NACCIMA Faults FG’s Deficit Financing Model, Says It’s Making Nigerians Poorer

•Insists Nigeria cannot tax itself out of current economic problems

•NECA: With rising FG support, states shouldn’t complain about minimum wage

Emmanuel Addeh in Abuja and Dike Onwuamaeze in Lagos

The National President of the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA),  Dele Oye, yesterday faulted the federal government’s deficit financing model, arguing that the manner it was funding the expansionary budget deficit was depreciating the Naira.

Oye maintained that the development was also stoking inflationary pressure, thereby rendering Nigerians poorer after each budget circle.

Oye, who urged the government to listen to the ideas being championed by private sector operators on how to recalibrate its reforms, spoke when he appeared on the Morning Show on Arise TV, a sister organisation of THISDAY newspapers.

The NACCIMA chief spoke as the Director General of Nigeria Employers’ Consultative Association (NECA), Mr. Adewale-Smatt Oyerinde, separately maintained on the show, that all enforcement mechanisms should be activated to ensure a successful implementation of the current national minimum wage.

Oyerinde argued that with the current support from the federal government, no sub-national government should be complaining of inability to pay the N70,000 minimum wage.

But Oye emphasised the need for the government to support private sector growth, reduce costs, and attract investments to Nigeria, calling on the government to create an enabling environment for private businesses to thrive.

“Government must work with the private sector. We cannot tax ourselves out of this problem. To increase competitiveness, taxes should be reduced, and policies should align with those of neighbouring countries to make Nigeria more attractive for investment,” he pointed out.

Emphasising the importance of reducing government expenditure, promoting private sector competitiveness, and improving collaboration with stakeholders, Oye stressed that while the reforms may not be bad, there have to be  adjustments to their implementation.

“We are not advocating a reversal of reforms but a recalibration. The private sector must lead in some of these efforts. It is not the business of government to be in business; government is a facilitator. It must create an environment that attracts investments into Nigeria,” he added.

Besides, he argued that increasing taxation would exacerbate the current economic difficulties, lamenting Nigeria’s shrinking private sector as against the expanding public sector, which he attributed to deficit financing and government policies.

“Government must listen more to businesses because it is the private sector that generates the income used to pay loans. Loans are not sustainable until the government cuts costs in its own sector,” he stressed.

He stated that the organisation had outlined 12 recommendations,  key among which is addressing the naira’s instability, which deters investment.

“Nobody will invest in a climate where the currency depreciates daily,” he pointed out, urging the government to reduce its operating costs, curb deficit financing, and stop unsustainable borrowing, particularly in the local market.

According to him: “The CBN must reconsider its approach,” arguing that “Increasing interest rates punishes the private sector, which is not the cause of these economic problems.”

Oye further urged the government to adopt innovative strategies to restore Nigeria’s position as Africa’s leading economy.

“We must find a way to make Nigeria work. It is in everyone’s interest for the government to succeed because if it fails, we all lose. My members are ready to partner the government to turn the economy around,” he stressed.

He lamented that in 2014, Nigeria’s Gross Domestic Product (GDP) was  $560 billion, but that it has been slumping since then.

“All these are due to domestic policies around deficit financing and coordinated transfer from private to public sector. What you are seeing is that the private sector is shrinking while the public sector is expanding.

“The reason the Naira is crashing is because the government is running a deficit budget. What do you expect in a N13 trillion budget deficit? It is going to affect the value of the Naira. The Naira will start appreciating if the government’s expenses are cut down.

“Government must take the issue of the Naira seriously. It is the biggest driver of inflation. Nobody will invest in a climate where the currency melts every day,”  he maintained.

According to Oye, the private sector is not asking for handouts from the government, but a formula that would bring down the interest rate so that businesses can borrow at sustainable rates.

He said: “The president promised that he would give us a single digit interest rate on loans. We need to sit down with the government to create an enabling environment to establish this. This is what NACCIMA is saying.

 “The high interest rates the private sector is paying for loans are not sustainable. That is why we are shrinking. And the CBN has been very imperial in its approach to this and we have said this several times that these policies cannot work,”  he asserted.

While not advocating the reversal of the federal government’s reform policies, he argued that the way it is being currently implemented will not lead Nigeria anywhere.

Also, in his intervention, Oyerinde said that the N70,000 new minimum wage has come to stay and advised every stakeholder to line up with the law.

He pointed out that no state or local government should claim that it does not have the capacity to implement the current minimum wage because enough revenues are now flowing into their treasury.

He said: “The issue of not having funds to pay the minimum wage does not even arise. The state governments should do the needful and meet the expectations of their workers because the next battle to fight is the battle of compliance. 

“The law should take its course even on private sector organisations that are not paying. We have provisions for both compliance and enforcement. Therefore, the provisions for enforcement should be applied on those not complying with the new minimum wage.”