NACCIMA Writes Finance Minister Wale Edun, Makes 12-Point Demands

The Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture, NACCIMA, has written to the Finance Minister and Coordinating Minister of the Economy, Mr Wale Edun, on the “State of the Economy”.

In a letter signed by the President, Mr. Dele Kelvin Oye, Esq. dated Wednesday, February 14th, 2024, NACCIMA raised concerns that the government’s promise of sweeping structural reforms in political, economic, and security sectors remains unfulfilled, nearly a year into its commitment.

According to the NACCIMA letter, “The focus seems to have shifted towards raising revenue at the expense of the productive sector, which is counterproductive. The private sector requires a transparent and coherent financial strategy, not the current piecemeal and reactionary policymaking.”

Below is the full statement of the NACCIMA letter to the Finance Minister;

The State of the Economy and Fiscal Policy

We stand before you today as a private sector representative, seeking to engage in a constructive dialogue about the current state of our nation’s economy and its management. Our collective objective is to foster a thriving economic environment that balances the needs of the public and private sectors while ensuring sustainable growth and stability. The State of the Economy and Fiscal Policy Our analysis reveals that while the private sector diligently fulfils its tax obligations, there is an expectation of reciprocity in the form of efficient public services and infrastructure. 

However, recent trends indicate that increased tax revenue does not necessarily translate into tangible enhancements in these areas. Instead, a discernible pattern of wealth transfer from the productive private sector to the public sector may not enhance economic growth. The cessation of fuel subsidies has yielded significant savings. 

Nevertheless, these funds appear to have been reallocated to the public sector rather than being invested back into the private sector to stimulate economic activity. Without clear fiscal reforms detailing the allocation and utilization of tax revenues, the economy is deprived of essential goods and services that the private sector could provide. 

Currency Management and Inflation 

The current approach to currency management has led to undue pressure on the Naira, exacerbated by excessive public sector expenditure and questionable foreign currency acquisitions by some corrupt private and previous public officials, as disclosed by the EFCC investigations and court proceedings. We advocate for a stable fixed exchange rate regime, which would provide predictability and foster investor confidence, both domestic and international. 

Structural Reforms and Governance 

The government’s promise of sweeping structural reforms in political, economic, and security sectors remains unfulfilled, nearly a year into its commitment. The focus seems to have shifted towards raising revenue at the expense of the productive sector, which is counterproductive. The private sector requires a transparent and coherent financial strategy, not the current piecemeal and reactionary policy-making. Private Sector Requests In light of these challenges, we present the following requests: 

1. Transparent Financial Strategy: A comprehensive and transparent articulation of the government’s short-term financial strategy is imperative, replacing the current sporadic and reactionary policy dissemination. 

2. Tax Relief and Fiscal Policy Direction: Clear policy signals regarding tax relief for the overburdened formal sector, alongside a defined government policy direction on pivotal issues such as food security, inflation, and infrastructure development. 

3. Human Capital and Domestication Plans: A robust human capital development plan encompassing all sectors, alongside intervention strategies for the domestication of the African Continental Free Trade Area (AfCFTA). 

4. Security and State Policing: Authorization for establishing State Police to enhance security infrastructure, ensuring the safety of citizens and the protection of economic interests. 

5. Governance and Cost Reduction: A commitment to curtail government expenditure, eliminating waste and inefficiencies, and reducing the disproportionate emoluments that serve a narrow political class at the expense of the nation.

6. Agribusiness and Food Security Initiatives: Full adoption and expeditious implementation of the African Development Bank’s Special Agro-Industrial Processing Zones (SAPZs) to bolster food security, exports, and employment opportunities. 

7. Entrepreneurial Financing and Industrial Development: Enhancement of local development banks’ capacities to offer single-digit interest rates. 

8. Entrepreneurial Financing and Development: We advocate for bolstering the capacity of local development banks to provide single-digit interest rate loans, fostering entrepreneurship, and supporting both existing businesses (brownfield) and new ventures (greenfield). 

9. Industrial Clusters and Joint Ventures: We recommend the establishment of industrial clusters across various states through joint venture arrangements among the Federal Government, state governments, development partners, and private investors, aimed at stimulating industrialization and job creation. 

10. Expansion of the Bank of Industry (BOI): We suggest expanding the role of the BOI to finance sectors beyond the industrial realm that can reduce the demand for foreign exchange. This includes high-quality educational and healthcare institutions. Moreover, we propose renaming it to the Business Development Bank of Nigeria to reflect its broader mandate. 

11. Foreign Exchange Contracts: We urgently appeal to the Honorable Minister to engage with the Central Bank of Nigeria (CBN) Governor to revisit and honor forward contracts that are backed by proper and compliant documentation, ensuring that commercial banks can use these hedges effectively against each letter of credit opened. 

12. Reconstitution of MDA Boards: We request the reconstitution of boards of various Ministries, Departments, and Agencies (MDAs) to enhance their performance, notably reinstating members from the Organized Private Sector of Nigeria (OPSN) onto the board of the Nigerian Customs Service, as the current government-appointed nominees do not represent our interests