Nigerian economy: Emefiele foresees 3% GDP growth rate in 2019

 

• Enelamah seeks increased tax compliance

 

The Central Bank of Nigeria (CBN) Governor, Mr. Godwin Emefiele, has projected that the Nigerian economy would grow by three per cent in 2019, higher than the 1.93 per cent it achieved in 2018.

Emefiele who gave the forecast on Thursday also said that the CBN would continue to maintain a tight monetary policy stance to rein in inflation which he said was expected to rise to 12 per cent in the course of the year before moderating.

This is coming as the Minister of Industry, Trade and Investment, Dr. Okechukwu Enelamah, has called for higher tax compliance in the country, stressing that in order to stimulate economic growth, all hands must be on deck to support the policies of government through partnership.

The CBN governor spoke while setting the post-election agenda for monetary policy, at the BusinessDay Post Election Outlook Conference in Lagos.

The Monetary Policy Committee of the CBN which is expected to meet next week, has left the benchmark interest rate at 14 per cent since 2016.

Speaking further, the CBN governor expressed optimism that the Nigerian economy post-May 2019, would witness positive growth that would help in reducing the current level of unemployment in the country.

He, however, noted that the apex bank would adjust the policy rate in line with unfolding conditions and outlook. Inflation figures released by the National Bureau of Statistics (NBS) showed a moderate decline in the Consumer Price Index in February to 11.31 per cent.

While basing the inflationary projection on productivity gains in the agricultural and manufacturing sectors, he anticipated that the GDP would pick up in the first half of the year, owing largely to continued efforts at driving indigenous production in high-impact real sector activities.

On the exchange rate policy, he said the apex bank, in spite of expected pressure from the volatility in the crude oil markets, would maintain its stable exchange rate over the next year.

According to him, “gross stability is projected in the foreign exchange market, given increased oil production and contained import bill.”

Emefiele expressed optimism that the country’s Balance of Payments would remain positive in the short-term, adding that the current account balance could improve further if oil prices continued to recover.

He noted that this would be, “supported by improved non-oil performance as diversification efforts begin to yield results to reduce undue imports.”

While warning that the issues that led to the economic crisis between 2015 and 2017 remained visible, Emefiele stressed the need to increase the country’s policy buffers, including fiscal measure, to increase its external reserve.

He also reiterated the need to diversify the revenue structure of the federal government, in order to reduce dependence on direct proceeds from the sale of crude oil.

He equally advised that cheap financing be provided to boost local production of priority goods in critical sectors of the economy in order to reduce reliance on foreign imports.

Emefiele, who also used the platform to highlight efforts made by the CBN in the past five years in monetary policy and development finance, disclosed that the weakening of the naira impacted the balance sheets of domestic banks. However, he said the Bank took measures such as monitoring the financial position and performance of supervised institutions and the assessment of the risk profile and governance management practices of banks, to guarantee financial stability.

He listed other efforts carried out by the bank to ensure financial system stability and the promotion of sustainable economic development to include the establishment of the investors and exporters’ window; conservation of foreign exchange through the restriction of access to foreign exchange on 43 items; and increased lending to the agricultural and manufacturing sectors.

The governor, while soliciting continued support of policy measures that restrict import of items that could be produced in Nigeria as well as increased penalty for smuggling of restricted items in Nigeria, expressed optimism that the Nigerian economy in post-May 2019 would witness growth and reduced unemployment.

On his part, Enelamah noted that in order to stimulate economic growth, all hands must be on deck to support the policies of government through partnership.

He also called for a higher tax compliance in the country.

According to him, the government was already taking steps to ensure that it generates enough revenue outside oil to ensure growth and development, adding that it requires the cooperation of the citizens.

“There is no doubt that we need to focus on growing revenue as a government, six, seven or eight per cent of GDP is not good enough. In my view if we all chose to pay our taxes or handle the tax issue in a way that was more effective, we will be better.

“The people who should be paying taxes are not paying. Most of us are not paying. The ones that are paying are the companies or the ones that are on our records. I do think that there are many strategies that can be used to improve tax collection and improve the social contract between the government and taxpayers and the government is looking at that and I think we would see better results.

“If you look at other countries, whether developed or developing countries, everybody is in double digit in terms of tax revenue collection to GDP, Nigeria is still doing single digit and there is no explanation that would suffice.

 

“In Nigeria we say government has been providing infrastructure why should we be paying taxes. Well I think we need a new social contract, if we are building infrastructure, we should be paying taxes,” the minister said.

“If you look at other countries, whether developed or developing countries, everybody is in double digit in terms of tax revenue collection to GDP, Nigeria is still doing single digit and there is no explanation that would suffice.

“In Nigeria we say government has been providing infrastructure why should we be paying taxes. Well I think we need a new social contract, if we are building infrastructure, we should be paying taxes,” the minister said. a new social contract, if we are building infrastructure, we should be paying taxes,” the minister said.