The Federal Government has been urged to explore low-cost options of funding its just-launched N75.03 trillion Economic Recovery & Growth Plan (ERGP), to avoid plunging next generation into debt.
According to Professor Olu Ajakaiye, the Chairman of African Centre for Shared Development Capacity Building (ACSDCB), Ibadan, who gave the advice Tuesday in Lagos at the Bullion Lecture organized by Centre for Financial Journalism, there is little room for the Federal Government to wiggle as far as financing the ambitious plan is concerned.
In his paper entitled: Nigeria’s Economic Recovery &Growth Plan: Options for Low Cost Financing of the Programmes, Ajakaiye lauded the Buhari Administration for the programmes, saying that it has eloborate articulation of what it intends to do, but advised that government should not leave its roles for the market forces.
“Any society that thinks that the government and market are alternatives, such society will fail. Government should solve problems by combining markets with getting resources from other jurisdictions to perform its duties,” he stated.
On the deficit financing arrangement under the programme, he opted for innovative ways of financing national development to stimulate the economy.
His words: “It is important for the government to be mindful of the dangers of another round of external debt overhang in the future. The external debt management strategy which aims at maximizing low-cost concessional external debt, while minimizing non-concessional and commercial debt should be sustained during the plan period.In this connection, the current arrangement whereby over 80 per cent of total external debt stock is concessional should be sustained so as to keep the external debt service quite small.
“There is not much of fiscal space for the Federal Government with which it can finance the plan. For example, the overall budget deficit exceeds the Federal Government Investment Programme for 2017 and 2018 and only slightly less than the figures for 2019 and 2020.
Given the very high proportion of private sector contribution to total investment envisaged by ERGP, the Nigerian Stock Exchange should be a major avenue for mobilizing capital.
If capital projects envisaged in the ERGP are packaged in ways that guarantee security and reasonable returns, pension funds could be encouraged to enter into co-financing arrangement with government.
It is quite possible that concessional external loans may be insufficient to meet the external components of budget deficit. In such case, government,in concert with the Central Bank of Nigeria (CBN), government should consider issuing project tied bonds and market them among the Nigerians in Diaspora.
If the projected annual Foreign Direct Investment (FDI) flow of around N970 billion is to be realized,it is imperative to ensure peace and stability in the Niger Delta region.