.”
He said government should strengthen the telecommunications sector to grow the economy, adding that despite current turbulence the sector faces, there was still hope because of its strong linkages with other critical and job-elastic sectors of the economy, including manufacturing, agriculture, and trade.

He said, “The way out is to boost aggregate telecom investment that had shrunk 47 per cent since 2021, crippling market efficiency and growth.
“The regulatory landscape and macro-fundamentals must be supportive to incentivise investments.”
According to him, “Boosting sectoral GDP is an inductive way to achieve economic expansion marred by structural defects. Should output decline, exports will keep falling, further exacerbating inflation and exchange rate pressures.

“There is no magic wand to stabilising the economy. If the wrong choices continue to take precedence, the macro-economy will attest to it.”
Rewane however, said federal government’s recent move to raise the minimum wage and remove import levies on some essential items signalled a continuation of policy reforms, adding that this could support the sourcing of external finance from the World Bank, the African Development Bank and commercial creditors.
He said, “The cost of living in Nigeria is set to spiral as inflation remains steady above 30 per cent.

“The Naira, which is theoretically undervalued, will endure pressure.
“However, CBN’s sustained market corrective measures will likely continue, possibly anchoring investor sentiments positively in the medium term.
“As they say, it’s not over until the fat lady sings! We will keep watching the plug-and-play moves that will influence business and investment decisions over the next few weeks.”