Nigeria’s economy transiting to another model, not dysfunctional – IMPI

Publicly available data show that the Nigerian economy is responding progressively to the economic policies of the President Tinubu administration, according to policy think tank, the Independent Media and Policy Initiative (IMPI)

This, the group, says is contrary to the doomsday prognosis of a dysfunctional economy by some self styled analysts which have no basis in fact.

In a policy statement signed by its Chairman, Dr Niyi Akinsiju, IMPI argued that there is a changing paradigm on the economic landscape as a result of ongoing reforms.

It said: “Contrary to the doomsday analysts’ submission, it is a picture of emerging economic hope, progression and resurgence that was aptly orchestrated by the national President of the Nigeria Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), Dele Kelvin Oye. In a statement, he applauded President Bola Tinubu’s administration on the occasion of the country’s 64th Independence anniversary, noting that “Government’s efforts have repositioned Nigeria as one of Africa’s largest economies and ranking among the global 20 driven by growth in sectors like agriculture, the creative industry and the digital economy.”

“He added that as the private sector’s voice, NACCIMA recognises the federal government’s efforts to address the economic, political and security challenges inherited at the inception of the current administration while acknowledging that some issues still persist.

“We fully subscribe to NACCIMA’s summation of the state of the Nigerian economy, especially considering the data available to us regarding the changing paradigm of the national economy.

“Based on our qualitative research on the state of the economy, we can confidently submit that though cost of living remains high, there are enough indicators to show that the policies being implemented by the federal government are gradually addressing the challenges that had historically contributed to the near-asphyxiation of the economy before the coming of the Tinubu administration with its reforming zeal.

“Indeed, our desk research on the economy indicates that the federal government is making solid strides in different segments of the nation’s economic spheres. More impressive, to our minds, is the renaissance of the federal government’s saving capacity, targeted at infrastructural development across the 36 states and the Federal Capital Territory (FCT).

“President Tinubu approved the establishment of the Infrastructure Support Fund for the 36 states on 20 July 2023 as part of measures to cushion the effects of petrol subsidy removal on the people. We commend the federal government’s fiscal discipline, as exercised by the monthly deduction of N100 billion from the federation’s gross revenue. Thus far, a total sum of N900 billion had been saved between November 2023 and September 2024.

“The Federal Accounts Allocation Committee (FAAC) has been deducting the amount into a special account before its monthly revenue distribution to the three tiers of government. In a show of fiscal discipline, it is established that no singular deduction or diversion had been made from the account since its inception.

“These savings are helped by the substantial increase in the federation’s generated revenue threshold, which stood at N9.1 trillion in the first six months of 2024, compared to the N5.2 trillion made in the same period of 2023.

“This, without doubt, is a milestone in federal government’s fiscal management that should be credited to the reforms being consummated by the Tinubu administration.

“When further analysed, the increase has an impressive contribution from Company Income Tax (CIT) at N3.45 trillion. This figure is remarkable considering the challenges many companies operating in the country announced in the wake of the ongoing reforms by the Tinubu administration.

“Out of the N3.45 trillion CIT collected, local companies account for N1.73 trillion. The figure included N386.49 billion in Q1 and a substantial increase of N1.35 trillion in Q2. For foreign payments, the sum of N1.72 trillion was collected. These are apparent indicators of a robust corporate performance in the nation’s economic domain.

“Instructively, we observe with interest the manufacturing sector’s surge in tax contributions, recording a nine-month high in the second quarter of 2024 despite ongoing economic challenges. In Q2, 2024, the total tax paid by manufacturers, which combines both CIT and Value Added Tax (VAT), amounted to N405.86 billion. This implies the sub-sector’s growing resilience and underscores a resurgence of production, productivity, and related activities.”

IMPI was emphatic that Central Bank’s monetary policies have also been yielding good fruits on the investment front.

It cited the latest report on capital inflows to back its position.

“On the CBN monetary policy front, it is becoming apparent that the Monetary Policy Committee’s insistence on increasing the benchmark monetary policy rate is now yielding the envisioned results with increased inflow of foreign capital into the Nigerian economy jzhxwhich has helped the standing of the foreign exchange reserves.

“By the end of the first half of 2024, Nigeria had recorded a total capital importation valued at $6 billion. This is higher than the $2.1 billion capital imported into the country in 2023 before the reforms that began changing the value of foreign exchange transactions were implemented.

“About $199.4 million of the foreign inflow found its way into the nation’s stock market as part of the $3.4 billion invested in the larger capital market by foreign investors showing renewed interest in the Nigerian economy. This represents a significant 36 per cent year-on-year growth from the $756.1m recorded in the corresponding half of 2023.

“Because of this substantial investment in the capital market, Nigeria’s stock market segment has demonstrated remarkable resilience, posting impressive gains. For example on 27 September, the last trading day of the first nine months of 2024, the stock market gained N15.66 trillion through capital appreciation as investors continued to invest in blue-chip companies.

“This is despite the double-digit inflation rate, unstable foreign exchange market, and soaring monetary policy rate, which are usually a collection of macroeconomic indicators that negatively impact the market.

“Despite these challenges, the Nigerian Exchange Limited (NGX) market capitalisation closed at N56.578 trillion as of 27 September 2024, an increase of N15.66 trillion or 38.27 per cent compared to the N40.918 trillion it closed for trading at the end of 2023,” it added.

IMPI also pointed out that the economic approach of the Tinubu administration will make the country more productive on the long run

“As analysts, we have decidedly sided with the federal government as it transitions the national economy from the anachronistic dependency model to the liberal, free-market, enterprise-driven model.

“Of course, we are aware of the challenges associated with policies to wean citizens and corporations off the corruption and distortions of subsidies, either petroleum or foreign exchange. Still, our situation as a country is that we cannot continue in the old ways. It is self-exploitation.

“The national economy can be more productive and, in so doing, create more jobs, enable wealth creation, and lift vast numbers of Nigerians out of poverty. This should be the collective pursuit of all Nigerians with good intentions for our national economy and individual citizens’ well-being. This economy is in transition, not dysfunctional,” the group concluded.