The Federal Government of Nigeria has announced major programs to finance domestic manufacturing, lower corporate taxes, and offer single-digit lending rates to stimulate economic growth.
This was revealed on Thursday during Access Bank’s 2024 “Corporate Customer Forum,” which was held in Lagos. Wale Edun is the minister of finance and the coordinating minister of the economy.
He stressed the government’s commitment to fostering an environment that supports the private sector, including long-term low interest rates and 25-year mortgages.
According to Edun, consumer credit programs would make buying durable items easier, which would boost the manufacturing industry. He also presented measures to lower the corporate income tax to free up cash for companies and promote investment.
He claims that to shift the tax burden to high-end consumption, the government will raise taxes on luxury goods while removing the value-added tax (VAT) from necessities like food and prescription drugs. Edun claims that this will boost demand in important industries, including oil and gas, electricity, health, and agriculture, while also boosting local output and jobs.
The richest man in Africa, Aliko Dangote, acknowledged the government’s efforts but emphasized the need for more robust domestic investment.
Dangote declared, “No domestic investment, no foreign investment,” emphasizing the need to help local businesses boost employment locally and lessen dependency on imports.
He voiced concern about Nigeria’s reliance on imports, pointing to the example of Chinese biscuits, which he said were “creating jobs in China and poverty here.”
Dangote also highlighted how critical it is to shield domestic businesses, especially small and medium-sized ones (SMEs), from unfair competition from overseas producers who profit from government-subsidized loans. He called on the government to keep up its efforts to establish a “circular economy” that will benefit all industries, from bankers to manufacturers, and guarantee the survival of regional businesses.
Furthermore, Edun recognized the importance of SMEs to Nigeria’s economy, emphasizing government initiatives like N50,000 incentives for startups and 9% loans for bigger SMEs.
In order to combat inflation, he restated the government’s commitment to cutting production costs and increasing output.
State governments, the Nigerian Economic Summit Group (NESG), and the Manufacturers Association of Nigeria (MAN) are among the important parties consulted while developing the government’s economic plan.
The managing director and CEO of Access Bank Plc, Roosevelt Ogbonna, emphasized the importance of addressing Nigeria’s major economic difficulties. Speaking on how these issues affect the entire world, Ogbonna pointed out that Nigeria is not the only emerging market experiencing economic hardships.
He remarked that the bank sought to ensure its corporate clients understood the ramifications of new government policies under President Bola Tinubu, given last year’s emphasis on tax and fiscal changes.
Ogbonna emphasized the importance of a shared roadmap for determining Nigeria’s economic revitalization.
In his keynote address, Bismarck Rewane, the managing director and CEO of Financial Derivatives Company Limited, provided a detailed overview of Nigeria’s economic situation by 2026. His forecast shows that Nigeria’s economy will expand by 3.5 percent to reach over $400 billion, making it the second-largest in Sub-Saharan Africa.
The forecast for important industries shows a mixed bag of opportunities and difficulties notwithstanding this expansion.
Rates for electricity will continue to be high, surpassing 200 kWh for customers in bands A and B, while rates for telecom services should increase significantly. Positively, unencumbered foreign reserves will stabilize at $20 billion, and the foreign exchange market will witness an effective auction mechanism. The Monetary Policy Rate, the benchmark interest rate, is expected to fall to 20 percent annually as a result of the anticipated decline in inflation, which is now a major worry. It is anticipated that the banking industry’s non-performing loan ratio will decline due to this cut.
On the black market, the naira is expected to trade for N1,550 per US dollar. Even with its decline, this exchange rate will be a component of a foreign exchange system that is more stable and functional thanks to measures like intervention funds, remittances from the diaspora, and exchange rate adjustments. Notably, it is anticipated that creative sectors of the economy, such as the arts and tourism, will also contribute to inflows into the foreign exchange market.
The director of Nasarawa State University’s Institute of Capital Market Studies, Uche Uwaleke, spoke during a panel discussion on ways to deepen the capital market. He noted that the market’s GDP contribution is less than 20% and that rapid growth is required to reach the Capital Market Master Plan’s target of 25% by 2025.
Uwaleke focused on a few important topics, including government borrowing. He attacked the over 78% of domestic debt made up of federal government bonds, with less than 2% coming from infrastructure bonds like Sukuk.
To guarantee that borrowed money is allocated to important projects, Uwaleke suggested that the government concentrate more on infrastructure bonds. He maintained that this change would lessen the nation’s mounting debt load and improve infrastructure.
