The Centre for the Promotion of Private Enterprise, a leading economic institution has raised concerns about the Federal Government’s monetary and foreign exchange policies, warning that such rigidities around the policies will make the nation prone to an economic decline in the coming year.
The economic concerns were conveyed in the institution’s ‘2022 Economic Outlook’ report. A strategic publication that describes the economic bearing of Nigeria. The Central Bank of Nigeria is the apex Nigerian bank and is responsible for formulating the monetary and forex policies in the country.
The organization pointed out that the CBN does not seem to be ready to make adjustments to its current monetary and foreign exchange policy, a position that is poised to affect Nigeria’s economic growth in 2022.
The centre said, “Monetary and foreign exchange policy rigidities may also pose a risk to the growth outlook as there are no indications of any significant shift in monetary and foreign exchange policy stance in the near term.
“Consequently, the distortions inherent in the foreign exchange market will persist in 2022. The constraining effect of the high Cash Reserve Requirement on financial intermediation would also persist in 2022 with a dampening effect on growth outlook.”
The private body went on to diagnose the problem of insecurity as an obstacle to national economic growth. However, they pointed to an overall positive economy with a Gross Domestic Product at a delicate three per cent.
The report also articulated the trend that is gradually placing Nigeria as an unfavourable destination for investments. It was also reported that the agricultural sector will be negatively affected by this trend if intervening changes are not effected. It said investors would have to grapple with barriers to international trade experienced in the nation in 2021.
The economic think tank said problems relating to the Lagos ports, the traffic gridlock, port congestion, bureaucratic documentation processes, extortions, and the prohibitive charges by terminal operators and shipping companies might continue in 2022.
The CPPE said, “There will be intense electioneering activities in 2022, preparatory to the 2023 elections. This will cause some serious distractions for political office holders at all levels as they struggle to retain power during the elections.
“This will adversely impact the economy and the investment environment as considerable attention and resources are committed to the electioneering activities in 2022. The aggressive drive for revenue by agencies of government will put enormous pressure on investors in 2022.
“Beyond the regular tax authorities, other agencies of government may become more aggressive in their revenue drive. This will constitute an additional burden to investors in 2022.”
According to the organisation, the Federal Government is unlikely to fully remove petroleum subsidy in 2022 because of the 2023 elections. Because of this, the body said that the economy would have to bear the heavy fiscal burden of this policy, and the full implementation of the PIA as well as the reform of the downstream sector would be affected.