To cushion the effect of the COVID-19 crisis on the Nigerian economy, experts have urged the government to restructure its finances and eliminate overlapping ministries in various departments.
The experts argued that the emergence of COVID-19 and its increasing incidence in Nigeria calls for drastic review and strategic measures to restructure the finances of the government.
They insisted that if fully and faithfully implemented, these measures would go a long way in reducing the overall cost of governance in Nigeria.
Specifically, an economist, Johnson Chukwu, said eliminating overlapping ministries would help to reduce overhead cost and the rising cost of governance in Nigeria.
According to him, the budget reduction was most expected because of the significant drop in foreign exchange income and other government earnings have completely voided all the revenue projections even before the pandemic.
“The only saving grace is that government just adjusted the exchange rate to 360 thereby being in a position to convert the little foreign exchange earnings at the higher exchange rate and increase the naira payable by the federal government. It would have been very difficult to even achieve anything in terms of revenue earnings this year.
“But all said and done, it was expected, we now need to take strategic measures to restructure the finances of the government. Such measures will include; eliminating overlapping ministries in a different department of the government to reduce the overhead of the government, fully liberalising the downstream oil and gas sector.
“What I mean by fully liberalising is that government should deregulate it fully to attract private sector investment into refining business and therefore cut down on the demands of forex that we currently incur today as a re-imported refining petroleum product.”
Chukwu, who is also the Chief Executive Officer of Cowry Asset Management Limited, suggested that whatever funding government would realise from multilateral agencies should be deployed into public works to create employment and spur demands for increased production.
“We pray the health crisis does not linger, the government need to restart the economy. This means there are some sectors that suffer damage more than others like the aviation industry. They may need some level of government financial support.
“So we need to look at the sectors that were grossly affected and then intervened directly to restart their commercial activities such that employment and business will return back to normalcy at the earliest possible time.
An independent investor, Amaechi Egbo, said the public sector should under no circumstances be seen as a vehicle for wasteful, spending on large retinues of appointees.
According to him, Nigeria needs not to operate the most expensive democracy in the world, if it must record any reasonable level of growth post-pandemic.
“Nigeria at the moment can ill-afford such profligacy. Nigeria needs not to operate the most expensive democracy in the world. If fully and faithfully implemented, these measures will go a long way in reducing the overall cost of governance in Nigeria. More financial resources will be released for capital expenditure as a result of these cost-cutting measures.”
The Head, Research, FSL Securities Limited, Victor Chiazor, said the review of the country’s 2020 budget the review suggests that most sectors which had earlier complained of low capital injection will now receive lower funding on the back of the review, while the fiscal deficit will rise to N4.43trillion from N1.59trillion, which will increase the nation’s debt servicing to revenue ratio to a level that may become toxic to the economy.
“Going forward the government must begin to think of different ways to generate revenue outside of oil, as oil prices have become very volatile and unpredictable, hence the need for the country to find alternatives outside of oil.”
“This will ultimately increase our debt servicing to revenue ratio to a level that may become toxic to the economy,” he said.