Stakeholders task ministers on nation’s economic recovery
Raise concerns over merged ministries
STakeholders in the financial sector may have raised the stake for the newly appointed ministers, as they prescribed performance-driven initiatives that are devoid of mere head knowledge, but an understanding of the economy’s challenges as a benchmark.
The stakeholders, who harped on the need to hit the ground running on isssues relating to foreign exchange, real sector support, interest rates, and liquidity management, also called for flexibility in reversing any assessed unwholesome policy.
A former banker, chartered insurer and Chief Executive Officer of Brickred Consult Limited, Dr. Dan Okehi, said to achieve desired goals, the President should immediately constitute an economic team.
According to him, the team members should include tested individuals, even if it means recruiting old hands, to assist the Finance Minister, especially as some of the ministers are “green horns” in that level.
He said that the revamping of the economy should take precedence, while some controversial policies so far threatening the micro and macro economic stability of the system should be reviewed.
Okehi noted that the banking system is quietly collapsing through liquidity tightening from the Treasury Single Account, among other policies, adding that while the measure is good to an extent, there might be a better way to tackle it and allow the banks the needed liquidity to operate.
The insurer also said there is need for human capital re-engineering, raving up of productive activities through enabling frameworks and viable ideas, as well as shunning the call for devaluation of the naira in its entirety.
The Managing Director and Chief Executive Officer of Cowry Asset Management Company, Johnson Chukwu, said the improving growth should top the priority list of the cabinet.
Chukwu said that reducing poverty level through an effective redistribution of national wealth is needed now than ever, noting that government must take a definite stand on the issue of subsidy, which has become a drain for the economy.
According to him, to impact positively on citizens, the new Finance Minister must now show visionary leadership by initiating programmes that would touch directly the poor, whom the subsidy argumement is riding on their back.
“We must begin to get our budgeting process right, moving away from the high level recurrent expenditure and neglect for the real and mortgage sectors that would impact more on citizens.
But the Centre for Social Justice (CSJ), which welcomed the long awaited inauguration of the Executive Council, drew attention to what it described as “pertinent issues and concerns” on two key ministries- Budget and National Planning and Power, Works, and Housing.
The lead Director of CSJ, Eze Onyekpere, noted that the movement of the Budget Office of the Federation to National Planning as a full ministry makes it imperative to amend some laws that gave specific tasks regarding budget to the Minister of Finance, in favour of the new ministry to be able to proceed with his duties.
The first is the Fiscal Responsibility Act (FRA), which assigns inter alia to the Minister of Finance, the task of: Preparing the Medium Term Expenditure Framework (MTEF); collection of estimates of revenue and expenditure of scheduled corporations; preparation of budget disbursement Schedule; powers related to virements and restriction of budgetary commitments; budget reporting obligations based on monitoring and evaluation; and the attainment of fiscal targets.
“The second is the Finance (Control and Management) Act, which vests the power of preparation of budget estimates on the Finance Minister, who presents same to the President for approval before it is laid by the President before the National Assembly (NASS),” he said.
Onyekpere noted that by merging ministries of Power, Works, and Housing, government has created a ‘super’ ministry that may make or mar the administration.
“The challenges in that sector are enormous and could take the full time of a Minister and Minister of State, adding that the President still has the opportunity in these early days to split the ministry and appoint more ministers.
The “pruning and merger” of some ministries, as expected, aligns with the objectives of the government to reduce administrative overheads to conserve resources, which already has fallen to a 30.7 per cent year-on-year decline (to N3.5 trillion) accruing to the federation account in the first half of the year.
“Although we are moderately bullish on personalities of the ministers to drive policy initiatives, the fact that the appointments were delayed for five months in a period of deteriorating macroeconomic fundamentals has set expectations high for them.
“Important policy decisions lie ahead and the market would expect the Finance Minister to work out a co-ordinated policy framework along with monetary authorities to respond to the macroeconomic challenges of slow growth, heightened inflationary pressure, declining reserve buffers and exchange rate uncertainty,” the Head of Investment Research at Afrinvest Securities Limited, Ayodeji Eboh, said.
According to him, the market now is waiting to see how the current CBN’s strategy will be balanced with the expected expansionary fiscal 2016 budget.
“The market awaits a plethora of signals for a major turnaround in sentiments for equities, chief of which would include, optimal pricing of foreign exchange rate, clearer fiscal policy direction and reinstatement of investor confidence in monetary and fiscal policy managers,” he added.
But Onyekpere added: “The idea of saving money by merging Ministries may not hold water if the administration lives up to its anti-corruption posture. The annual basic salary of a Minister under the Certain Political, Public and Judicial Office Holders (Amendment) Act No.1 of 2008 is N2,026,400.
Adding the allowances and perks of office will now bring the yearly emoluments of Minister beyond N30 million. Forty ministers at this level of emoluments will still be about N1.2billion, which will not be above the affordability limit for the country.”