….Canvasses Replication Of Fiscal Measures In Other Sectors
The Centre for the Promotion of Private Enterprise (CPPE) has commended the Federal Government on the recently issued Executive Order removing import duties, Value Added Tax (VAT), and Excise duty on pharmaceutical raw materials, intermediate products, medical diagnostic equipment and machineries.
The Centre, in a Note issued by its Director/Chief Executive Officer (CEO), Dr Muda Yusuf, projected that the fiscal policy measures would revitalize our pharmaceutical industries and boost domestic production of pharmaceutical products, reduce the cost of medications, create more jobs and improve access to healthcare and impact positively on the well-being of citizens.
In addition, the organized private sector group noted that the fiscal policy measures had much better prospects of addressing supply side challenges in the economy, if well targeted, adding that boosting production is very vital to fixing the current inflationary pressures, driven largely by supply side challenges in the economy and that fiscal policy measures are potent tools for the realization of this objective.
The CEO stated: “We recommend that these fiscal policy measures should be replicated to boost production in other segments of the real sector. We need similar executive orders for agriculture, agrochemicals and agro-allied industries to curb the surging food inflation; we need similar intervention in the energy sector, to promote energy security and incentivize private investments in the sector; there is need for similar support for Iron and steel sector to aid the construction industry and reduce construction costs for housing and infrastructure.
“We also need fiscal policy protection to support domestic investments in petroleum refineries to conserve foreign exchange, create jobs, and deepen backward integration.
“There is a groundswell of economic nationalism globally and we should respond by strengthening our domestic production capabilities across all sectors. Fiscal policy measures have proven to be more impactful on real sector performance than monetary policy. The real sector of the economy deserves to be effectively protected and incentivized to improve production and ensure sustainability investments in that space. The Nigeria economy cannot afford to submit to a regime of complete trade liberalization in the light of the challenges faced by domestic manufacturers.
“We need to stem the tide of deindustrialization of the Nigerian economy, the exit of foreign direct investors and the rising mortality rate of domestic industries. We believe that stepping up fiscal policy interventions would facilitate the realization of this objective. But we must be ready to trade off some revenue in the short term. The economy would be better off in the medium to long term, with regard to growth in domestic production, less import dependence, heightened prospects of disinflation, higher job creation and better economic resilience”, Yusuf added.
Meanwhile, the CPPE also commended the Central Bank of Nigeria (CBN) for scrapping the Price Verification System Portal, which it described as a needless duplication of the functions of the Nigeria Customs Service, and a product of a dysfunctional foreign exchange regime, and urge the CBN to sustain its engagement with the private sector for quality, evidence-based feedback on monetary policy outcomes.
This is eve as it advised the fiscal authorities to identify other overlapping regulatory functions which had continued to constitute impediments to domestic and foreign investments with impacts varying across key sectors of the economy.
The CPPE identified some of the regulatory institutions with overlapping mandates as including the Federal Ministry of Environment, National Environmental Standards and Regulations enforcement Agency (NESREA), State environmental protection agencies, local government environmental units, and state waste management agencies. There are also the overlapping functions in respect of SON, NAFDAC, Nigeria Agricultural Quarantine Service, Weights and Measures Department, Federal Competition and Consumer Protection Commission (FCCPC).
It further clarified: “In the logistics sector there are numerous regulatory and institutional irritations from multitude of agencies of state and non-state actors creating logistics nightmare for investors. We have state VIO, FRSC, State traffic agencies, Police traffic units, local government traffic units, there are state and local revenue generating agencies on highways as well as non-state actors.
“Meanwhile, in the spirit of the economic transformation programmes of the current administration, it is imperative to ensure effective implementation of Executive order 003 which prescribes that preferences must be given to local manufacturers of goods and service providers in the public procurement of goods and services by the MDAs.
“There is also Executive Order 005 which focuses on improvement in local content in public procurement with science, engineering and technology components. But a policy can only be as good as its implementation. These executive orders have been flagrantly violated overtime without consequences”, the OPS advocacy group added.
To ensure that the fiscal measures positively impact on the economy, the CPPE appealed to the Presidency “to ensure compliance by the MDAs with these executive orders in the spirit of current efforts to boost domestic production, grow domestic talents and reform the economy.”
