Experts have highlighted measures the federal government needs to take to tackle the rising uncertainty in the country’s business environment that could threaten the profitability and survival of many businesses.
Some analysts had projected that the economy would perform better in 2024 on the back of the recovery of the oil sector and gains from the Federal Government reforms.
“The government needs to set up an economic team of people who are real economists, not politicians. And one of the things the team should do is review all the policies, particularly the economic ones,” Femi Egbesola, national president of the Association of Small Business Owners of Nigeria (ASBON), said.
“I think that many of the policies are not in tandem with today’s reality, some of them have passed their time and are not yielding results as they should,” he added.
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Muda Yusuf, chief executive officer, of the Centre for the Promotion of Private Enterprise, said the government can help businesses by stabilising the macroeconomic environment.
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“If the government addresses issues such as exchange rates, energy costs, and insecurity, it would provide immediate relief to citizens. This would allow us to focus on tackling larger long-term challenges like infrastructure, roads, railway systems, and power supply at a later stage,” he added.
Adeola Adenikinju, president of the Nigerian Economic Society (NES), said the government must address inflation and the high cost of living by implementing measures to alleviate the burden on vulnerable individuals experiencing severe financial difficulties.
He said this could involve providing palliative measures and social interventions to support those most affected by the current economic challenges.
According to the National Bureau of Statistics, headline inflation rose to 28.92 percent in December from 28.20 percent in the previous month. Food inflation rose to 33.93 percent from 32.84 percent.
“The government should engage with Nigerians to assure them that it is competent and capable in its actions,” Adenikinju said.
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BusinessDay analysis of the financial statements of 11 manufacturers on the Nigerian Exchange Limited showed that four of them — International Breweries, Cadbury Nigeria, Morison and Neimeth International Pharmaceuticals — posted a combined loss of N89.8 billion in 2023.
In 2022, three of them reported a total profit of N0.72 billion, while International Breweries posted a loss of N21.6 billion. Fidson Healthcare Plc, May & Baker Plc and GlaxoSmithKline Consumer Nigeria Plc recorded a combined after-tax profit of N4.81 billion, down from N6.47 billion.
During a national broadcast in July, President Bola Tinubu said his government would energise the Micro, Small and Medium Enterprises (MSMEs) sector with N125 billion as part of measures to cushion the impacts of the subsidy removal.
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“Out of the sum, we will spend N50 billion on conditional grants to one million nano businesses between now and March 2024. Our target is to give N50,000 each to 1,300 nano business owners in each of the 774 local governments across the country,” he said.
He added that the Federal Government will fund 100,000 MSMEs and start-ups with N75 billion and that under the scheme, each enterprise promoter will be able to get between N500,000 and N1 million at nine percent interest per annum and a repayment period of 36 months.
“An event has resulted in manufacturers losing their working capital, necessitating the need for palliatives. If the underlying cause of this capital loss is not addressed, any funds injected will only provide temporary relief,” Egbesola of ASBON said.
He added that while providing financial support or implementing palliative measures is beneficial, it is equally important to tackle the root causes of the manufacturers’ distress.
Tax payments from local companies in Nigeria declined by 36.4 percent within three months, according to the NBS. The tax revenue reduced to N651.6 billion in the third quarter of 2023 from N1.02 trillion in the previous quarter.
Egbesola highlighted the importance of good policies in driving infrastructure development.
He said the government needs to take decisive action by declaring a state of emergency in critical sectors, particularly MSME sector.
“A struggling MSME sector poses a significant threat to the overall health of the economy,” he added.
